“You know going to want that category,” he said. According to Brandenberg, that probably won’t be for long. While Amazon has looked into adult beverage e-commerce over the years, it’s yet to unveil a total online alcohol strategy. “ Selling alcohol online presents many logistical and regulatory challenges,” Kroger said, adding that Drinks’s platform “has allowed us to roll out a scalable wine e-commerce program, while ensuring that the branding remains true to Kroger.”įor now, the big retailers are waiting to see what the others do. There has yet to have a clear winner in alcohol e-Commerce, but small steps like this from Kroger show that the battle is on. Because of different state laws, they simply can’t roll out a nationwide online alcohol program. Brian Lee, a senior principal researcher at Gartner L2, told Modern Retail earlier this year that the largest US potential area for growth in grocery “is in the online alcohol delivery space.” Numbers from Gartner says that online spirits sales grew ten times faster than the entire industry.įor the big retail players, it’s a slow trudge. The alcohol industry is worth over $250 billion today off-premises wine sales alone exceed $70 billion. “It wasn’t the low hanging fruit.” But as services like Instacart look to form smaller partnerships with mom and pop liquor stores, as a way to facilitate home alcohol delivery, bigger players are figuring out what they can do to innovate their alcohol sales. “Adult beverage is finally getting the attention it deserves from retail when it comes to convenience,” said Brandenberg. Now, the big players are slowly trying to figure out what services they can offer - be it e-commerce sales or buy online and pickup in-store - and how nationally they can scale them. The ultimate goal, he said, is to “enhance convenience for customers.” Big names like Walmart and Target have improved their online programs by leaps and bounds, but alcohol has remained behind the curve, likely because of legal setbacks. “The need for retailers like Kroger,” said Drinks co-founder and CEO Zac Brandenberg, “is to be as omni as possible,” meaning they need to offer more than just a physical location. Put together, online alcohol sales is one of the next big frontiers for retailers. “In many ways, there is a massive opportunity - not just for Amazon but for others.” “Less than 2% of alcohol is sold online,” Drizly CEO Cory Rellas said to Modern Retail last August. Meanwhile, the alcohol e-commerce space as a whole is heating up - Walmart’s chief merchandising officer Steve Bratspies earlier this year admitted that adult beverage is “one of the big ones that we’re leaning into.” Similarly, Amazon has been making incremental inroads - last month it unveiled a private label gin it was making in the U.K. The company told investors last month that it expects same-store sales to increase more than 2.25% in 2020, which is an acceleration from years past.
And recent results indicate that some things may be working. Its focus on online adult beverage sales was certainly a part of this big shift.
The strategic revamp focused on increasing online sales and discovering new digital revenue streams - it included a completely revamped shopper marketing program. In 2017, it announced its Restock Kroger program, where it would invest hundreds of millions of dollars in its innovation efforts. In recent years, Kroger has focused on boosting online sales and delivery capabilities. “We’re working to actively expand our footprint as quickly as possible in the coming year.” “We are continuously broadening how customers can engage with us no matter what their needs are, and expanding into wine was the natural evolution of bringing our in-store experience online,” a Kroger spokesperson said to Modern Retail in an emailed statement. Like nearly every other retailer in the country, the grocer has been feeling the heat from big players like Walmart, Target and Amazon. For Kroger, its program for wine - and alcohol more generally - has been an important strategic differentiator.
KROGER WINE AND SPIRITS SOFTWARE
It has partnered with software platform Drinks, which specializes in back-end infrastructure for wine delivery services specifically, and has worked to make alcohol a bigger part of its future programming. Over the last few years, Kroger has been quietly expanding its adult beverage delivery program.
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