direct to consumer sales drinks international

The Rise of DTC Sales

02 September, 2021

The Covid-19 pandemic has inspired drinks producers across the world to significantly ramp up their focus on direct-to-consumer (DTC) sales.

In the first quarter of 2021, AB InBev’s sales through owned ecommerce channels quadrupled in size. The world’s largest brewer reported that its courier platforms are now available in nine markets and 220 cities. Heineken, the world’s second largest brewer, reported that revenue doubled at its DTC platform in Europe, Beerwulf.

In the United States, producers sold $223 million worth of wine via their DTC channels in June, an increase of 18% on the previous year. That was despite a strong rebound in on-premise sales, highlighting a continued trend for home consumption in the world’s largest economy.

The spirits industry has lagged behind, but trade bodies are working hard to pave the way for a new era of DTC growth. The Distilled Spirits Council of the United States, American Craft Spirits Association and American Distilling Institute have joined forces to lobby the federal government to pass direct-to-consumer shipping laws.

Just nine states, plus the District of Columbia, permit DTC spirits sales, compared to 46 states that allow DTC wine sales. The trade groups are calling on the federal government to intervene. “In states where craft distillers have been permitted to ship their spirits direct-to-consumer, they report it has been a saving grace and a much needed source of revenue during the hardships of the pandemic,” said ADI president Erik Owens. The groups teamed up with IWSR to survey 2,000 consumers about the issue, and 80% said they supported direct-to-consumer sales.

Johnnie Walker and Smirnoff producer Diageo expects direct-to-consumer sales to grow rapidly and emerge as an important part of the business in the years ahead. The spirits giant has just beaten analysts’ expectations by posting 16% organic net profit growth for the year to June 30. That was partially driven by surging ecommerce sales, which now account for around 5% of Diageo’s global business. It has enjoyed success with major third-party platforms such as Amazon and Drizly, but is starting to ramp up its focus on direct-to-consumer sales too.

At an earnings call, chief executive Ivan Menezes told Drinks International: “We do see the consumer behaviour shift towards shopping online as very sustained. It will continue to grow. Alcohol has typically been under-penetrated [online]. Throughout the lockdown and the pandemic period, the penetration for alcohol online shopping has gone up significantly.

“We have leading positions on third-party platforms like Amazon in Europe, Tmall in China and Drizly in the US. We’re doing very well on those platforms. We have introduced nine new direct-to-consumer platforms around the world. We do tend to lead in that space. It’s still relatively small for Diageo, but we expect it to grow fast and it will become a more important piece of our business. 

“We have an asset called TheBar.com in the UK and Brazil. We have platforms at the top end of our single malts portfolio. This is an area where Diageo will do more. I expect it to become a bigger part of our business over time.”





Digital Edition

Drinks International digital edition is available ahead of the printed magazine. Don’t miss out, make sure you subscribe today to access the digital edition and all archived editions of Drinks International as part of your subscription.

Comment

Nick Strangeway

Bar food's blurred lines

Once upon a time pubs and bars were somewhere you went with the sole purpose of getting pissed and there wasn’t a knife and fork in sight, just a packet of dry roasted nuts.

Instagram

Facebook