Will wine consumers continue to buy online?
Why wine e-commerce, shipping, takeout and delivery are here to stay.
Four suggestions for winery digital marketing.
Wine consumers are making a massive shift toward digital purchases.
- First time e-commerce buyers are driving growth in this channel,
- Consumer purchases of loyalty programs indicates a longer-term channel shift, and
- The in-home dining experience is being re-set, with wine on the menu.
An old marketing adage is that consumer attitudes are easier to change than behavior. But COVID-19 is giving a jolt to both — we are witnessing a transitional phase, a quick shift toward wine e-commerce channels that is unlikely to evaporate once COVID-related situational factors lessen.
First-time E-commerce Shoppers are Driving Digital Sales Channel Growth
During Wine.com’s May 1 webinar for the trade, Mike Osborn reported that wine.com attracted 7 times the number of new customers in April 2020 versus April 2019. April revenue growth was 3.5 times the previous year, and larger than December 2019.
Revenue growth was driven primarily by new customers; existing customers were not buying more bottles, or more frequently. This finding is consistent with reports of Drizly’s recent results for delivery.
New E-commerce Consumers Will Continue Using Digital Sales Channels
Again, citing Wine.com, the number of new subscribers to their flat rate shipping program, StewardShip, grew 14 times in April versus previous year, and far ahead of December. It is doubtful that StewardShip members – like Amazon Prime customers – are only interested in a 1-time purchase.
Nielsen’s Danny Brager recently pointed out survey data illustrating that frequent on-premise drinkers are more likely to have used DTC channels during the pandemic than the average alcohol consumer.
Consumers now have a taste of the convenience of e-commerce, and of the options available to them for delivery and shipping. (Many industry watchers erroneously assume all consumers know that they have these options.)
If you can have those heavy, cumbersome bottles of wine, beer and spirits shipped or delivered directly to your home – from your favorite retailer, grocer, winery or distiller – why purchase them the old fashioned way?
But we’re not suggesting wine merchants are going away. If anything, many retailers are doubling down, investing in systems better adapted to meet surging consumer demand in March and April. That tech isn’t going to evaporate; retailers will continue to benefit from their more robust infrastructure and, remember, many of them (you) have very robust consumer email lists and social followers.
This point was made by Bourcard Nesin’s recent piece in wine-searcher.com; the Rabobank analyst cited the longer-term benefits of systems investments by retailers:
“Many executives believe there will be a sustained shift to e-commerce as a result of the Covid-19 pandemic, and so they are investing more into the channel. While we do not disagree with that premise, we feel that the scale of those gains will depend on the industry doubling down on their investment…we have no doubt that they (investments) will have a long-lasting impact.”
Separately, we heard Drizly’s CEO say in early May they probably need to triple the number of their retailer partners to meet demand.
Re-setting the In-home Dining Experience
There’s no place like home: safe and secure.
In the post-COVID phases of “re-opening,” safety and health concerns will support in-home dining. And wine digital marketing and sales can work even harder because consumers generally perceive wine as a beverage choice that enhances food and the dining experience. Their attitude toward the product category fits the trend (or requirement, depending on your location).
Of course, no one really knows how macroeconomic factors and COVID-related factors—the easing of social distancing rules or the speed of virus testing and vaccine development—will affect the short-term. But it’s easy to identify a few key obstacles to streamlined wine digital sales and marketing success:
- Consumer resistance to shipping costs
- Technical impediments like poorly managed e-commerce portals
- Lack of digital marketing spend and, therefore, brand awareness and loyalty
- Laws that ban or set obstacles to interstate and intrastate commerce (full disclosure: Benson Marketing Group runs the campaign, Free the Grapes).
How Can Wineries Adapt?
Beyond the wine category, the pandemic is spurring rapid testing and breakneck innovation around the globe, even as companies horde cash. Sysco built a new distribution and billing system to serve grocery stores in a week. The Economist covered this topic last week, citing that in a small crisis power moves to the center, while in a big crisis, “it moves to the periphery.” Innovation relies on boldly testing new ideas, on partnerships and cooperation, not on a ‘command and control’ management structure.
Winery CEOs and digital marketers can adapt to these behavioral shifts in a number of ways:
- Push out decision-making authority to your sales and marketing teams;
- Build a higher percentage of shipping costs into wine pricing to counteract resistance to shipping costs;
- More aggressive digital advertising to build awareness in local markets and convert awareness to local retail, as well as DTC, sales;
- Developing consumer-friendly purchasing options, including more flexible subscription services.
Yes, this may sound self-serving coming from a wine marketing agency, but consider the facts of a very competitive marketplace:
- 130,000 wine SKUs are sold in the U.S. each year
- Roughly 30% of wine sold in the U.S. is imported
- 9,950 wineries in the U.S. compete for less than 10% of the market by volume.
Fortune Favors the Bold
Fortunately, being bold doesn’t cost much. We are testing digital campaigns for less than $1,000. Our clients are conducting virtual wine events and seminars for the first time — they may not be totally polished, but consumers don’t expect winemakers to have the chops of a TV anchor.
It’s just the start of a longer-term requirement to connect digitally with your consumers and trading partners. You can’t wait for them to come to you.
Take that staff time and budget and re-allocate it to meet the marketplace.
SOURCES AND RELATED POSTS
Wine-searcher.com: “Will Covid-19 Change Online Wine Forever?” By Bourcard Nesin.
The Economist: “Crucible of Creative Destruction.” April 25, 2020.
Bensonmarketing.com. “11 Ways to Adapt Your Winery Social Media During the Coronavirus Pandemic.”
Benonmarketing.com: “The Big Pivot: How Wine Marketers are Adapting to Coronavirus.”