As our industry crosses everything in the hope that it can emerge from the ongoing affects of Covid19, followed in quick succession by the cost of living crisis, we appreciate that breweries are looking at every option to generate sales growth and increase overall profitability. We also understand that the rising production and logistics costs are not able to be fully realised as yet through price increases, as society looks to tighten its belt across all areas of spending.
In the UK, SIBA’s (The Society of Independent Brewers) recently released 2023 Craft Beer Report had a somewhat positive outlook for the independent brewing industry and listed a number of causes for optimism as their industry looks to turn itself around after a tumultuous few years. The report stated that the number one cause for optimism was:
“A sale direct to consumers, whether by pub, bar, website or taproom, is the most profitable route for most brewers. These sales seem to be growing fastest with over a quarter of all output now sold through these channels”
Over 68% of SIBA members now have a webshop, with 54% having a brewery shop and 40% operate a taproom. To back this up locally, our research (contained within our Heart of the Matters report) shows that online liquor sales represent the fastest growing segment of the retail industry with sales forecast to continue growing over the next five years. Wine, particularly premium and rare wine, has traditionally been the major product sold online. Currently, approximately 13% of total wine sales are made online. Both wine and spirits currently sell a greater proportion of their products online than through traditional retail channels. There is definitely a similar opportunity available to independent beer. Beer as a category sells appx 27% of its products online vs 37% in the retail channel.
Industry operators are anticipated to increasingly invest in online sales channels over the next five years, particularly as this market is forecast to grow at a much faster rate than traditional bricks-and-mortar sales. And we believe that online ranging represents a more profitable opportunity where in-store ranging can be more challenging.
Online liquor retailers will also be seen as a more attractive option for consumers due to the diverse product range and competitive prices, which we saw reflected in leading audience targeting company for the global marketing industry, GWI, who released their recent retail trends report. They stated that 59% of consumers say they would rather shop online than in-store, which although changes by the generations, with Gen Z’s (59%) and Milennials (63%) being more open to online than their older counterparts, Gen X (55%) and Baby Boomers (46%).. the numbers are still very encouraging for the online, direct to consumer opportunity.
Whilst also being a highly profitable channel when selling your products direct to your consumers, the online channel also provides a great opportunity to build intelligence around your consumers… as well as driving direct-to-consumer tactical promotions. It can be the greatest direct line of communication you have with your consumers. As more and more consumers are going online for inspiration and purchases, the importance of having an online presence, that is easy to shop is fundamental