UK online wine sales buck offline decline

While the volume of wine sold in bricks and mortar retailers suffers a sustained decline, UK online wine sales are enjoying long-term increases.

“Overall, within wine, we have seen a long-term trend towards volume decline,” commented Tim Wilson, managing director of the Wilson Drinks Report during a briefing on Monday at the London Wine Fair.

Recording an overall volume drop of 3.2% for still wine in the UK off-trade (MAT 26.04.14) – although value sales are up 1.7% – he said that volumes for red wine had fallen the most, down 5.5%, while white and rosé volumes had dropped by 1.7% and 1.4% respectively.

The exception to this offline trend is sparkling wine, which is up 1.9% in volume and 7.7% in value, according to Wilson, although he added that it was just sparkling wine from Italy and the USA that was increasing.

“The growth in sparkling wine is just focused on two countries”, he said.

Turning his attention to the online retailing, Wilson highlighted the marked difference in sales development.

“The trend is the other way, wine is in long-term volume growth,” he said.

Using figures collated by the Wilson Drinks Report for the third quarter of 2013, Wilson said that total wine sales online were up 8%, with red wine sales increasing by 6%, white by 11%, rosé by 18%, and sparkling by 13%.

He also pointed out that the average transaction for wine online was £125, and the price of a single standard bottle of wine sold through the online medium was worth £6.43, which he said was around £1.30 more than the average bottle sold in the off-trade.

According to Wilson, this online average price was bolstered by the sale of high value and low volume wines sales through specialist online retailers.

Notably, unlike wine sales through bricks and mortar retailers where white wine outsells red, online, red wine is bigger than white.

Wilson suggested the greater share of red wine in online retail is due to the dominance of French wines on websites.

“The emphasis is on French reds, not Australia, not Italy; it is France online, and the country has a huge number of skus to present,” he commented.

Overall, he said that still wine was around 80% of all alcoholic drinks sales online, with sparkling representing a further 17% and the remaining 3% accounted for by spirits.

“Wine is a product that is so well suited to selling online,” summed up Wilson.

Neverthelss, he stressed that margins online are “pretty low”, which explains the “mixed fortunes” for web-based retailers in the last 18 months.

For example, Wilson reminded attendees that Morrisons, which launched morrisonscellar.com back in November 2012, has this year closed the standalone wine site and incorporated wine sales it into its main site.

Ahead of that, Slurp.com had gone into receivership, before being bought out by SH Jones in June last year.

On the other hand, this aspect of the UK wine retailing scene has seen recent additions, including a new online offering from Asda, with the launch of The Wine Shop in October last year, as well as Waitrose Cellar, which went live last month to replace the supermarket’s former site, called Waitrose Wine Direct.

However, Tesco is dominant in wine online, and holds an even greater share of wine sales online than it does offline with almost 50% of the market for web-based wine sales.

Wilson also noted that as much as one third of sales online for all sectors are now made via a mobile device, while stressing that wine is “ideally suited to m-commerce”.

As for the size of the online wine market, Wilson said he had yet to formulate a precise figure, but estimated that the sector was worth between £800 million to £1 billion in annual sales, around 10% of the total UK off-trade wine market – a figure reported by db late last year.

Looking ahead, he said that Amazon was “lurking in the long grass”.

“In theory they have 13,000 wines on their website and they have said a number of times that they want to focus on wine,” said Wilson.