The direct-to-consumer (DTC) trend attracted another big name this week, as Corona beer’s parent company, Constellation Brands, acquired media agency owner Gary Vaynerchuk’s Empathy Wines. The move follows the announcement in mid-June that The Macallan Scotch Whisky would also begin selling DTC, which has accelerated in the shift to Digital 3.0.
The acquisition comes as states have widely varying regulations regarding on-premise dining and drinking. For example, New York City planned to open its bars for indoor seating this weekend, but then canceled that plan after overall cases spiked above 40,000 per day in the U.S.
“The DTC market was growing at more than two times the rate of the general market in wine consumption pre-COVID,” said Robert Hanson, president of wine and spirits for Constellations Brands, which has a wide array of wines in its portfolio, including Robert Mondavi, Ruffino, Simi and The Dreaming Tree. “Everything that’s occurred since has just been an acceleration of that.”
Alcohol has been a laggard in eCommerce sales, partially because of individual state regulations. But the pandemic is changing that. The category saw a 74 percent eCommerce bounce from March 11 through April 21, according to a June report from Adobe.
“I would argue, out of every category on the consumer level, ‘bev alc’ has the most to gain, because most people were not educated on the options,” Vaynerchuk told CNBC. “Most people understood they could buy cereal, soap, a plant and spoons on the internet, [but] because of the way liquor laws have been through the years ... there was a lot of misinformation or lack of education on the options.”
The acquisition also comes at a time when the company’s flagship brand – Corona beer – carries a name that matches the pandemic. Early in the pandemic, the brand took a hit from people who equated it with COVID-19. But now, the name has apparently emerged without lasting damage, and was even extended successfully to the company’s new Corona Hard Seltzer.
The company’s earnings statement, released on Wednesday (July 1), shows that its supply was depleted due to pandemic-driven shutdowns at its Mexican plants in March and April, as well as bar and restaurant shutdowns across the U.S. Its on-premise business dropped 75 percent as the Corona brands grew in “double digits,” according to the company’s quote of IRI sales data. It was accelerated by the launch of Corona Hard Seltzer, which the company says has become the No. 4 hard seltzer player, approaching 6 percent IRI market share in the U.S. hard seltzer category.
The moves in the beverage alcohol space will undoubtedly continue as the pandemic persists and bars see inconsistent opening patterns. It was started by The Macallan’s announcement in mid-June that it would sell directly through its website.
“That was one of the No. 1 inquiries from our website and social channel: ‘Where can I purchase this? Why can’t I purchase this from you?’” said Samantha Leotta, brand director of The Macallan Americas, in a report. “We wanted to create an all-in-one experience on our site, where you could learn everything about great whisky – how to nose it, take a virtual tour of the distillery, watch videos – and buy it for yourself.”