Consumers may have started heading back to bars and restaurants in the second half of 2021 as COVID-19-related restrictions subsided, but they haven’t abandoned the new method of buying alcohol they learned during the pandemic: home delivery through third-party services.
The following overview of trends in the home delivery of alcoholic beverages was originally presented as part of a Q&A session between Courtney Crossley, director of eCommerce at The Mars Agency, and Kasey Jamison, Director of Sales for Large Format at Instacart, held during the Path to Purchase Institute’s P2P Live event in November 2021.
Crossley: The grocery home delivery space is absolutely booming. There were 20 million new CPG buyers in 2020. More and more shoppers are trying the online fulfillment model, and they aren’t coming empty handed: the monthly spend for the online CPG buyer in 2020 was $501 — up 147% from $348 in 2019.
So there’s a lot of untapped revenue here. As we see more and more shoppers moving grocery trips from the car to the couch, this channel could grow to nearly $50 billion if we gain as many online grocery shoppers as we currently have with non-food buyers.
There’s a lot of untapped revenue here. As we see more and more shoppers moving grocery trips from the car to the couch, this channel could grow to nearly $50 billion.
No, it’s not a trend that is going away: When interviewed, nearly 90% of current online shoppers indicated, they’ll continue to shop online post-pandemic. As Mars works with our brands, our proprietary platform Marilyn finds that there are fundamental shifts like in the traditional shopper journey that are shaking up what we view as “the norm.”
And it’s not just food that are bringing these shoppers to digital. We’re seeing nearly 61% of consumers shopping for alcohol while they’re shopping other categories. And that’s leading to an expected 6X growth in online alcohol sales by 2024.
The grocery channel catapulted to the forefront of the adult beverage space in 2020 and is now the leading channel ecommerce alcohol sales growth. And shoppers are buying more and more of it for themselves: There has been a 35% increase in shoppers buying alcohol for at-home consumption.
*Sources: *ISWR 2020 Drinks market analysis; **Kantar Shopperscape Alcohol Beverage and Spirits Deep Dive; ***The 2020 Alcohol E-Commerce Playbook by Bourcard Nesin, Rabobank. Published December 2019; t Crunchbase Rise in Alcohol Ecomm Market (4/5/21)
With all this growth happening in ecommerce, traditional retailers are really struggling to keep up, which is opening the door for emerging partners to pick up the slack to ensure that shoppers are getting what they need, when they need it, and how they want it.
One of the largest players in this emerging space is Instacart, which has stepped up to quickly grown to become a right-hand partner for many grocers and a trusted platform for brands looking to meet their shoppers’ changing needs.
Kasey Jamison: Instacart’s mission is to create a world where everyone has access to the food they love. We believe in that mission wholeheartedly and we’re executing on it as the leading online grocery platform in North America today.
Some quick stats:
- We reach 85% of US households.
- We partner with over 700 national, regional and local retailers.
- We’re in 65,000 stores across 5,500 cities.
And we have over 500,000 personalized shoppers, which is important to note because these shoppers are who you’ll communicate with as you place the order, as they’re finding replacement products, as they’re making sure they get you the freshest items.
In 2020, Instacart grew five years almost overnight. Alcohol ecommerce orders grew 80%, and they’re certainly not slowing down. As we said earlier, we expect bev-alc ecommerce sales to grow 6X in the next few years, according to ISWR. That’s a huge number, and we’re certainly on track to hit it.
Across all Instacart orders with alcohol, 83% are built on foundational grocery products, which means that consumers are coming to buy their weekly groceries and adding alcohol to the basket. So toilet paper and alcohol are going hand in hand in these weekly shops, if you will.
Another thing that might not be too much of a surprise is that grocery orders containing alcohol are 25% larger than orders without alcohol. That signals how important this category is for all brands for driving up basket sizes.
In terms of barriers to further adoption, I think the biggest obstacle we have is awareness. We need to ensure that consumers are aware they can purchase bev-alc products on ecommerce platforms like Instacart. There is a gap to close here in terms of online versus in-store.
And the first way to do that is through the consumer experience. How can we better drive awareness on Instacart so that the category is always top of mind?
We recently built an alcohol hub, so when you come to Instacart one of the first things you’ll see is an alcohol button that will take you to a destination for all alcohol products, and you can purchase them through your favorite retailer. And since alcohol and convenience go hand in hand, we’re also prominently featuring alcohol on the convenience hub that we also recently launched.
Another potential way to drive awareness is through reminders. Let’s say Courtney is on Instacart and she buys some white fish. Wouldn’t it be cool if we created some sort of popup reminder that says, “Hey, you just got this fish, why don’t you pair that with white wine? We don’t have that today, but creating more experiences like that will help.
In general you’re going to see a massive shift in our experience where we take it from transactional, where you’re coming in and you’re shopping your list and buying your groceries, to really creating an inspirational experience where you can explore, discover and be inspired. Alcohol pairings are a great example of that.
And as we continue to focus on this inspirational personalization, I think we need to give brands more opportunities to inspire consumers through their own branded content. Every brand, especially within the bev-alc category, has amazing stories to tell and we need to give them the opportunity to do that on Instacart.
In general you’re going to see a massive shift in our experience where we take it from transactional to really creating an inspirational experience where you can explore, discover and be inspired.
So we’re launching brand pages, which will be an opportunity for a brand to tell its story, and maybe we can innovate ways that we can recreate in-store experiences like tastings within these brand pages. I think the potential is limitless. We’re starting to pilot the program in Q4 and hopefully will launch in Q1 2022.
Crossley: That’s so important because there’s been such a quick shift toward the digital-forward marketplace that brands sometimes forget the online shopper wants the same experience that in-store shoppers are getting. They want to have someone’s brain to pick as they’re trying to figure out what goes best with dinner. So I think that it’s awesome to really make sure that the shopper experience remains at the forefront.
Jamison: We’re also thinking the need to solve for all use cases. We are excellent at solving for that weekly grocery shop. But there are so many other use cases that we need to fulfill in which alcohol can play a role, such as:
Special occasions: You’re hosting a party and you want to order white wine and you need it in a hurry. How can we be there for you in that special occasion?
Gifting: Why not a bottle of wine or a classic spirit? This is a huge use case that we need to continue innovating on.
Prepared meals: This goes back to pairing. If we’ve a prepared meal for that busy mom — it’s Taco Tuesday, maybe. How can we make sure she’s getting Corona with that?
So it’s not just innovation and awareness, but also solving for all the use cases where a consumer could be looking for alcohol.
Crossley: That’s really a natural progression. Many of the clients we work with are leaning toward inspiration. We are 18-19 months into this pandemic. People have been cooking from home or at least staying home more often, and they’re trying to find that moment of inspiration. When you’re trying to recreate the restaurant experience at home, alcohol can be a large part of that. So providing shoppers what they need to make the right decisions is going to be key.
With the holidays coming up, what trends are you seeing across the globe in the adult beverage category?
Jamison: Holidays are about coming together, cooking together, the traditional family meal, so this is really our prime time. We see the highest number of net new customers trying Instacart, and we see people doing more discovery, more browsing, searching for more unique items — probably to make that traditional family meal.
Some trends that we’re seeing specifically within the bev-alc category:
- Customers are adding alcohol to their cart more frequently. We’re seeing a higher number of baskets with alcohol.
- From an affinity standpoint, they’re purchasing it for the holidays. So, for example, we see a strong affinity for vodka with things like cranberries, or cordials or materials for making holiday cocktails.
- Premium products. Folks trade up during this time period, especially in wine and spirits. They’re going for those more expensive bottles of wine or that nicer tequila.
We see the highest number of net new customers trying Instacart, and we see people doing more discovery, more browsing, searching for more unique items.
Crossley: What a nice way for a brand to build a relationship with the shopper, to be involved in that holiday purchase and help make holiday memories. That’s a nice way into a shopper’s basket.
Jamison: We’re also seeing cider growing seasonally, and huge growth in prepared cocktails, which is up 100% year over year in sales. And then slower but still growing is the hard seltzer category, where we’re still seeing double-digit growth. Overall, holidays are prime time for Instacart and prime time for adult beverages.
Given that this space is fast-moving and still evolving, how can brands jump in? What is your biggest piece of advice?
Jamison: Sorry if this sounds super-basic, but my biggest piece of advice is, do not wait. This online “trend” is going to stick around. People are not going back. In 2019, we saw one in 20 grocery transactions happen online. We expect that to be more like one in four by 2024. People are not going to get off this digital train.
In 2019, we saw one in 20 grocery transactions happen online. We expect that to be more like one in four by 2024.
Crossley: I recently saw that 90% of people who are shopping online plan to stay. It’s a lifestyle now. Having your groceries delivered to your door, not having to stop and pick something up on the way when you’re running late, this is the way of the future.
Jamison: First movers win. If you capitalize on this moment in time, it will set you up for longer-term success.
We recently released a case study finding brands that invest [in digital advertising], but then go dark and don’t invest consistently, typically have to reinvest 2X the original spend just to regain the share lost during the dark period.
Crossley: That’s something we communicate with our brands. The cost to acquire a customer is so much more than it is to retain one. When you are on and then off, there and then dark, customers can’t find you so they swap — and then you have to find them all over again. We’re seeing that across all retail media: Once you’re on, make an “always on” strategy, make it evergreen.
As brands are jumping in, how can they win? What are some of the best media tools in the space that they can leverage?
Jamison: You have to own the digital shelf and be prepared to show up wherever that consumer is. On Instacart, the shopping experience is not linear. We’re not a spearfishing platform where you come, you search for an item, and then you check out. Customers come to search, to discover, to be inspired — or they come to just rebuy their last grocery order.
- 40% to 50% of our consumers come to search for specific items that they need and add them to their cart.
- 30% to 35% come to browse. They’re in full discovery mode, shopping our departments, looking at our homepage and our storefronts.
- 20% to maybe 30% are repeat purchasers who come to buy the same list they bought previously.
Thirty to 35 percent [of shoppers] come to browse. They’re in full discovery mode, shopping our departments, looking at our homepage and our storefronts.
Crossley: So the types of online shoppers really aren’t different than the in-store shoppers. You have a person who’s “mall walking” and shopping every aisle. You have people who know exactly what they want and where it is on the shelf, so they get in and out. And then you have people who just know what they need every month.
Jamison: That’s exactly it. And to win, you have to show up at every shopping use case and every shopping experience. On Instacart, we have Feature Product, which is our CPC [cost per click] ad product that ensures you show up at the top of the digital shelf as those customers are searching, browsing or repeat purchasing. And this is so important because 88% of add to carts are from the top three rows of search. And Feature Product will guarantee you’re in those top three rows.
And if you really want to win, especially in a key time period like holiday, you can amplify with display ads. Once you get your Feature Product strategy set, then layer on display placements so you’re bringing new people into the category through your brand.
This is so important because 88% of add to carts are from the top three rows of search.
And the last piece that is coming soon will be the brand pages I mentioned earlier for sharing content, telling your story and engaging with consumers.
Crossley: So what I’m hearing is: inspire the browser; be practical, be an eye-line in those top three rows for the people who want to get in and out; and then for the people on autopilot buying, just reengage your loyal buyers and make sure you have touch points with them across the way.
Jamison: And I’ll add something you noted earlier, which is that “always on” strategy. When you’re pulsing or you’re not live the entire day, that’s an opportunity for another brand to come in and steal share.
Crossley: With some of the supply chain issues we’re seeing across the industry, people are swapping brands more and more frequently nowadays because there’s less established space and less consistency. So we’re seeing a pretty big uptick in what we call “switchers.” It’s therefore more important than ever to just make sure you’re there.
So then, what does good look like for a brand? Can you outline some best-in-class examples?
Jamison: I’ll share an example of a big holiday tentpole over the summer months. We had a supplier that conducted a big omnichannel execution leading into a holiday event. And there were a few things that I thought were really well thought out and benefited the brand.
It was a portfolio play. They were driving awareness, consideration and purchase of their core bev-alc products but also their seltzer brands, leveraging that whole brand halo to promote all their brands within one initiative.
And it also was a multi-ad product strategy. They started with Featured Products, using search as the foundation and making sure they were set up to be always on. We have a tool during peak holidays where you can switch to Max Impressions that will let you win every auction that you’re set up to win (as long as your bids win). So search was the foundation, and they were well funded there.
But then they layered on those consideration display placements. They surfaced in adjacent aisles to the alcohol category, and they also leveraged specific targeted audience segments. We have our own first-party audience targeting that we can apply to display placement, and they leveraged that to make sure they were in the consideration piece of the funnel.
And then the last thing they did was go for higher awareness. We have something called a Storefront Banner that appears on every retailer storefront on Instacart. It’s like pulling into the Publix parking lot and having your brand right next to the Publix sign. Not only did that grow their share during a key moment in time, but it drove net new brand buyers: 97% of consumers who bought the product after clicking on the banner had not purchased the brand in the last 52 weeks. And once those new customers put you into their basket the first time, a lot of them go straight to the buy-it-again option after.
The other example I’ll share is a different advertiser, a beer manufacturer that did something similar leading up to the holiday period: search foundation, layered-on display, higher awareness storefront. But the one thing they did differently that was to capitalize not only on the lead-up period but also the post-holiday period where most brands pull back. They ended up doubling down and that resulted in them maintaining their highest share for the month after the campaign.
Crossley: One of the retailers that I work with very closely released a stat over the summer: A new buyer to your brand is 82% more likely to keep buying for six months if you are able to reengage with them within a month or two (depending on the purchase cycle) of the first purchase. So if you can win them again in that second purchase cycle, you’ve got them on the hook for a while.
And that really is a point of differentiation. So many brands want to be competitive when people are building their lists, and then when they’re shopping. But then they get the conversion and they’re like, “We won, we’re done, and we’re out.” But that is not the case at all.
Final question: If you had a crystal ball, what’s your best guess on what the next big thing will be?
Jamison: I think it’s already happening: personalization. Up until the last eight months or so, Instacart’s app experience hadn’t undergone any major changes. But we’re at a really interesting moment in time where the shopping experience is really going to evolve from that transactional destination into an inspirational destination, where consumers can buy the things they need but also be inspired, discover new products, maybe even share what they’re finding with friends. We need to innovate in this space. We need to double down on the personalization, and we need to create an emotional connection through that personalization.
Crossley: There’s a different kind of creative that’s necessary to engage someone who’s loyal to the brand and constantly buying versus someone that’s buying just for the holiday. So if you’re targeting with an always on ad for summertime, that can be a bit more targeted to the loyal brand buyer with creative that feels a bit more familiar. But when you have that key tentpole event when you know everybody’s just going to be coming to buy, your creative can be a bit broader.
I see a lot of the frontrunners in retail media across the board starting to really customize the creative and the flighting and timing to make sure they’re meeting each customer’s needs. That’s where personalization is so important.
Jamison: Another thing we’ll see is speed. “Two days” is too long now, and even Amazon is thinking about quick commerce. So we’ve got to accelerate the delivery time because consumers want what they want, and they want it almost immediately.
Right now, we’re focused on priority 30-minute delivery, but I think you’re going to see 15-minute delivery and maybe even shorter windows. I think there’s going to be a huge movement across all ecommerce where all players are going to move toward quick commerce and make it even faster.
[Note: In early December, news broke that Instacart is hoping to pilot 15-minute delivery service in 1Q 2022.]
