Tracking E-Commerce Performance of Wine in Australia

Within fast-moving consumer goods (fmcg), the shift to e-commerce accelerated during the pandemic, and now the majority of fmcg categories have elevated levels of e-commerce sales. However, the rate and penetration of e-commerce sales differs by category and country, and prioritising where opportunities are most significant can help companies win online. Utilising Euromonitor’s new e-commerce system, we will use Australia as an example to show how wine is performing online, and who is winning from a retailing and brand perspective.

Wine sales are heavily over-indexed in e-commerce compared with other alcoholic drinks categories

In the above chart we can cross compare the share of bricks-and-mortar sales versus e-commerce sales by key alcoholic drinks categories in Australia to understand how each performed in 2022. Bulky and often impulse purchased categories such as beer and RTDs are more heavily indexed at bricks-and-mortar channels, given consumers’ preferences in terms of temperature, as well as the shipping and handling of products. However, spirits and wine have a much higher share of sales through e-commerce

Wine sales in particular account for over 37% of alcoholic drinks sales online, while making up just 23% of sales through more traditional bricks-and-mortar retail channels

^{Source: Euromonitor International}

Further segmenting the wine category, we can see the difference by subcategory and identify still white wine and still red wine have much stronger proportional sales in e-commerce channels compared with sparkling wine. Consumers still prefer to purchase sparkling wine (which includes champagne) in-store because of the tactile experience of interacting with the product and the gratification of purchasing a product with a high price point in-person. However, Australian shoppers tend to prefer purchasing still red and white wine online, given the superior selection and the information online retailers provide.

White wine shows strong recovery online in the first quarter of 2023

While overall yearly sales can pinpoint categories’ performances in e-commerce versus bricks-and-mortar, tracking at the e-commerce quarterly level can reveal seasonal implications and unveil hidden opportunities. Within the two strongest, over-indexed e-commerce wine categories, we can see how differently still red and white wine perform online across five quarters.

Red wine performed strongest in the Australian third quarter winter months of July, August and September, with 40% higher sales compared with online sales of still white wine

^{Source: Euromonitor International}

White wine exceeded red wine by 25% in the first quarter of 2023, when temperatures are highest.

Australia’s wine market in particular is important to track at a quarterly level, as the industry looks to recover from crippling tariffs of up to 200% from China from November 2020, which nearly eliminated all sales to the country’s largest wine importer. The country has worked hard to diversify its export partners and stabilise prices, due to the significant supply issues the tariffs caused in the domestic market. Nonetheless, online growth of still white wine in the first quarter of positive 7% provides encouraging signs for the industry moving forward, and a hope that the worst of the pandemic is over.

Smaller players are winning in the e-commerce space

In terms of where still grape wine is seeing the best performance online, three of the four largest e-commerce retailers saw growth in the category for Q1 in 2023 compared with Q1 of 2022. While Endeavor Group’s Dan Murphy’s saw sales in the category decline online in the first quarter, another of the group’s retailers, BWS, saw strong online growth of still grape wines.

Using Euromonitor’s e-commerce stock keeping unit (SKU) tracking system Via, the online retailers above have varying strategies in their online SKU portfolio metrics. While Dan Murphy’s has the largest inventory online, with over 4,000 SKUs being tracked in still grape wine, the retailer has a much lower promotional rate compared with BWS and Liquorland. From a pricing standpoint, Dan Murphy’s has a high average SKU price due to a large amount of high-priced still grape wines, but even the median price of its portfolio is still higher than the other players. BWS performed particularly well in Q1, and the company has increased the variety of its delivery services covering “last mile” destinations. Naked Wines is the only pure online player listed above, and focuses predominantly on still grape wine rather than other alcoholic drinks (AD in the table) categories. The company strongly supports independent wine manufacturers, and while it does not offer promotions on each of its SKU pages, the company does show the “market price” to give consumers an indication of the savings offered by the retailer.

Finally, two still grape wine brands that showed strong double-digit e-commerce growth in Q1 2023 compared with Q1 2022 were Winesmiths and Grant Burge. Tracking online sales can pinpoint key winners in the marketplace and uncover how various strategies are performing with consumers. In this case, Winesmiths places strong emphasis on its vegan and sustainable properties alongside colourful box packaging, whereas Grant Burge is a brand that has succeeded online by promoting its image as an independent, multi-generational, family-owned winery with a wide variety of South Australian wines. Grant Burge did particularly well during the holiday gift-giving season within the fourth quarter of 2022. Both brands have well-crafted websites with background information on the companies’ values and a variety of information on their portfolios. Alongside strong user feedback, with high online ratings across their SKU portfolios, and keeping online prices consistent throughout the review period, both companies look well-positioned to compete online as Australia’s wine industry recovers and looks to attract consumers online with a wide variety of options.

Analysing the online performance of still grape wine and other categories provides invaluable insights into the dynamic world of e-commerce, where more and more consumers continue to migrate. Please see our E-Commerce page for more information on methodology and coverage, or see our report Wine in Australia for more insight, and download our on-demand webinar, Mastering E-Commerce Growth: How to Win Online Amid Uncertainty.

^{Note: Sample based on SKU prices found in Euromonitor International’s e-commerce tracking tool Via with data extracted in July 2023. Please note that due to ongoing improvements to the AI-led product matching of SKUs to categories, supplier, and brands, data and SKU counts can be revised based on system updates.}