U.S. e-commerce alcohol sales could increase by 7% in value between 2023 and 2027, but the rate of increase for spirits will be slower than initially expected.
The U.S. online alcohol market rose only 1% in value in 2022, after years of continued growth during the pandemic, according to data from IWSR Beverage Market Analysis.
IWSR projects a compound annual value growth rate (CAGR) of 7% for online alcohol sales in the United States from 2023 to 2027. In comparison, his CAGR for total beverage alcohol (TBA) over the same period is 1%. As a result, the TBA share of e-commerce will increase from 3.2% in 2022 to 3.9% in 2027.
However, the 7% growth is lower than the projected CAGR of 11% from 2022 to 2026.
Online spirits sales in the U.S. are also expected to grow by 7% (CAGR 2023-2027), with beer, cider, and ready-to-eat (RTD) products expected to grow by 19% combined. Meanwhile, wine is expected to fall by 1%.
IWSR previously estimated that e-commerce spirits sales in the U.S. will grow at a CAGR of 17% between 2021 and 2026.
Despite the slowdown in online alcohol purchases, 14% of consumers said they shopped on this channel in the past six months of 2023, down from 18% in 2022. Therefore, IWSR believes that the market still has ample growth potential. .
Guy Wolfe, head of e-commerce insights at IWSR, said: “Since the pandemic, recruitment activity has understandably slowed, particularly among baby boomers, and we are seeing this channel become more mature. It shows,” he said.
“However, there is still room for growth, with one in four online buyers adopted in the past two years. Moreover, the frequency of online shopping continues to increase among those using this channel. ”
Spirits and beer take market share from wine
Within online channels, wine is the most mature category due to the widespread use of direct-to-consumer (DTC) shipping. Wine's TBA value share in the US is 22%, but wine's share of TBA e-commerce is 45%. Spirits has a 37% e-commerce share (33% TBD) and beer/cider/RTD has 18% of e-commerce (44% TBD).
IWSR said spirits, beer, cider and RTDs will gradually eat away at wine's share in the coming years.
Whiskey will account for almost 50% value share in e-commerce spirits sales in 2022, while agave-based spirits will overtake vodka during 2024 and become the largest online spirits market by 2027. The company is on track to capture more than 20% of sales.
Online's value share of U.S. spirits sales is projected to reach 4% by 2027, up from 3.5% in 2022.
Rogers added, “The value share of e-commerce is relatively low but increasing as a result of stricter state regulations for online sales of spirits compared to other beverage alcohol categories.” “Amid complex market conditions, distilled spirits continue to find ways to work around restrictive state laws to meet consumer expectations and demands.”
Currently, only 11 states, including the District of Columbia, permit the transportation of DTC spirits. Industry groups, including the Distilled Spirits Council of the United States, are collaborating on the “Sip My Spirits” campaign, which aims to allow DTC shipments of spirits.
IWSR also highlighted the growth of non-alcoholic beverages “significantly outpacing traditional products” and the benefits of having no restrictions on shipments.
We recently looked at the state of DTC transportation in the United States.
US alcohol delivery service Drizly is shutting down this month, just three years after being acquired by Uber for $1.1 billion.
Alcohol e-commerce sales in 16 markets are estimated to grow at a slower pace than originally expected, with the category expected to reach nearly US$40 billion in value by 2027 rather than 2026. .
