Can Heineken Help Spark More Online Alcohol Sales?

Mark Willingham Uncategorized

Can Heineken Help Spark More Online Alcohol Sales?

Source: https://www.pymnts.com/

June 11, 2018

In news that might please frat boys, fans of European beer and owners of man caves, Heineken has started online sales of its home tap machines and the two-liter kegs that work with it. On a more serious note, the move represents the latest effort to bring more alcohol sales online, one of the more challenging eCommerce propositions, even this far into the digital era.

According to a report Monday (June 11) in Digiday, the sales will come from Heineken USA’s new eCommerce site, draftforhome.com, and will initially be limited to consumers in New York City before rolling out to the rest of the United States.

“These kegs, which keep beer cold for up to three weeks, are not only filled with beer, but also two new product lines for the company: cold-brew coffee and kombucha,” the report said.

Online sales of kegs would cut out the need for consumers to go to a liquor store and employ the services of a middleman – a step forward for direct-to-consumer eCommerce. But this is not Heineken’s first foray into online beer sales. Last year, the company launched “a Heineken-only store at now.heineken.com,” the report said. According to that site, deliveries take place in “about an hour,” though the online service is not available in all areas. A consumer must be at least 21 years old to take possession of the delivered beer.

Heineken had also launched a site for Dos Equis beer – Heineken owns a variety of brands – but discontinued that effort after launching, in April, another eCommerce site that includes Dos Equis along with “Tecate, Strongbow, Red Stripe, Amstel Light, Newcastle and Affligem,” according to Digiday.

Not only does Heineken want to sell where consumers increasingly shop, but the digital channel also allows for a faster pace of commerce. “With traditional retail, it takes a long time to get beer from overseas, and you have strict shelf sets. What you put out is what you get,” said Jenna Behrer, senior director of innovation at Heineken USA, in the Digiday report. A direct-to-consumer service means Heineken can be fast to market, she said.

Heineken is upping its eCommerce game at a time of significant growth for online alcohol sales. Those revenues increased nearly 33 percent in 2017, with an average monthly growth rate of 3 percent, according to Slice Intelligence. Much of the credit for that growth goes to alcohol delivery service Drizly, whose own revenue increased about 62 percent last year, according to the Slice report.

Online alcohol sales in the United States reached $1.7 billion in 2017, according to Rabobank. Such delivery services as Postmates and Instacart are also providing consumers with digital options for buying beer, wine and spirits.

Still, even with the growth and potential, online alcohol sales are a relative laggard when it comes to other forms of eCommerce. “Consumers want food and beverage providers that can anticipate their needs and personalize experiences, but they aren’t getting that from the companies out there today,” wrote Sean Dunn, head of digital at Astound Commerce and a former winery and distillery employee, in a recent column for Food Dive.

A big hurdle remains in the Prohibition-era regulations that still govern alcohol sales in many states. “For example, only five states today permit direct shipping of spirits to consumers,” Dunn wrote. “Additionally, each state regulates alcohol differently, adding further logistics challenges.” The country has come a long way from the “Smokey and the Bandit” days – that 1977 Burt Reynolds chase movie centered around a delivery of Coors beer to Georgia, an illegal act of commerce at the time – but those laws still have major influence.

Beyond that, shipping alcohol presents other challenges related to temperature control and the fragile nature of bottles – to say nothing of the last-mile task of verifying that the consumer is old enough to take delivery of the product, Dunn wrote. Those factors would seem to give job security to the brick-and-mortar middlemen involved in alcohol sales, making it difficult for breweries and other companies to offer direct-to-consumer services.

Heineken, for its part, hopes to increase its eCommerce appeal by seeking help from experienced digital operators. According to Digiday, “Heineken is also in beginning talks with other eCommerce sites like Amazon to see what other options might look like in the future, so the company can scale its offerings. Heineken is mostly using Facebook ads to promote the sites in key markets, but there are some event promotions planned as well.”