The Supply Side: Survey finds consumers prefer buying adult beverages in-store

by Kim Souza ([email protected]) 1,159 views 

Alcohol sales surged in 2020 to their highest level in 18 years and grew at a 3.8% clip though this summer, according to the International Wines and Spirits Record (IWSR). The biggest gainers saw spirits sales up 4.6% last year, the highest increase in a decade. Agave-based spirits sales shot up 15.8% last year, falling just behind vodka and whiskey, IWSR reports.

While consumers purchased most consumables online last year, that was not the case with liquor. A recent survey by ChaseDesign found that nearly 90% of all beer, wine and spirit sales last year were made in stores, not online.

Noting that bars and restaurants serving adult beverages have reopened and resumed total capacity in recent months, consumers have simultaneously bought less liquor online. That said, store sales remain elevated.

The survey found that 40% of consumers during the pandemic said they bought alcohol online. That number is now 35% and trending toward the pre-pandemic level of 30%.

Consumers in the survey also favored Walmart (38.6%) as the top retailer for purchasing beer, wine and spirits, followed by Target (25.4%), Costco (21.3%), Kroger (17.4%), Trader Joe’s (14.1%) and Sam’s Club (13.7%).

Walgreens, Whole Foods, Publix and Amazon Fresh also were favored by at least 10% of the survey respondents. Wine had a strong showing, with 19.5% of respondents selecting it, and a whopping 34.6% said they preferred to shop at local liquor stores. According to the report, the strong showing by independent brick-and-mortar liquor stores reflects the power of localization and trust in store personnel, which adds that this is often the most undervalued asset in retail.

The most significant reasons respondents said they preferred buying liquor in-store is because of the wide selections and discovering new brands. They also chose stores for their convenient location, and they also like to do other shopping while they are there. That bodes well for grocery and big-box stores. Still, 45.6% said they look for reasonable rates when making liquor purchases.

While 88% of the respondents said they purchased alcohol in stores last year, 45% also made online purchases for home delivery, 36% picked up online orders in stores and 29% used curbside services for their online purchases.

Delivery was evenly split among several major third-party final-mile platforms such as Instacart, DoorDash, Uber Eats, Drizly, with 30% also having a wine subscription and nearly that many getting direct shipments from brand websites. One in four respondents said they do not have alcohol delivered to their homes.

For the 65% who said they purchased online and picked it up at the store, most said they do it because it’s convenient and limits their exposure to COVID-19. More than one-third also say they can find the best price when shopping online and then pick it up when it’s convenient.

The biggest downside for online orders is the wait time for the alcohol to arrive. About half also said delivery fees could add up, and 42% said they received incorrect orders or had missing items. Another 30% said they worry about the package being stolen if they are not at home when the delivery is made.

Online orders for alcohol tended to range from $30 to $49, said 27% of the respondents. Still, 24% were bigger spenders between $50 and $69 per online alcohol order. At the lower end, 18% said they spend between $10 and $29 per order, 30% of the respondents spend $70 or more and 17% reported spending $100 or more per order.

Walmart noticed shoppers spending more on premium brands of wine last year, which prompted the retail giant to expand its proprietary brand.

“Since introducing the Winemakers Selection label to Walmart customers in 2018, we’ve continued to identify new ways to bring our customers new and exciting offerings as they explore the collection,” said Jason Fremstad, vice president of adult beverages at Walmart.

He said  that last year Walmart relaunched the Winemakers Selection Classic Series, which featured an updated brand identity. He said the Classic Series quickly became a customer favorite.

“Over the past year, we’ve noticed our customers have been more interested in exploring premium wines but wanting to try them at an accessible price point without sacrificing quality,” Fremstad said. “That’s why Walmart is expanding the Winemakers Selection label to include the new Reserve Series.”

Like with the other Winemakers selections, Walmart is working with wineries across the globe from Argentina to Italy, France, California and New Zealand.

Walmart also made an effort to showcase beer and wine brands from diverse suppliers in the past year, and Fremstad said carrying local craft beers is an essential strategy for the retail giant.

In Arkansas, Walmart can own and operate just one full liquor store, and that is at Sam’s Club in Fayetteville. The retailer sells beer and wine at all locations where it is allowed. Todd Owen, a divisional market manager for adult beverages at Sam’s Club, said adult beverage sales have grown over the past few years, ramped up in 2020, and are outpacing those levels this year.

Like Walmart, Sam’s carries a private brand of Member’s Mark wine sourced worldwide and in 14 varieties. Owen said that even though Sam’s limits the number of items it has in clubs, adult beverages are one category that’s been expanded with a broader brand assortment. He said significant research goes into curating an assortment for clubs. He said it’s essential to balance national and local brands and also add in seasonal favorites.

“As for beer, local brands are very important, especially for the craft beer category,” Owen said. “Here in Northwest Arkansas, for example, you’ll find local brands in our clubs like Bentonville Brewing, Bike Rack, Lost 40, Ozark and Black Apple Crossing Ciders. And we tailor our local assortment like this for all of our clubs that carry beer and wine.”

Editor’s note: The Supply Side section of Talk Business & Politics focuses on the companies, organizations, issues and individuals engaged in providing products and services to retailers. The Supply Side is managed by Talk Business & Politics and sponsored by Propak Logistics.