As online sales boom, product lines diversify, and competition grows throughout the market, liquor retailers were slow to move online.
Despite this, the online beer, wine, and liquor sales industry has gained momentum as it stabilises within the retail division, according to research by IbisWorld.
The booming online retail sector has struggled to get consumers to invest the same confidence in online grocery and liquor sales compared with other products, however, as major players have strengthened online sales systems and delivery methods, sales have skyrocketed.
As online purchasing of alcohol cements itself within the retail sector, the online beer, wine and liquor sales industry is estimated to grow at an annualised 9.8 per cent over the five years to 2013-14.
As market uptake strengthens, revenue is forecast to increase 6.5 per cent over the year to reach $692.3 million, capturing just over four per cent of total liquor sales.
The online sale of alcohol lends itself to higher sales of wine and spirit-based beverages compared with beer and cider. Spirits and wine tend to be higher value purchases that are forward purchased for inhouse stock.
IbisWorld industry analyst, Emily Witham, says the industry has challenges ahead as it finds ways to mitigate competition with the convenience of tangible purchases from bricks and mortar liquor retailing.
“As consumers become increasingly health conscious, high levels of alcohol consumption is viewed as a poor health choice. Wine and spirit sales lend well to a feasible online purchasing choice and as an option for purchases of higher quality and value consumption with lower consumption levels,” Witham says.
Purchasing of online alcohol is expected to increase as delivery systems and technology improve. The industry is viewed favourably due to the diverse range available at competitive prices.
Volatility in discretionary income is likely to drive online alcohol purchases as consumers look for value for money.
According to Witham, “unlike many online retail industries, online alcohol sales are somewhat sheltered from international competition due to importation requirements and the nature of the produce”.
Online alcohol sales exhibit a low level of marketshare concentration. The industry is characterised by a large number of highly fragmented firms of varying sizes. Most players are smaller, independently owned firms that have limited operations outside their key markets and employ few employees.
Over the next five years, IbisWorld expects the industry’s marketshare concentration will increase as large supermarket chains begin to make a move on smaller industry players. Woolworths is currently the only major industry player.
For more information, visit IbisWorld’s Online Beer, Wine and Liquor Sales report.
