Wine Distribution How Online Is Changing The Off-Trade World

WINE DISTRIBUTION: HOW ONLINE IS CHANGING THE
OFF-TRADE WORLD
August 2011
INTRODUCTION
CURRENT MARKET TRENDS IN WINE
DISTRIBUTION
CROSS CHANNEL SHIFTS: NEW RETAIL
STRATEGIES
OPPORTUNITIES ACROSS THE PRICE
SPECTRUM
ONWARDS AND OUTWARDS: FUTURE
PROSPECTS FOR ONLINE WINE SALES
Euromonitor International PASSPORT 3 ALCOHOLIC DRINKS: WINE DISTRIBUTION
Disclaimer
Much of the information in this
briefing is of a statistical nature and,
while every attempt has been made
to ensure accuracy and reliability,
Euromonitor International cannot be
held responsible for omissions or
errors.
Figures in tables and analyses are
calculated from unrounded data and
may not sum. Analyses found in the
briefings may not totally reflect the
companies opinions, reader
discretion is advised.

In this global briefing
Euromonitor International analyses
the growth in wine sales via the
internet. Even though this channel
accounts for only 2% of global
wine sales, smaller wine producers
are using the internet and social
media in particular to push their
brands and connect with
consumers. Although todays
internet retailing of wine is limited
to only a few countries, emerging
markets are gradually becoming
more tech-savvy and are creating
new opportunities for online wine
sales.

Scope
INTRODUCTION
All values expressed in this report are in US dollar terms, using a fixed exchange
rate (2010).
2010 figures are based on part-year estimates.
All forecast data are expressed in constant terms: inflationary effects are
discounted. Conversely, all historical data are expressed in current terms:
inflationary effects are taken into account.

Alcoholic Drinks - 239 billion litres
Wine
27 billion
litres
Sparkling
wine
Fortified wine
Non-grape
wine
Still light
grape wine
Beer
187 billion
litres
Spirits
20 billion
litres
RTDs/high-
strength premixes
4 billion litres
Cider/perry
2 billion
litres
INTRODUCTION
Key findings
Internet retailing
grows by 90% over
2005-2010
Internet retailing was the most dynamic channel in wine distribution between 2005
and 2010, benefiting from consumers quest for value and convenience.
Internet retailing still
very small
Although dynamic, internet retailing accounts for only 2% of global wine sales.
Supermarkets/hypermarkets dominate with almost half of off-trade wine sales.
Wine particularly
strong in alcoholic
drinks online sales
Compared to the overall alcoholic drinks industry, the wine category is
disproportionately strong in global online alcohol sales. Only in cider/perry does
internet retailing have a larger share of off-trade sales.
Online wine retailing
limited to a few key
markets
The geographic reach of online wine retailing is currently very narrow. Three markets
dominate sales within the channel: the UK, Germany and France, with Western
Europe thus leading the way in terms of regions.
Grocery retailers
lead the way
Over the past few years, major grocery retailers have gone online and wine sales
have gone with them. They have a strong focus on price, although this is gradually
changing with some moves upmarket.
Online retailing offers
opportunities for
specialist retailers
and mail order
companies
As online retailing is a cost-effective channel, it offers opportunities for specialists,
mail order companies and smaller producers which are trying to compete with the
major grocery retailers. They cannot compete on price with big grocery retailers, but
have the advantage of being able to offer expert advice, as they focus solely on wine.
Substantial future
opportunities for
online wine retailing
With more people going online in the future, there are more opportunities for online
wine retailing across different price points and for different formats, from large
retailers to niche brands across developed and emerging markets. Social networking
sites offer an opportunity for word-of-mouth recommendations, either through
general networks, such as Facebook or Twitter, or more specialist wine forums.
INTRODUCTION
DISTRIBUTION
STRATEGIES
SPECTRUM
Internet retailing was the most dynamic channel between 2005 and 2010, benefiting from consumers quest
for value and convenience.
However, this growth was from a low base, with internet retailing representing only 2% of overall wine off-
trade volume sales.
By contrast, the supermarkets/hypermarkets channel accounted for 47% of off-trade volume in 2010,
highlighting the importance of store-based retailing compared to non-store.

Current market trends in online wine distribution
CURRENT MARKET TRENDS IN WINE DISTRIBUTION
-20
0
20
40
60
80
100
0
1
2
3
4
5
6
7
8
9
10
Supermarkets/
hypermarkets
Independent small
grocers
Drinks specialists Other store-based
retailers
Homeshopping Internet retailing Other non-store
retailers
%

o
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f
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a
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g
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2
0
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/
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Wine Off-trade Distribution 2010
Volume sales 2010 Growth 2005-10
90%
Growth in global off-trade wine sales by
volume generated via internet retailing
between 2005 and 2010
2%
Share of internet retailing in global off-trade
wine

The quest for value is evident when looking at the most dynamic channels within off-trade alcoholic drinks.
Supermarkets/hypermarkets, discounters and internet retailing performed well over 2005-2010 as
consumers sought out bargains.
As with wine, internet retailing within alcoholic drinks showed the most dynamic performance between
2005-2010, but from a low base.
As tech-savvy millennials are increasingly replacing baby boomers as the industrys focal target group,
internet retailing will become key for the strategic planning of major producers, as well as smaller, less well
resourced but more innovative companies.
Gathering momentum and demonstrating remarkable resilience even in the midst of the economic
downturn, the internets potential is also leading to dramatic developments in marketing, promotion and
advertising.
However, supermarkets/hypermarkets, small grocery retailers and food/drink/tobacco specialists retain
their dominance in retailing.

Supermarkets/hypermarkets lead but internet most dynamic

-20
-10
0
10
20
30
40
50
60
0
10
20
30
40
50
60
Supermarkets/
hypermarkets
Independent small
grocers
Drinks specialists Discounters Homeshopping Internet retailing

%

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2
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Alcoholic Drinks Off-trade Distribution 2010
Volume sales 2010 Growth 2005-10
0 25 50 75 100 125 150 175 200 225
Australasia
Western Europe
Eastern Europe
Latin America
Middle East and Africa
North America
Asia-Pacific
Million litres
Off-trade Wine Internet Retailing by Volume 2010
Although internet retailing has seen strong growth, its geographic reach is largely restricted to three
markets the UK, Germany and France with Western Europe thus being the dominant region.
One of the reasons why internet retailing is bigger in Western Europe is due to the aggression with which
grocery retailers have gone online over the past years.
North America is the second largest region for online wine sales, but sales are hampered by the state-by-
state legislation in the US which restricts the opportunities for internet retailing.
There are clear differences between UK and US internet retailing in terms of the type of retailers which sell
wine online, with the bulk in the UK being grocery retailers, whereas in the US specialist retailers lead.
There are so many laws and restrictions in the US that differ from state to state that a large grocery retailer
would have problems implementing a nationwide system for online retailing.
Online wine retailing currently limited to a few key markets
PASSPORT 9
Total online retail sales in the EU reached
US$104 billion in 2010 similar in size to the
US.
CASE STUDY: EU internet retailing
PASSPORT 10
Internet retailing in the 27 EU members
posted a 21% CAGR over the 2005-2010
period, slightly ahead of global growth, and is
expected to post an 11% CAGR over the next
five years, slightly lower than the global
average.
While harmonisation and the single market
have been at the heart of EU growth over the
years, the same cannot be said of internet
retailing, at least not yet.
There still exist a number of barriers which
are limiting the uniform development of online
sales throughout the EU.
A recent study by Eurostat found that only
9% of consumers ordered goods or services
from another EU country, compared to 36%
ordering from domestic markets in 2010.
Cross-border trade is growing at a much
slower pace than overall internet retail due to
a number of constraints.

EU: A fragmented internet market

20-35%
10-20%
5-10%
0-5%
0%
% of Western Europes Online Wine Sales by Market

PASSPORT 11


In addition to the 23 official languages in the EU, consumers engaging in internet shopping from
businesses based abroad need to consider different rates of VAT and other taxes which might be
applicable.
Payment options also vary widely. While credit and debit cards are widely used in the UK, German
consumers prefer to use bank transfers or the post office, and payment on delivery is a popular method
within Eastern European markets.
Delivery more specifically lack of suitable delivery options is one of the biggest obstacles to EU-wide
internet retail. At present there is no unified approach, with each retailer offering different options and
prices.
The European Commission has drafted plans to make delivery to any part within the EU mandatory.
Industry associations are worried that this and other provisions within EU Directives will increase the cost of
doing business.
On the other hand, clear rules and costs to the consumer could increase cross-border trade, particularly
within the smaller EU markets which might not be tempting enough for retailers from other EU countries to
establish a presence. Increased cross-border online sales could have the spill-over effect of increasing
competition in local markets and for local retailers.

EU: Payment and delivery challenges

PASSPORT 12


EU payment and delivery challenges

0 2 4 6 8
Denmark
Switzerland
Portugal
Austria
Belgium
Sweden
United Kingdom
Turkey
Norway
Germany
France
Netherlands
Spain
Greece
Italy
US$000
Average Spend per Card Western
Europe 2010
0.0 0.2 0.4 0.6 0.8 1.0
Norway
UK
Turkey
Greece
Switzerland
Sweden
Portugal
Spain
Netherlands
Italy
Denmark
Austria
France
Germany
Belgium
Number of cards
Personal Credit Cards per Capita in
Western Europe 2010
PASSPORT 13


Growth and development in internet sales
within the individual EU markets remains
disparate, with the northern and western
European markets achieving the highest
penetration of online sales, while the
southern and eastern European markets
have much lower penetrations.
At one end of the spectrum is the UK,
with a significant US$580 per capita
spend, while at the other is Bulgaria, with
just US$5. Northern European markets
are seeing faster adoption of the internet,
with Germany lagging slightly at the lower
end of the spectrum compared to its
northern peers.

EU internet retailing: The north/south divide

0 100 200 300 400 500 600
UK
Denmark
Finland
France
Luxembourg
Sweden
Netherlands
Germany
Belgium
Ireland
Austria
Malta
Spain
Cyprus
Greece
Portugal
Italy
Czech Rep
Slovenia
Poland
Hungary
Slovakia
Lithuania
Latvia
Estonia
Romania
Bulgaria
US$ per capita
EU Internet Retailing per Capita 2010
UK
Malta
Czech Rep
Bulgaria
Note: East/West division based on Euromonitor International geographic groupings
Northwest
Southwest
Northeast
Southeast
PASSPORT 14


While the variation between markets is partly due to different purchasing power (which remains most
evident between the eastern and western EU members) this does not account for all variations.
Household PC ownership and penetration of faster ADSL (broadband) internet is higher within the northern
and western markets. In addition, southern consumers still seem to have a greater preference for traditional
retail methods than their northern counterparts.
However, with lower prices available online, it is expected that consumers who are still reluctant to use the
internet to shop will be more tempted to move online.
The proliferation of member-only websites in Spain, for example, shows how consumers are embracing
deals online.

Technology at play

-
5
10
15
20
25
30
35
40
0
10
20
30
40
50
60
70
80
Germany UK France Italy Spain Netherlands Sweden Poland Austria Belgium
M
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P
C
s

PC Ownership in EU countries 2010/2015
2010 2010/2015 % growth
%

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h

2
0
1
0
/
2
0
1
5

Note: chart only includes EU countries with a PC ownership of 5 million or above
Wine category punches above its weight in online alcohol sales
Wine sales strongest in
Western Europe
Grocery retailing, driving
online wine sales,
strongest in Western
Europe
Result: wine category
disproportionately
strong in global online
alcohol sales
...but this suggests that
the majority of online
wine sales by volume
are mass-market brands
0
10
20
30
40
50
60
70
80
90
100
All off-trade distribution (156 billion litres) Via internet retailing (0.9 billion litres)
%

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Off-trade Distribution vs Internet Retailing by
Category 2010
Wine Spirits RTDs/high-strength premixes Cider/perry Beer
INTRODUCTION
DISTRIBUTION
STRATEGIES
SPECTRUM
Online food and drinks sales are still at a very early stage of
development, with overall sales of US$22 billion or just 7% of total internet
retailing. Within packaged food, the internet retail share is even smaller,
at less than 1% in 2010.
The UK is the most mature market for food and drinks sales online,
enjoying both the highest per capita spend and the largest overall sales,
of US$5.5 billion. The UK market has been largely driven by strong online
commitment from leading grocery retailers, which have invested in the
category over the years. With the help of the store pick-up and home
delivery model, grocery internet retailers have succeeded in reaching the
majority of UKs population.
The remaining developed markets still have relatively underdeveloped
online grocery sales, as retailers are more cautious about investing in
internet retailing capabilities, in particular for perishable food items.
Different shopping habits make online shopping for groceries less popular
in other markets, in particular in countries where grocery shopping is
based around smaller but more frequent trips to local grocery stores or
supermarkets. However, the market size reached in the UK illustrates that
there is significant growth potential in other markets, particularly in those
where consumers typically make one or two big shopping trips a month to
the supermarket. Rising petrol costs are likely to drive consumers online.
Major grocery retailers are already starting to enter the channel and to
trial different delivery methods.

Early stages of food and drink internet retailing

CROSS CHANNEL SHIFTS: NEW RETAIL STRATEGIES
0
10
20
30
40
50
60
70
80
90
100
2007 2008 2009 2010
U
S
$

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Food and Drink Internet
Retailing 2007-2010
US France
Germany UK
Over the past few years, major grocery retailers have gone
online. In the UK, Tesco is the largest retailer overall and
also the largest internet retailer, offering both grocery and
non-grocery products. It benefits from a dense and well-
developed store network that supports the development of
internet retailing through store pick-up. Tescos strong
internet offer has allowed it to increase its reach both for
grocery and for non-grocery products.
Other major grocery retailers have equally ambitious
growth plans. Three of the top four UK grocery retailers (J
Sainsbury, Tesco and Asda) have already established an
online presence; however, Sainsbury and Asdas reach is
confined mostly to grocery products.
In the US, Royal Ahold and Wal-Mart are the key players,
together with pure online player FreshDirect.
Royal Ahold is currently operational in 11 eastern states
through peapod.com. Wal-Mart has a strong share in
internet retailing due to the popularity of its in-store
collection service. In late 2010, it added a same-day
collection service on orders taken before 18.00hrs for
consumer electronics and video games in selected cities.
This test launch demonstrates its confidence in its
operational efficiency.

0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Tesco Plc J Sainsbury
Plc
Ocado Group
Plc
Wal-Mart
Stores Inc
U
S
$

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UK Internet Retailing
2007 2008 2009 2010
Grocery retailers set the trend

0
400
800
1,200
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2,000
2,400
2,800
Wal-Mart Stores Inc Royal Ahold NV
U
S
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US Internet Retailing
Grocery chains go online, and wine sales go with them

Focus on price is a strong feature of the
online grocery offer sales volumes must
be high to make it pay
Some moves upmarket, eg Tescos Wine
by the Case
47% of global wine sales go through
supermarkets and hypermarkets
...but online grocery retailing is still
unknown in many markets
The logistics of online grocery have
been challenging, even in the US and
Europe
...but more and more chains are
entering the channel, and if all
supermarkets and hypermarkets had
online shops internet retailing would be
even bigger
Mass
positioning

Global
reach

Global
potential?
Specialists are the second largest channel for wine distribution
globally, after supermarkets/hypermarkets. A mixed offering and
personalised customer assistance have historically been the
channels strong points. The relevance of these points to wine,
especially at the higher end, make specialists a popular channel
for many consumers.
Certain markets only or mainly rely on specialist retailers for their
wine sales, due to legislation. For example, in Canada, most
provinces operate through government-controlled channels. Each
province has a government-owned liquor board which purchases
alcohol from manufacturers and sells it through its own outlets and
distribution network to the public and to licensed establishments.
Finland, Sweden and Norway share similar regulatory
frameworks, structured around a rigid % abv barrier that is in
place in order to curb excess drinking and to moderate
consumption. The barrier is 4.7% abv for Finland, 3.5% abv for
Sweden and 4.75% abv for Norway, with state-owned specialists
controlling all sales of alcoholic drinks above this limit, resulting in
almost all wine being sold through this channel.
However, there are many markets with no legislative barriers
impacting sales of wine through a specific channel, and in these
markets consumers purchase wine through specialists out of
choice.

Countries with Highest Share of Wine
Sales Through Specialists 2010
% sales of wine
Pakistan 100.0
Algeria 100.0
Egypt 100.0
UAE 100.0
Sweden 100.0
Finland 99.7
Norway 99.2
India 98.7
Uzbekistan 95.0
Australia 95.0
Canada 88.2
Cameroon 75.2
Taiwan 62.5
Peru 62.4
Specialists offer product mix and product expertise
Specialists face mounting competition from
supermarkets/hypermarkets and discounters. Competitive
prices based on economies of scale and steadily expanding
portfolios are the key means used by these alternative
channels to challenge the position of specialists in markets
where they dominate.
On the other hand, the markets where specialists have so
far failed to capture a big share of distribution hold the
greatest potential, since this operating model remains
untarnished by maturity concerns and an out-dated image.
Within these markets, specialists tend to focus on niche,
affluent audiences and are expanding their penetration
rates on the back of Westernisation (since in many cases
these are emerging markets), and a more personalised
shopping experience.
The difficult competitive environment is forcing wine
specialists online, and this provides them with significant
opportunities.
Majestic Wine, in the UK, is an example of a specialist
which is increasing its focus on internet sales and new
media. According to company results, in 2010 its online
sales continued to show good growth and were up by 9.6%
on the previous year. It is using social media to interact with
its customers, and it has launched an online tasting counter
which is a live representation of what is available to taste in
any particular store.

Specialists ascend

Specialists descend

Novelty of format translates into a
fresh, progressive, modern positioning.
Specialists are expected to continue
posting gains, moving in parallel with
the advancing alcoholic drinks
consumption culture in their respective
markets, as well as an increasingly
sophisticated distribution environment.

High distribution share but often an
out-dated, conservative positioning.
Specialists are expected to continue
losing share as long as they fail to
adapt to the evolving operating
environment, diversify their offerings
and expand their range of products to
include mid and lower end varietals.

Maturity breeds declines, niche share spells future gains

Difficult competitive environment forces wine specialists online

Specialist channels wide range of
positionings means a move online is not
an obvious step for all
Mid/upper-market specialists offering
advice or unusual ranges are the
most likely entrants
As more grocery chains go online, mid-
market specialists in particular will be
forced to follow

Smaller chains/ independents could
struggle to achieve the scale for global
sales
Wide
positioning

Global
reach

Global
potential?
Mail order is popular in markets such
as Germany, France and the UK.
In the UK, Direct Wines is a key
player, owning companies like
Laithwaites, Virgin Wines, The
Sunday Times Wine Club and others.
Mail order companies are increasingly
also selling wines online, which is a
more cost efficient channel in which to
operate, and gives consumers the
option of a 24-hour shop.
Although major mail order companies
are moving into the online world and
seeing growth prospects within it,
there will always remain opportunities
for mail order, as the demographic for
this channel is different. It depends on
the age group, and not all consumers
will go online. Opportunities for mail
order lie especially with an ageing
population in many mature wine
markets. Some consumers also like
the human contact mail order can
offer them.

Mail order clubs explore new non-store potential

Mid /
upper
positioning
Global
reach
Global
potential?
Upmarket image (but often mid-
market stock)
Differentiation is a rising
challenge as more wine
providers move online
Current market almost
entirely dependent on
Western Europe
Reach has been limited
by reliance on print
catalogues and also
personal interaction with
customers (language
limitations)
Reliant on a older demographic
(shrinking) in core markets, but
potential in emerging markets
perhaps combined with direct
selling format, where there is
growing demand but limited
knowledge
INTRODUCTION
DISTRIBUTION
STRATEGIES
SPECTRUM
Different pricing creates different selling environments

OPPORTUNITIES ACROSS THE PRICE SPECTRUM
Mass Wines
Key challenge:
Lower profit margins
require large-scale
volumes
Key online formats:
Bulk sellers, eg grocery
retailers, warehouse
clubs, larger specialist
chains
Strongest USPs:
Price, marketing
Standard/Premium
Wines
Key challenge:
Differentiation from rival
brands and mass-market
offer
Strongest USPs:
Back story, value-added
qualities, localism
Key online formats:
Wine clubs, wine
specialists, social
networking sites
Super-Premium/Fine
Wines
Key challenge:
Supporting premium
brand image
Key USPs:
Brand image, exclusivity,
rarity, provenance
Key online formats:
Wine clubs, sommelier
services, super-
premium/fine wine
specialists...or not online at
all?
For mass-market wines, the online efforts of large store-based chains, such as grocery retailers and
warehouse clubs, continue to offer the most obvious potential for growth. Using 6- rather than 12-bottle
cases is also making the by the case model accessible to a wider audience, and may benefit some lower
end brands, while the entry of lower end alcohol specialists, notably leading UK chain Bargain Booze, which
have been slower to move online, should also boost growth.
The online market for mid- to higher-end wines and niche brands is likely to see the most movement over
the next few years. Moves by supermarket retailers to stock more higher priced wines and exclusives, the
ongoing shift of mail order wine clubs online and more specialist retailers launching their own websites will
all develop the market, but the potential goes further than that.
As the market matures and customers begin to look at value as well as price, the ability of the internet to
frame a products backstory is coming into its own. This helps retailers such as wine clubs and specialists to
sell products at higher prices, but also, tapping into this, smaller brands are becoming increasingly aware of
their ability to market their products for themselves, using websites, blogs and email newsletters, as well as
building a presence on social networking sites to differentiate themselves from competitors and to engage
consumers.
Marketplace-style sites can give smaller retailers a larger gateway to sell through. Some of these sites,
such as Amazon.co.uk, which launched a grocery offer, including alcohol, in the UK in 2010, are very
hands off, but others are bidding to be an integral part of the winemaking process. Naked Wines, for
example, not only offers wines from small independent wineries, but also helps angel members invest in
the vineyards before the wine has actually been produced, while its marketplace allows winemakers to sell
directly to the public at a price of their choice. The companys holistic approach to online wine retailing
extends to consumers as well as winemakers, boosting peer-to-peer interaction through product reviews,
chat forums and wine tasting events.

Opportunities exist across the price spectrum
Grocery retailers are continuing to expand online and are looking outside
their home markets, as well as sharpening their product portfolios.
In many cases, grocery retailers are bulk sellers able to offer mass wines at
a more affordable price point.
Now that an internet offer is a common, even expected, aspect of most retail
business models, larger retailers have had to work harder to differentiate
their offer by providing new or exclusive brands and background information.
Large-scale online grocery making steps towards global expansion

UK: online success of
the first movers is now
tempting other grocery
chains online. The
challenge now is to
sharpen their wine offer
Poland: Auchan
announced a pilot online
shopping service, which
was launched in June
2011
China: Sams Club
pioneering mass-market
online supplies
France: retailers
focusing their online
efforts on collect-at-store
rather than delivery, such
as drive-through format
Auchan Drive
Australia: Coles extends
its click and collect
shopping offer to include
collection from some of
its 600+ fuel stations

New opportunities for niche and upmarket brands
Niche,
upmarket
and premium
brands
Aggregator sites are gaining scale
and are a good option for smaller
wineries from a cost point of view, as
these sites enable them to reach a wide
audience with minimal overheads.
Online members shopping clubs,
which generally feature heavy
discounts for a limited time period, are
a well-established route to market for
products such as fashion and
homewares. Now sites such as
SommelierCellar.com are extending
this model to the wine category, with
the added attraction that the wines
sold have been personally chosen by
some of the UKs top wine experts.
Amazon could be big, but the jury is
still out on this. It offers opportunities
for small wineries, as it provides secure
payments, and minimal investment with
a maximum return,
INTRODUCTION
DISTRIBUTION
STRATEGIES
SPECTRUM
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2010 2015 2020
%

s
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Half of All Internet Users Will Be in Asia Pacific
by 2020
Western Europe
North America
Middle East and Africa
Latin America
Eastern Europe
Australasia
Asia-Pacific
Internet continues to reshape the world

ONWARDS AND OUTWARDS: FUTURE PROSPECTS FOR ONLINE WINE SALES
0
500
1,000
1,500
2,000
2005 2010 2015 2020
M
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l
i
o
n

More Than 40% of the Worlds Population
Will Be on the Internet in 2020
Internet users Internet subscribers
General internet penetration will increase
significantly. By 2020, 40% of the global population
is expected to be online, reducing the digital divide
between developed and emerging markets.
The biggest growth will be in Asia-Pacific. For
example, China is expected to have 700 million
online users, compared to 280 million in the US.
Higher numbers of online users will help increase
overall growth in internet retailing over the forecast
period, especially within emerging markets.

Globally, internet retailing is expected to post a 13%
CAGR between 2010 and 2015, which is far more
than dynamic than the 3% total volume CAGR global
wine sales are expected to see over the same
period.
Grocery and non-grocery store-based retailers will
post CAGRs of just 2-3% over the same period.
Internet retailing will be the fastest growing channel,
outpacing other non-store channels.
Within the top 10 fastest growth markets, China will
lead in both CAGR and actual increase terms, on
the back of a rapid increase in its online population
and the uptake of the internet not only for searching
for better prices but also for shopping.
Top 10 Fastest Growing Internet Markets
Country
% CAGR
2010-
2015
Absolute value
growth US$ million
2010/2015
China 41.8 54,322
Mexico 29.9 2,503
Serbia 25.6 67
Indonesia 22.0 18
India 21.1 1,135
Hungary 18.1 534
Portugal 17.8 525
Argentina 17.7 1,153
Czech Republic 16.9 1,445
Brazil 16.6 9,462
Internet retailings strong growth to continue

Grocery retailers
Non-grocery retailers
Internet retailing
Direct selling
Homeshopping
Vending
Global Channel Performance % CAGR 2010-2015
Within new retail channels, it is m-commerce and, even more importantly, mobile phone apps that offer the
greatest potential. In stores, they give consumers instant access to product information, reviews and
special offers, while, away from stores, they can transform liking a product into buying it at the click of a
button.
Instead of on-trade sales competing with off-trade sales, they stand to complement each other, and product
marketing campaigns should begin to take this into account.

Smartphones and social networking offer fresh potential
QR: Store-to-web
options
Apps: Recommendations and food
matching advice, any time,
anywhere
Direct vineyard-to-consumer
communication and brand building
Apps: Reviews and
discussions
Apps: Finding wines...and the
best prices
Emerging healthcare
concerns Marketing
opportunity to
promote wine
over competing
products such
as spirits and
beer
Health
benefits of
anti-oxidants
Niche
opportunities
possible for
products such as
lower ABV wines
via online sales
Emerging spending
power
Rising interest
in traditional
[grape] wine
Product
education:
Information on
websites;
guided choices
via wine
clubs/direct
sales
Rising
disposable
incomes
feeding into
strong
premiumisation
trend
New trends for online to tap into in emerging markets
Consumers need to have access to the internet and, increasingly, via
a broadband connection, in order to shop online.
Cash-on-delivery is a common payment option for online orders in some
markets, but payment cards are particularly useful for online alcohol
sales as they can provide proof of age.
Phase one:
the basic
requirements
Even with the basic requirements in place, most consumers need a
reason to change their established shopping habits.
Convenience and low prices are key factors, but the recent recession
also saw elements such as at-home consumption patterns and the
ability to control impulse spending come into play.
Phase two:
driving change in
shopping habits
As online wine sales become more common, both retailers and brands
need to finesse and develop their offer, for example by introducing
exclusive brands, in order to differentiate themselves from competitors.
Social networking offers a valuable way to connect to consumers,
particularly as consumers themselves seek out advice and
recommendations in order to choose from the mass of wines available.
Phase three:
finessing the offer
As the market for online wine becomes more sophisticated, value-added
products such as organic wines could see a rise in demand.
The biggest development is going to be the rise of smartphones, which
can blur the division between on-trade and off-trade sales and may well
become the most common form of internet access in emerging markets.
Phase four:
future
development
Online wine retailing: The development cycle
Internet
penetration
Choice/
exclusive
brands
Value for
money/price
promotions
Home
consumption
Convenience
Product
background/
provenance
Social
networking
Smartphone
penetration
Value-added
products
Online wine retailing: Changing drivers
Early market drivers
Mature market drivers
Payment
options
87%

Forecast value
growth for all
internet retailing
between
2010-2015
Wine
This is the aggregation of still and sparkling light
grape wines, fortified wine and vermouth and non-
grape wine. In terms of alcohol content, light wine
usually falls into the 8-14% abv bracket, while
fortified wine ranges from 14-23% abv. For this
study, low- and non-alcohol wine is also included in
the data (attributed to each category as
appropriate).
Fortified Wine and Vermouth
Fortified wines wines treated by the addition of
brandy or alcohol, such as port, marsala and
sherry. These products include Muscat (France)
and Tio Pepe. Vermouth any of several wines
containing aromatic herbs and some other
flavourings.
Non-Grape Wine
These wines can be made from a variety of other
products, including cereals, as well as from a wide
variety of fruit flavours, eg plum, apple, etc. One of
the most common types is rice wine (such as sake)
which is widely consumed in many Asian countries.
.

Other Sparkling Wine
A sparkling wine (white, ros or red) not produced
in the Champagne area. Examples include Sekt in
Germany, cava in Spain, spumanti and lambrusco
in Italy and many varieties from Australia and the
US. Also included is semi-sparkling wine that
contain no more than 2.5 atmospheres of carbon
dioxide. The carbon dioxide may be endogenous
through secondary fermentation or through gas
injection. Semi-sparkling wines are referred to
locally as vino de aguja (Spain), agulha (Portugal),
ptillant (France), perlwein (Germany) and
frizzante (Italy).
Champagne
A sparkling wine (white or ros) produced in the
Champagne area (around Reims and Epernay in
France). Only products made in this area can be
called champagne.
Still Light Grape Wine
Still light grape wine is the total sum of still red,
white and ros wine. Light wine is so called
because of its alcohol content, which usually falls
into the 8-14% abv bracket and thus excludes
fortified wine. Semi-sparkling wines are included
here. These are sparkling wines that contain no
more than 2.5 atmospheres of carbon dioxide.

Product definitions
REPORT DEFINITIONS
Retailing coverage: Grocery retailers, non-grocery retailers and non-store retailing.
Non-store retailing retail sales of new and used goods to the general public for personal or household
consumption from locations other than retail outlets or market stalls.
For the purposes of this study, non-store retailing is the aggregation of vending, direct selling,
homeshopping and internet retailing.
Internet retailing sales of consumer goods to the general public via the internet. Consumers
purchase goods online through the web platform.
Sales data are attributed to the country where the consumer is based, rather than where the retailer is
based.
Also includes orders placed through the web for which payment is then made using a store card or an
online credit account subsequent to delivery or on delivery of the product. This payment may be by
any mode, including postal cheque, direct debit, standing order or other banking tools.
Includes mobile retailing (m-commerce), whereby consumers use wireless devices, such as a mobile
phone, PDA or smartphone to connect to the internet and purchase the goods online.
Internet retailing excludes sales of: (a) products using consumer-to-consumer sales sites, such as
eBay. All sales over such sites are excluded, even if they were generated by companies operating
through the site; (b) sales of motor vehicles, motorcycles and vehicle parts; (c) tickets for events
(sports, music concerts, etc) and travel; (d) sales of holidays; (e) revenue generated by online
gambling sites; (f) quick delivery services of food, magazines, household goods and DVD rentals, for
example: MaxDelivery.com, LicketyShip.com, Netflix.com, LoveFilm; and (g) returned products/unpaid
invoices.

Channel definitions
REPORT DEFINITIONS
This research from Euromonitor International is part of a global
strategic intelligence system which offers a complete picture of
the commercial environment. Also available from Euromonitor
International:

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