Shop Talk: Financial Pressures Have Consumers Cautious About Alcohol eCommerce

As consumers seek to balance convenience and cost, alcoholic beverage brands are seeing current economic pressures hamper enthusiasm for beer, wine and spirits delivery.

In an interview with PYMNTS for this week’s Shop Talk, Peyton Mason, CFO at craft distillery Laws Whiskey House, which was founded in 2011 and began selling in 2014, discussed how consumers’ alcoholic beverage eCommerce behaviors have shifted in the last few years.

“In 2022, folks were still very much prioritizing convenience over cost or anything else. As we’ve come out of that into ‘23 and into this year, you’re starting to see consumers look at what it costs to transact online versus what it would cost them to go down to their local liquor store,” he said. “When we look at average order size and things of those natures, it strikes me that consumers are becoming a little bit more conscientious of some of the extra costs that come with buying online for delivery, especially alcohol.”

He noted that, given Laws’ small scale, its eCommerce business is still on the upswing. However, overall, he observed that, given the complexities of shipping alcoholic beverages versus shipping, say, “a T-shirt off of Amazon,” the cost can be a disincentive.

Certainly, consumers increased their alcoholic beverage eCommerce adoption in the early 2020s. A PYMNTS Intelligence 2021 survey revealed that close to half of consumers who purchased alcohol online for same-day delivery were doing so more often than before March 2020, and the same held for later-date delivery. Plus, the study revealed that the vast majority of consumers who had increased their adoption reported that they intended to maintain some or all of their buying behaviors even as COVID restrictions let up.

Growing the Footprint

Online commerce has enabled Laws Whiskey House to bridge gaps in its physical distribution network, providing a way to penetrate markets where the brand is not in stores.

“There are a variety of reasons to not be in all 50 states, but eCommerce has served as a way for us to reach states where we don’t have a physical presence, or at least not a strong one, where a consumer may not be able to go to the liquor store on their corner and find a bottle from us,” Mason said.

Building an audience without that strong physical presence poses unique challenges. Laws Whiskey House leverages social media, among other methods, to create brand awareness, as traditional advertising methods like billboards and print ads are not feasible for a company of their size. On social media, the key is shortening the path to purchase.

“On social media, we try to find very consumer-friendly ways to direct them to where they can purchase a bottle from the post or advertisement,” Mason said. “Making that as easy as possible has always been a big focus, as opposed to just putting up an advertisement on social and then hoping that they do the extra legwork to Google the company’s website and go through what would be a more traditional channel.”

Additionally, eCommerce allows the distillery to offer limited releases and special products directly to consumers without the logistical nightmare of managing numerous distributors and accounts across different states. Mason highlights the ease of working with a single eCommerce retailer for special releases, as opposed to coordinating with multiple distributors and hundreds of accounts. This approach not only simplifies the distribution process but also ensures that exclusive products reach enthusiasts efficiently.

Looking ahead, Mason hopes changes to alcoholic beverage regulations in various areas will make it easier for small brands to take advantage of the opportunity eCommerce provides.

“Laws Whiskey House is probably never going to ship a bottle from our distillery to a consumer, but I think allowing more avenues for us to partner with retailers and have bottles shipped across the country or across state lines would allow people easier access to various products,” Mason said. “That’s something that we are looking forward to.”