Specialist
Senior director, e-commerce & sales planning, North America at Beam Suntory Inc
Agenda
- Alcohol e-commerce industry trends and developments, including coronavirus tailwinds
- Regulatory environment update
- Retailer and alcohol e-commerce platform strategies, including Drizly and Amazon's (NASDAQ: AMZN)
- Alcohol manufacturers' need to adapt investment, marketing and consumer communication strategies to online retail growth
Questions
1.
Could you give an overview of how e-commerce alcohol has developed in the US?
2.
You mentioned that alcohol e-commerce penetration was low-single-digits as a percentage of the overall market pre-coronavirus. When did this segment start? How long did it take to reach to low-single-digits? What is the main route to the consumer through e-commerce? Are there several forms of e-commerce?
3.
You mentioned regulation as a reason behind the very low initial penetration. Could you comment on consumer awareness of being able to shop online for alcohol? I imagine consumer awareness and regulation go together, but why do you think coronavirus was such a great catalyst for online alcohol penetration in the US? Did the pandemic force consumers to seek alternatives to bricks-and-mortar?
4.
You estimated the pre-coronavirus growth rate for alcohol e-commerce at 60-70%. It increased to roughly 200% in aggregate when coronavirus took hold. How did growth differ across channels? Did third-party marketplaces, bricks-and-clicks or B2B take more share?
5.
You said bricks-and-clicks held a vast share of the market – do you think the bulk of the e-commerce market today is captured by this channel? We hear a lot about Drizly in the press, but is this channel still a relatively small part of the online marketplace?
6.
How sticky do you think the e-commerce trend will be given the level of forced adopters? Do you think those consumers are likely to be repeat customers when grocery and liquor stores are safe to visit again, or when on-trade reopens? How do you think the e-commerce segment will evolve over the next 3-5 years?
7.
Could you estimate current alcohol e-commerce penetration if it stood in the low-single-digits prior to coronavirus? What percentage penetration could the segment reach?
8.
Do you think the e-commerce segment might initially lose share when consumers relax about returning to on-trade and grocery stores as COVID-19 vaccines roll out? Do you think the segment could continue to build share given it started from such a low base? Could the alcohol e-commerce shift be much more seismic than what has occurred in traditional grocery?
9.
What are your thoughts on first-time online alcohol purchasers? You mentioned younger consumers reaching legal drinking age as a potential key driver.
10.
You mentioned wine e-commerce has a slightly different dynamic due to the regulatory backdrop. Have dynamics differed at all between the spirits and beer categories? Do you think one lends itself more favourably to e-commerce than the other, given the coronavirus uptick?
11.
Do you think any spirits categories have done particularly well due to the recent online adoption, excluding RTDs? Have higher price-point or premium spirits or any other categories outperformed?
12.
Could you elaborate on the regulatory headwinds that kept alcohol e-commerce penetration low pre-coronavirus? What is the three-tier system? Could you touch on any regulatory differences across wine, beer and spirits?
13.
You mentioned that D2C represent 20-25% of total wine sales. What share does D2C take in beer and spirits? Is D2C prohibited in these categories or permitted in certain states?
14.
Do you think coronavirus could drive deregulation as opposed to increased regulation in the US alcohol market?
15.
Could you outline any differences across the models of third-party platforms such as Drizly and Instacart? How do those players make money? Do you think the competitive landscape will consolidate? How could this relatively new model evolve?
16.
Who could be the winners or losers from the third-party disruption across the value chain? Does nothing change especially? Is it just that the consumer pays slightly more for delivery?
17.
You predicted that Amazon will be key to driving alcohol e-commerce. How large a disruptor could the company become here? What are the regulatory hurdles? From my understanding, Amazon doesn’t focus on alcohol as a category – it’s more a component to its total approach to grocery. Is that the way to think about it?
18.
Why do you think alcohol isn’t a top priority for Amazon? Is this due to the regulatory headwinds? Might some stigma be involved? Could coronavirus have changed the company’s thinking?
19.
How could the e-commerce alcohol growth affect suppliers? How might they have to approach their marketing? How do they think about their consumer communications or digital strategies?
20.
What do you think are the cost implications of e-commerce growth for the alcohol companies? Is it just a pivot in strategy, or do you think this might have some cost implications too?
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