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Online wine retail key to long term growth

Online wine sales are expected to grow by nearly 12% each year over the next four years, with it now “almost unquestionable” that e-commerce platforms will continue to gain share of retail sales.

That’s according to Rabobank’s latest Wine Quarterly report, which highlights the growing importance of online platforms, driven by increasing consumer demand.

“Growth rates of online wine sales vary across markets. but fairly consistently far outpace growth in traditional retail. In the UK online wine sales revenue of independent e-retailers grew 11% in the first quarter of 2015, while total wine sales value only increased 3.5% during that same period.”

Backing up Rabobank’s assessments of the online wine sector, a study presented at Vinexpo earlier this year by Bordeaux’s Kedge Business School confirmed that global online wine sales are around 600% higher than in 2006, contributing $6 billion (£3.8bn) to the industry. It too asserted that this route to the consumer will continue to grow and will become increasingly important.

Rabobank’s report, released today, highlighted millennials, an “increasingly wine-drinking demographic”, as one of the key factors driving this trend. However harnessing the potential of e-commerce platforms is not as simple as merely having a presence online, the report warns.

“Brand owners can choose to put their brands on popular online platforms, but without sufficient support for the brand, they can easily get lost”, said Rabobank analysts. “Simply having a presence online is not enough. Brand owners must invest time and marketing resources to achieve meaningful success in this channel.”

Furthermore, the rapid growth of wine e-commerce has resulted in an increase in competitors, forcing online retailers not only to expand their offerings but innovate in order to stand out from the crowd.

“Most wine marketers are still in the early stages of developing an online strategy”, the report noted. “They are struggling to find ways of standing our in a crowded playing field, avoiding channel conflict and effectively integrating process with their social media presence.”

One way to achieve this, according to the report, its to introduce interactive tools to assist consumers with their buying. Wine.com for example has introduced online sommeliers, who its members can chat live with in order to pick wines. Social media was also highlighted as “one of the most important” tools in driving online wine sales, with analysts advising wine brands to “integrate their social media platforms into the overall online experience.”

Overall Rabobank analysts are confident that e-commerce channels within the wine trade will continue to outperform growth of more traditional channels, however harnessing its potential will prove an ongoing challenge for wine brands and retailers.

“While most wineries recognise the growing potential, the complexity of effectively growing online sales while minimising conflict with traditional channels can be daunting”, it concluded. “Few wine marketers seem to feel confident that they are making the most of this opportunity. Developing e-commerce “know-how” can be a struggle for wineries, but those that invest early in building these skills will be better positioned for long-term growth.”

Source: The Drinks Business