With choices ranging from beer, to wine, to liquor, and back again, consumers are afforded bottomless options when it comes to their purchase of alcoholic products. To help marketers better understand these shoppers, we present our In the Buyer’s Head episode series, where we answer the question: “Why do people shop where they shop?”
In this episode of The Marketing Remix, Charles Wiedenhoft, VP of Strategic Planning, explores where shoppers are buying beer, wine and spirits, how they discover new alcohol brands and products, the impact of Amazon, and how alcohol brands can improve their digital shopping experiences.
What is the current retail landscape for beer, wine, and spirits?
Charles: I think the most interesting thing to come away from this research is that a lot of people who took our survey seemed to almost shocked we'd ask the question if they've shopped for alcohol online. [chuckle] It just isn't a whole lot of awareness that it's even legal to do so.
Reid: Yeah.
Charles: That's the main barrier at this point for more of it happening. And a lot of research indicates that, as we get into 2019-2020, a lot more people are going to become more aware that they can do this, and so that will really take off in the upcoming years.
Reid: Well, how are they discovering new brands?
Charles: Currently, almost all of it's happening in stores, so at the shelf, people show up, figure that they need something, take a look around, maybe talk to a sales person, and then take something to consume at home. So that's where a lot of it is happening. Some of it, some research is happening online now. Google searches related to alcohol have increased 500% over the previous few years. And so I think that definitely gives an indication to where things are heading.
Reid: I've probably contributed to that. With all the, now, craft spirits and different things, craft beers and all of that, it's got to be hard. You don't wanna maybe be totally reliant on the shelf space and the distributor relationships and all those kind of things out there. If you're a brand new brand trying to make a dent something and being completely reliant on shelf space at a grocery store, that's a challenge. How are these brands overcoming that?
Charles: Yeah, that's definitely limiting. The good news is we're seeing more information made available online now, either on retail websites or on the different brand dot com web sites, and definitely social media. It was cool to see in our research that 60% of the survey respondents said that they had actually looked for alcohol across various types of websites, including retailers, brands, different online clubs, delivery services, and certainly Amazon. So with their acquisition of Whole Foods, they have piloted not only food and grocery delivery, but also alcohol and a few different markets.
What role does (or will) Amazon play in this space?
Charles: Their acquisition and ownership of Whole Foods is the start of it – there's just the natural sort of relationship there. I was lucky enough to live in Cincinnati where Amazon piloted their one, two-hour delivery options of Whole Foods and groceries. I decided to take a chance to see if it were actually going to work. We lived pretty far away from the Whole Foods there, about 20 miles, and I chose that one-hour option, and sure enough, the beer I ordered online arrived on time and it was cold, so that was really cool.
Reid: Hey, [chuckle] keep the party going, huh?
Charles: There you have it, yeah. So I think with them, obviously providing those sorts of services and getting it right, it puts competition on traditional national retail grocery chains to do the same thing. And we also started to see these delivery services, like Drizly is one focused exclusively on alcohol, and Postmates. So they're investing more and growing in different cities, and then advertising the possibility of ordering your favorite alcoholic drinks and getting them to your front door without having to leave the house. So as those services gain in popularity, I think the Amazon halo just puts more pressure on people to get it right and to do it fast.
Reid: Yeah, that makes sense, I mean obviously, that's one aspect of it. Perhaps, if you know what you want and want it delivered, again, to keep the party going or just include that in whatever your groceries may be or something like that.
What are some key factors in the consumer’s decision to purchase alcoholic products?
Charles: Certainly, showcasing a diversity of product selection and inventory, making the unique brand that people want available accessible through their websites, and making sure that people understand that they can have it as quick as they want essentially, either delivered or being able to pick up at the curb side.
Charles: Replicating some of the things that brands and retailers have done over time offline in physical stores. So, sampling and tasting programs being done in-store obviously can create awareness of different brands. Some grocery chains now are doing either co-branded versions of specialty craft beers and cocktails, so forming relationships as well to gain visibility both in retail stores and on their website. Being a part of those different events can definitely help.
Charles: With alcoholic drinks in particular, people are very interested in the types of food that the drinks were going to pair well with. And so offering those suggestions on pairings and recipes, and even related drinks and flavors and styles can be very helpful and influential, but probably the most basic things are to have a decent inventory, be accessible, share the story about where the product is coming from, its ingredients, connecting with the brand at that level is going to be very important as well.
Reid: Do you feel like there's an advantage in physical retail versus online? Maybe juxtapose the key advantages between those two?
Charles: Yeah, sure. I think you mentioned earlier that obviously, offline in most stores there's going to be limited shelf space, and with the hundreds and hundreds of options that are available, it's going to be difficult for retailers to provide everything that's available, where if you sell online and you have virtual, limitless shelf space, you can make a lot more available to people. And certainly, as we've seen the explosion of craft brands, both beer, spirits, even wine, there's just a lot more available now to people, and so making it accessible to them is really important.
Reid: Yeah, and now the other part of it is, there is, I think we talk a little bit about in one of our other episodes around the footwear category, where social plays a big role, and that the social play a role in this category as much. You talked about food pairings and stuff like that. That may be a way of discovering new brands or maybe new flavors to put together, but maybe what's the role of social in this category?
Charles: Social for me and alcohol is going to be based around, I think, culturally relevant events. Recipes can play a huge role in that, events and gatherings. So any time people are getting together to socialize host parties and things like that, if you're able to latch on to those types of holidays, or different types of gatherings, then you have the opportunity to form a relationship with consumers through social. And we see some brands doing that. There are certain regulations that occur with an alcohol still, and advertising that provide, I believe, some restraints on what can be done.
Reid: Yeah, that's probably a major struggle for the brands that are trying to break through, is obviously what the rules and regulations on all of that so far, plus then the distribution component in the offline world that we talked about.
How can brands in this category improve their digital shopping experience?
Charles: Yeah, a lot of what we've talked about so far around just being findable and providing even fundamental information about what you're selling, where it's coming from, where it's available, anything special around the story of where it came from and the people who are behind it, those can be inspirational things that get people excited about trying new drinks, especially with younger consumers who, all the research have shown us that they're, it's not they're less loyal to brands, but they try many more products in a certain timeframe. And so allowing them to discover new products that are going to be interesting and relevant to them is hugely important. We're seeing some pretty cool things with mobile apps, and so with age detection on some of those things. If your brand has a mobile app, you can get around some of that pretty easily. And then doing either location-based geo-targeting campaigns, being accessible and found within restaurants and bars, breweries, tasting rooms, things that they're doing with loyalty in that regard can help form a longer-term relationship with your followers and people to encourage loyalty.
Reid: It seems like online has the advantage in that regard then. These people can spend time consuming the story of who's behind the brand in the mobile environment, connecting them to places where they can find some of these things, or the social components of some of those apps that certainly we've played around with. You can identify new breweries based on ones you've liked, or find that there's a particular brand you like and where you might find it, a restaurant you might find it or something like that. That's where it does feel like there's maybe a little bit of advantage in the overall purchase funnel compared to then, you talked a little bit about maybe on the sales associates and things like that in retail, it's kind of a different ball of wax over there in the physical environment, yeah?
Charles: Yeah, I totally agree. There's only so much information that a person in a store is going to be aware of. And again, how much knowledge that person has about everything that that store stocks could potentially be limiting, and certainly, digital can help expand upon that and kind of fill in the gaps. And using data and targeting again can fill that role of providing more personalized recommendations and encourage discoverability of different flavors or products that are sold within brands.
Reid: Yeah, it's amazing to consider how fast this category's been growing, like what you were saying earlier, the 500% growth. What those options start to create in this world, in the digital world certainly, is going to be really interesting to see how that unfolds. Any predictions as you see it... With that kind of velocity, I feel like next year in 2019, we'll probably see some even greater changes. What do you predict in that category?
Charles: I think it's definitely going to be a tipping point over the next few years. Amazon, they started selling and delivering alcohol in UK, in Germany a few years before the US, and they're seeing substantial growth in those countries, I think over 200%. So if you take that, you kind of see what might happen in the US. It's a huge opportunity for both retailers and brands to provide more of a direct-to-consumer relationship. It's interesting because it is pretty localized here in terms of different regulations, but for the most part, you can see those opening up and making alcohol definitely more accessible.
Reid: Yeah, that's fascinating. Charles, I really appreciate you joining us on this episode. All that research that you've done and synthesized here is available in our full 2018 Beer, Wine, and Spirits Shopper's Report. So Charles, thanks for joining us.
Charles: Certainly. Thanks, Reid.
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