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May 30, 2022 View:

IWSR predicts US to be world's largest online alcohol consumer market

According to a new study by International Wine & Spirits Data Analytics (IWSR), the value of alcohol e-commerce in the world's top 10 core markets will grow 42% to $24 billion this year as the new crown epidemic accelerates the consumer market shift to online.

Image courtesy of: Yue Chat Wine

The U.S. is expected to overtake China as the world"s largest market for online alcohol consumption by the end of 2021 due to lower-than-expected growth in the Chinese market, IWSR said.

This forecast is a far cry from IWSR's previous 2018 report, which stated that China's online alcoholic beverage market is four times larger than that of the United States.

IWSR said China is currently the world's largest online alcohol market, but its sales growth rate of 23% for 2019-2020 is lower than that of the U.S., U.K., Australia and Brazil.

IWSR predicts that by 2021, the U.S. will surpass China as the world's largest online beverage market

That's because alcohol e-commerce is already quite developed in China and there is less room for growth. 46% of Chinese consumers who buy alcohol online have been doing so for several years, according to the IWSR consumer survey. At the same time, the Chinese market also relies heavily on restaurants and bars, where about half of all alcoholic beverages are sold.

After experiencing over 80% value growth from 2019-2020, the U.S. is expected to surpass China as the world's largest online alcohol market by the end of 2021.

The report says the total value of U.S. alcohol e-commerce will grow sixfold from 2019 to 2024, from half that of China to as much as twice that.

However, this growth is from a low base: in 2019, e-commerce will account for only 1% of total retail alcohol sales for off-site consumption (e.g., superstores) in the U.S. IWSR estimates that by 2024, e-commerce will account for 7% of total alcoholic beverage sales for off-site consumption in the U.S., compared to 6% in China.

This year has seen a significant increase in consumer awareness of alcohol e-commerce in the U.S., while some states have relaxed legislation to facilitate online sales and home delivery.IWSR Consumer Research data shows that 44% of online alcohol shoppers in the U.S. will only begin buying alcohol online in 2020, compared to 19% in 2019. That growth is largely driven by the development of omnichannel (new retail) as supermarkets and traditional retailers seek to rapidly enhance their online offerings. On-demand vendors are also expected to gain significant market share, notes Guy Wolfe, strategic insights manager at IWSR Beverage Market Analytics.

Market Size

IWSR's latest comprehensive global e-commerce strategy study includes 10 core markets: Australia, Brazil, China, France, Germany, Italy, Japan, Spain, the United Kingdom and the United States, accounting for more than 90 percent of the total value of global alcohol e-commerce.

The report also examines 10 other markets of interest: Mexico, Colombia, Argentina, the Netherlands, Israel, Nigeria, Kenya, South Africa, Singapore and the Philippines.

IWSR estimates that the total value of the online alcohol market in these 20 countries will exceed $40 billion by 2024.

Although the shift to online shopping has been accelerated by the epidemic, IWSR believes this new buying habit will persist for a long time.

Wolfe said: In recent months, consumers have become more inclined to shop online, which is currently necessary for practical reasons, but this buying behavior will continue. As brand owners invest more and more in the channel, the market must evaluate it on its own merits and develop a strategy for doing so. This is particularly important because government regulation of alcohol e-commerce is likely to evolve as the online channel continues to grow.

Among the top 10 core markets, e-commerce platforms currently account for nearly half of total alcohol online sales, but omnichannel and on-demand supply channels are poised to gain market share.

The Direct-to-Consumer (D2C) channel will also grow by nearly $3 billion in value between 2019 and 2024, at a corresponding CAGR of 24%.

In addition, while wine is the dominant segment of e-commerce in most countries, ready-to-drink (RTD) products are expected to account for 10% of the total value of alcohol e-commerce in the top 10 core markets by 2024, up from 2% in 2019.