Alcohol Comes To The Internet

Posted: Nov 14, 2017



Moet Hennessy doesn't want to use the web to merely offer its luxury champagne, wine and liquor online. It wants to provide the mixologist, bar and glassware and maybe a trip to Scotland to boot.

The marketer of Dom Perignon, Veuve Clicquot and Belvedere vodka is trying to infuse its online sales with luxury experiences via a new site called Clos19, part of a broader effort among alcohol marketers to get more aggressive about e-commerce after years of trailing other categories. While 20 percent of U.S. shoppers bought groceries online last year, just 8 percent of buyers bought alcohol online, according to Nielsen data cited by e-commerce analytics firm Profiter.


Alcohol has lagged because of a complicated patchwork of post-Prohibition state laws that govern its sale and distribution. Generally, a so-called three-tier system requires most sales to flow from supplier to wholesaler to retailer. That means a beer brand, for instance, can't take an online order and ship it directly from its warehouse to the consumer.

But alcohol's online potential is now growing thanks to the rise of third-party sites that allow drinkers to order beer, wine or booze online and have it delivered from retailers like the corner liquor store. Among the most successful is Drizly, which began in 2012 and now serves 70 cities across 30 states. And of course, everyone is watching Amazon. While the e-commerce giant recently said it was closing its Amazon Wine program, it continues to expand alcohol delivery through its Prime Now service.

Only 0.2 percent of beer sales occurred online last year, but that's expected to grow to 2.4 percent by 2021, according to Heineken USA CEO Ronald den Elzen. He shared the data at a recent conference hosted by Beer Marketer's Insights, where he called e-commerce a "total system shake-up," the publication reported.

Drizly began humbly five years ago, when co-founders Nick Rellas and Justin Robinson started ferrying alcohol from a Boston liquor store in Rellas' 1998 Jeep Grand Cherokee. Because state law required that they work for the store in order to make the deliveries, the two men stocked the shelves making minimum wage "trying to get the business off the ground," Rellas recalls.

Today, Drizly says it has deals with more than 3 percent of the liquor stores in the U.S. The average site visitor has access to 6,000 unique products, compared with roughly 700 products at a given liquor store. Drizly does not release sales figures but Rellas says month-to-month revenue growth has averaged 17 percent over the past 46 months.

Beer brands are experimenting too. Earlier this year, Miller Lite struck a deal with Drizly to let consumers order beer delivery with a voice command to Amazon Alexa.

Asked about the Amazon threat, Rellas takes comfort in the survival of other specialty retailers such 1-800-Flowers and Wayfair. "Walmartdidn't kill the specialty retailer and Amazon isn't going to kill the specialty marketplace," he says. "Our business is technology. We figured how to bring the liquor store on the internet and we let consumers shop across those stores to find the best prices on the biggest selection. It's not about delivery."

Moët Hennessy is plugging Clos19 with an artsy video by Droga5 that blends vibrant images such as lush floral arrangements with scenes of people that are connected in some way. The work is designed to capitalize on consumer trends such as young people's increasing tendencies to stay in on nights and weekends.

In a departure from industry trends, however, the marketer is running the lifestyle site directly rather than relying on a third-party service where its brands go side by side with competitors. The site is technically operated by a vendor called Thirstie, which has been running a third-party alcohol delivery site like Drizly but is now focusing on selling its technology directly to marketers. Thirstie uses an established network of local retailers in an arrangement that it says keeps the three-tier system intact.

By E.J. Schultz
November 13, 2017
Source: AdAge
  

Image Credit: Clos 19 | You Tube

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