Online Wine Sales Have Room to Grow

Other countries outpace United States for selling wine on the web

by Andrew Adams
Online wine sales have caught on more quickly outside the U.S. through sites like Jiuxian (above) in China and Lavinia in Spain.

San Rafael, Calif.—The growth of online wine sales is outpacing retail sales growth in most major markets as more consumers take advantage of the many web platforms that sell wine.

“It appears almost unquestionable that e-commerce will continue to gain share of retail sales, as it is clearly driven by consumer demand,” Stephen Rannekleiv writes in a new report from Rabobank that explores the growth of online wine sales.

Rannekleiv, executive director of the bank’s Food & Agribusiness Research division, cites an eMarketer projection that the share of online sales has grown by more than 20% per year in recent years and is expected to maintain a growth rate of nearly 12% during the next four years.

This rate of growth varies across global wine markets, but it is generally outpacing retail wine sales growth. In the United Kingdom, total wine sales grew by 3.5% in the first quarter of 2015, while online sales increased 11%, according to the Rabobank report.

Much of the growth in online sales comes is attributed to younger consumers. In China, nearly half of all consumers buying wine online are between the ages of 28 and 38.

About 30% of all Chinese wine sales take place online, according to a report by the Kedge Business School in Bordeaux, France. The school has been tracking online wine sales with its “e-Performance Barometer” since 2007.

Online sales worth more than $6 billion

In a study conducted by Kedge marketing professor Grégory Bressolles, the global online wine market was pegged at 6 billion euro ($6.4 billion). Bressolles determined the French online wine market totaled $1.6 billion in 2015, which is about double what it was in 2013.

About 10% of all wines sales in France take place online. In the United States that percentage is much smaller. An earlier study by Bressolles determined only about 2% of American wine sales took place online.

At the Wine Industry Technical Symposium held this June in Napa, Calif., Laurie Rains, a vice president with Nielsen, said just 5% of U.S. consumers were likely to buy wine online. Rains characterized the online wine market in the U.S. as having potential but still essentially a niche segment of overall wine sales.

While small enough to still be considered a niche market, online wine sales in the United States are undoubtedly growing.

The Kedge school’s e-Performance Barometer ranks the world’s top online wine retailers. In 2015, Amazon took the top spot followed by the Chinese website jiuxian.com and the Spanish website lavinia.es. The other major American wine website, wine.com, came in ninth. (See the rankings of the top 20 websites in the world and the top 20 in France here.)

Amazon launched its online wine store in 2012 with about 200 wineries and could ship to consumers in 15 states and Washington, D.C. Today the website can ship to consumers in D.C. and 30 states, and it offers more than 8,000 labels from 1,000 wineries or “wine sellers,” as Amazon doesn’t actually sell the wine. Instead, the web retail giant acts as a web portal for wineries and fulfillment companies.

“While we don’t disclose specific sales data, we are pleased with the customer response over the past three years, and the increase of brands selling on Amazon,” the company’s spokesman, Eric Fairleigh, said in an email to Wines & Vines. He added most of the company’s wine sales growth is from U.S. consumers.

Another indicator of the potential of online wine sales is the persistence of flash websites. Sites such as Lot 18 and Invino originally were thought to just be a byproduct of the recession. Wineries and distributors had excess inventories, so they offloaded the wine to relatively discrete websites that sold it at low prices during one-time-only sales.

Those websites persisted through the recession, into the recovery, and now appear to be a integral part of online wine sales. Wines Vines Analytics has been tracking the wines offered by flash websites since December 2010, and the number of websites and offers have steadily increased. Through the past 12 months ending in September, the sites made 6,828 offers, which is 12% more than the previous year.

Enjoying exponential growth

Napa, Calif.-based Last Bottle Wines is one of the leading companies selling wine through flash sales. Stefan Blicker launched the website with partners Cory Wagner and Brent Pierce nearly five years ago as an offshoot of their more traditional online wine shop, BPW.

Blicker said he sees the growth of Last Bottle not just as affirmation of the flash model but of online sales in general. “We can look solely at our growth, which has just been exponential with no indication of slowing down,” he said. “Just about every indicator we have points to sustained growth to purchasing wine online.”

In the past 12 months ending in September, Last Bottle made 399 offers for domestic wines. Blicker said more than half (or about 60%) of the company’s offers are for imported wines. The company sells, on average, about 230 cases of wine per day.

Based on mobile traffic, Blicker said a good chunk of Last Bottle’s customers are millennials, but the site’s offers have attracted consumers from every demographic. “Honestly it’s the entire spectrum, and it’s something that continues to amaze and impress us,” he said.

As online wine sales continue to grow, Rabobank’s Rannekleiv notes that winery marketing executives and brand managers will face some of the same challenges they currently encounter in the traditional retail world. “They are struggling to find ways of standing out in a crowded playing field, avoiding channel conflict and effectively integrating the process with their social medial presence.”

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