Fueled by the pandemic, grocery stores have made significant investments in selling digitally, with wine being an essential growth category for online sales.  With estimates of ~$6B in wine sold through online grocery by 2025, Jessica Kogan, Chief Growth & Experience Officer of Vintage Wine Estates, gets into the trends, key success factors, and the opportunity that online grocery represents.  

Detailed Show Note: 

Vintage Wine Estates (Ticker: VWE)

• 11th largest wine holding company in the US
• 12 wineries, a couple of digitally native businesses, 12-15 lifestyle brands
• Heavy focus on DTC

Online grocery trends

• By 2025 - 22% of Americans will buy groceries online (i.e., anything not in-store and digitally enabled)
• Alcohol is the fastest growing segment for online grocery - by 2025 - $5.97B in wine online from <$1B in 2018 vs. $7.97B DTC from wineries in 2025
• Target saw 4x amount of alcohol when bought online vs. in-store purchases in 2021, most of which was wine
• Digital grocery brings up basket size and provides more flexibility for consumers (e.g., curbside pickup; Target provides lots of flexibility)
• ~50% digital is pickup, ~50% delivery today

Post-pandemic trends

• Wine DTC is seeing slower growth, but online grocery is continuing to grow
• Covid led to increased investment by grocery in online
• Grocery has goals of going beyond grocery into becoming a “lifestyle” store, e.g., leaning into wellness

Why consumers enjoy buying wine online

• Feel overwhelmed by the selection of in-store
• Like learning about the background and story of brands
• Often use phones in-store to learn more about brands
• Gen Z - born digitally, love stories & authenticity, committed to wellness - makes wine compete w/ RTD cocktails and hard seltzers
• Consumers are more open to taking risks on new brands online

Selling into grocery stores

• Believes in-store demo events are powerful
• Making the story accessible and easy (e.g., QR codes on labels) key

Selling in online grocery

• Uses Salsify (a “PIM” - product information manager) to publish info to grocery stores, allows producers to control data shown to consumers
• 94-95% of searches for wine are by varietal (or basic descriptors like red/white), not by brand
• Digital algorithms - can’t buy ads due to Tied House Laws, but can influence algorithms w/ customer reviews or customers saving products
• Using metadata to show up as recommended product vs. search displays helpful
• Being in the “above the fold” carousel of products where consumers don’t need to scroll down is vital for sales, as big as being on the end-cap in-store

Tips for brands for online grocery

• Have a website w/ e-commerce - helps understand the whole process
• Go w/ distributors to stores w/ digital info for products

Future trends for online grocery

• Virtual tastings will continue
• More information on wellness and wine
• Women to play an essential role in connecting w/ customers since most grocery buyers are women

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