AMAZON TO PUT ONLINE BOOZE DELIVERIES UNDER PRESSURE
Source: the drinks business
by Arabella Mileham
18th September, 2017
Online booze sales in the US may come under increasing pressure from global tech giant Amazon, following its completion of the Whole Foods acquisition last month.
According to CNBC, online booze sales had been “Amazon proof” due to the complexity of the regulations surrounding online alcohol sales and delivery, but this was set to change following the company’s acquisition of around 450 Whole Food stores across the US, more than half of which sell wine and beer.
The surprise $13.7 billion (£10.7 billion) deal in which Amazon announced its intention to buy the organic food and drink specialist was first announced in June, with analysts on both side of the pond calling it a ‘wake-up call” for retailers across the US and UK. It is widely anticipated that Amazon will boost its click and collect service so that customer can pick up beer and wine sales at Whole Foods’ stores, and the online giant has also quietly expanded the cities covered by Amazon Prime for beer and wine delivery. In March this numbered three – Seattle, Washington and Columbus and Cincinnati, Ohio – but this has been expanded to include Chicago, Los Angeles, Minneapolis, New York City, Phoenix, Portland, Richmond, San Diego, and the San Francisco Bay Area. According to US website Benzinga.com another 20 cities are set to follow, as part of the company’s bid to corner the US online booze market, and the online giant has also introduced alcohol sales via its ‘Alexa’ assistant.
Speaking to db in July about the US market, Stephen Rannekleiv, global beverages strategist at RaboResearch Food & Agribusiness, said the additional insight from Whole Foods’s affluent customer base would give Amazon some significant advantages in developing the category, in addition to the potential boost from its physical infrastructure in key markets.
“Both Amazon and Whole Foods place a great deal of importance on the wine category and do it well,” he said.
CNBC said the effect was yet to be felt by online booze operators such as wine specialist Blue Apron, alcohol courier service Postmates or Thirstie.com, but start-ups were anticipating that few brands would not turn down the chance for exposure to the market on that scale.
New strategy announced
Amazon has also revealed plans to integrate Amazon Prime into the Whole Foods point of sale in order to offer its Prime customers special deals in store. The aim is to make Amazon Prime the retailer’s loyalty reward scheme, with Whole Foods range becoming available across Amazon’s online channels, Amazon.com, AmazonFresh, Prime Pantry and Prime Now.
As Molson Coors wrote in a recent blog, “Beer is very different from other consumer categories that have been disrupted by Amazon. But there’s little doubt that the industry will feel the impact of the largest online retailer expanding into grocery.” http://www.millercoorsblog.com/news/amazon-buying-whole-foods-will-affect-beer/
Following the completion on the deal on Monday 28 August 28, Amazon dropped the prices at Whole Foods in the US, promising that the two companies would work together to “make high-quality, natural and organic food affordable for everyone.”