Constellation Brand Sees D2C eCommerce Sales Rise 40%+

Consumers are increasingly turning to digital channels to purchase alcohol, as Constellation Brands observes, but eCommerce in the industry has a long way to go.

The beer, wine and spirits giant, parent company of a range of popular brands including Modelo, Corona, Svedka and more, noted on a call with analysts Friday (June 30) discussing its first quarter FY2024 financial results that consumers are beginning to adopt its direct-to-consumer (D2C) digital channels.

“[Our] omnichannel focus has provided additional pillars of consumer-led growth, such as international and direct to consumer, the latter of which grew the channel’s net sales 13% in Q1 — and in fact, the eCommerce and customer loyalty portions of DTC business were up over 40% in Q1,” Bill Newlands, Constellation’s president and chief executive officer, said.

Certainly, consumers’ overall eCommerce adoption for food and beverages is on the rise. For instance, findings from PYMNTS’ study  “Tracking the Digital Payments Takeover: Catching the Coming eCommerce Wave,” created in collaboration with Amazon Web Services (AWS), which drew from an April survey of nearly 2,700 U.S. consumers, revealed that 32% of shoppers said they are very or extremely likely to increase their online grocery purchases in the next year.

That said, eCommerce in the beer, wine and spirits industry is behind other sectors, given the practical, technological challenges associated with purchasing these items online. Rather than simply having to process consumers’ payments, eCommerce platforms selling alcoholic beverages must verify consumers’ ages and comply with a complex set of regulations that vary from region to region.

Given how frequently alcoholic beverages are consumed, many retailers and aggregators are looking to get in while the getting is good. Last month, Walmart added alcoholic beverage delivery in five new states, bringing the service to close to 2,500 Walmart locations in 23 states.

Similarly, aggregators have been expanding their beer, wine and spirits delivery capabilities. Last fall, DoorDash made it easier for consumers to add alcoholic beverages to their food orders, and Grubhub announced a partnership with Gopuff to sell from the latter’s dark stores through the aggregator’s marketplace, adding Gopuff’s considerable alcohol inventory to Grubhub’s offerings.

Given the nascence of the space, beer, wine and spirits brands’ D2C initiatives have less to do with driving revenue right now and more to do with gaining a deeper understanding of consumers’ habits, as multinational alcoholic beverage giant Diageo notes.

“We’ve made [investments] not only in the physical D2C experiences … but also in the digital D2C experiences like the bar.com or malt.com, and we see that there is a greater value for us to play with an omnichannel concept,” Cristina Diezhandino, Diageo’s chief marketing officer, noted in a presentation earlier this month. “It doesn’t necessarily mean commerce, as it may not result in a large transaction value in the short term. However, it gives us data.”

The space may have a way to go, but it has also come quite far in the last few years. A PYMNTS survey of nearly 2,000 U.S. consumers in 2021 revealed that nearly half of all consumers began purchasing alcohol online more often during the pandemic, be it from on-demand channels or for delivery at a later date.