Increased online sales without increased consumption

16 April, 2020 by Brydie Allen

After the forced shut down of the on-premise industry, many consumers mistakenly predicted that bottle shops would be next, and flocked to retailers to stock up. 

The industry’s reaction to panic buying like this has been swift and proactive, with Retail Drinks rolling out a voluntary purchase limit initiative, except for in Western Australia, where the state government mandated it first. 

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Before and after these measures, continued peaks have been noted in online and home delivered orders. As we recently reported, online alcohol sales increased between 50 and 500 per cent for retailers in March, compared to the same period last year. Although many retailers are now saying that an initial sales boom has calmed down, online orders continue to be higher than usual. 

Coinciding with these records, it’s becoming more common to see warnings and cautionary tales about overindulging in alcohol, drawing connections between a rise in sales with a rise in consumption.

However, an increase in certain types or methods of sales does not directly imply a dangerous rise (if any) in overall consumption. Considering the proactive industry measures, as well as the pre-existing Retail Drinks Online Code of Conduct, such a change would be difficult to occur. 

According to Alcohol Beverages Australia (ABA), increased retail sales does not make up losses found from the closure of the on-premise. 

Andrew Wilsmore, CEO of ABA, said: “We urge caution in equating an increase in packaged liquor or home-delivery sales to many Australians drinking to excess while at home during this crisis.

“There has been a total decimation of ‘on-premise’ sales through pubs, bars, clubs and restaurants. Our beer, wine and spirits producing members are all telling us that this loss of sales has only marginally been made up for by an increase in packaged retail liquor sales. 

“Indications are that overall sales and volume loss range from 10-30 per cent, with many small producers even more severely impacted as they are unable to access the retail channel and / or have had to close their cellar/brewery/distillery door.”

With so many people doing the right thing by isolating and limiting contact with others, online and home delivery may simply be their only option for purchasing any alcohol, rather than being methods for them to procure and consume excessively. 

As IRI has noted previously, there is an “accelerated shift” evident in consumers moving online in the midst of the pandemic, and capitalising on this area is key for business success in a change environment.

Retail Drinks Australia also view an online focused strategy as important for retailers who are looking to remain agile and responsive. CEO Julie Ryan said boosting online sales is a responsible way to retail during this crisis where social distancing is the key to stop the spread of the virus. 

“For liquor retailers, one of the key ways to address a reduction in in-store trade is to adopt online delivery options,” Ryan said. 

“Even prior to the emergence of COVID-19, the online alcohol delivery market had been increasing significantly, with double-digit growth forecast over each of the next five years. With a substantial number of consumers currently either in self-quarantine or isolation, the demand for home delivery services of goods, including alcohol, is only going to increase further.”

Wilsmore also points to this fact, that these increases in the online and home delivery sphere are simply helping people at home get on with life as they usually would, without leaving the house. 

“It is important to understand that consumption doesn’t necessarily occur shortly after the time of purchase for packaged liquor sales, but normally occurs over a considerably longer period of time,” Wilsmore said. 

“Promoting adherence to self-isolation requires the home environment to be convivial and the ability to access everyday items such as a beer, wine, spirit or cider (which are a part of Australian culture) should be viewed as being critical to self-isolation success.”

Retailers have recognised the shift to online and many agree that it doesn’t illustrate heightened quick consumption, but rather, that consumers are stocking up for a long stay at home. However, there is still a need to keep responsibility at the forefront of conversations. 

A spokesperson for Endeavour Groups said: “Our retail stores and our online businesses are currently experiencing some elevated customer demand. We understand that these are uncertain times where there can be comfort found in being prepared, however we encourage customers to purchase as they would normally, continue to drink responsibly.”

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