direct to consumer sales drinks international

The Rise of DTC Sales

02 September, 2021

Dayalan Nayager, managing director of Diageo Great Britain, added that “the prominence will stay” for ecommerce sales as the world emerges from the Covid-19 pandemic, because “consumer buying habits have shifted”.

It is easy to see why brand owners are keen to accelerate a shift towards DTC sales. First, there is no middleman taking a cut, so margins are theoretically higher, provided they create very efficient platforms and logistical capabilities. Second, they can ensure a pleasant purchasing experience for their consumers by seizing control of the process.

Yet perhaps the greatest incentive to switch from supplying the trade to selling DTC is the ability to mine valuable consumer data. Some economists suggest that data is the new oil: an immense, untapped, lucrative asset that fuels the digital economy. By selling DTC, brand owners can enjoy access to the sort of analytics they would be unlikely to gain by supplying the trade. 

This could be one of the reasons why Moët Hennessy and Campari Group have joined forces to create an ecommerce business that will sell wine and spirits to consumers across Europe.

Last summer, Campari purchased a 49% stake in Tannico – Italy’s leading online wine and spirits retailer – for €23.4 million. Tannico also owns a majority stake in Ventealapropriete. com, a major ecommerce platform for the sale of premium wines and spirits in France. Campari will sell its stake in Tannico to the JV for €25.6 million. The new venture will be led by current Tannico chief executive Marco Magnocavallo, who remains a minority shareholder in the business, with the aim of building “a European ecommerce pure player in this growing category”.

“With the joint backing of Moët Hennessy and Campari, Tannico will have the repower to consolidate the fragmented European ecommerce sector and offer a qualitative, sizeable and integrated route to market option catering to the needs of all its wines and spirits suppliers,” said Magnocavallo.

Philippe Schaus, chairman and chief executive of Moët Hennessy, added: “This partnership represents a significant step forward in our global ecommerce development strategy. While ecommerce was already a growing channel for wines and spirits, the global pandemic has triggered a significant acceleration.”

GROWING TREND

We can expect to see more deals of this nature in the months and years ahead. It is certainly not limited to the drinks industry: manufacturers from Apple to Nike are increasingly selling directly to consumers. Yet it begs the question: what can retailers and bar owners do to ensure they are not phased out?

It is not such a concern for the on-trade. DTC retail channels cannot replace the conviviality, camaraderie and enjoyment of visiting bars and restaurants. Lots of brewers have their own pub chains, but there has always been a role for high-quality on-trade establishments with a strong and differentiated offering. 

The situation is a little more concerning for o-trade and ecommerce drinks retailers. They essentially need to maintain such strong sales volumes that drinks producers cannot afford to bypass them, ensuring they retain the bulk of their market share in the face to increased competition from DTC.





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