Hans Holmer is a quick study – and he needs to be. As the new vice president of operations for DRINKS, he is responsible for the supply chain of a rapidly growing retail as well as direct-to-consumer (D2C) beverage alcohol company that will quickly trip on itself if it can’t get its product to its customers. After just two months, the former senior director of fulfillment at Walmart has a good handle on his challenges and opportunities.
“My primary focus will be seeking new ways to look at our supply chain and logistics that will help meet rising consumer demand and expectations in this new economy,” said Holmer. “The reality is, large retailers are not yet ready for the massive shift in demand to digital purchasing and the ship-to-home logistics and regulations that are inherent in the beverage alcohol category. The team is ready and uniquely able to rapidly scale the availability of wine online. Yes, we’re experiencing unprecedented demand amidst a changing landscape, but I’m fortunate to be with a company that’s built to tackle those hurdles and expertly navigate the ‘new normal.’”
Unlike other online wine and alcohol pure plays, DRINKS will be splitting its bets with Holmer in charge. The company has two parallel business models. The first is its retail model, through which it white-labels a curated platform for ship-to-order collections. Kroger, Boxed and Thrive Market are its most high-profile customers on that front. The second business model is covered by its D2C arm, Wine Insiders. Both depend on a seamless supply chain, which is why the DRINKS executive team enlisted Holmer.
“Buying wine online was not something many people did pre-COVID,” he noted. “But in recent months, consumers are embracing online alcohol in droves, and there’s a readiness to order. As these behaviors become the mainstay, we have worked hard to expand our supply chain capacity and eliminate the backlog and adjust to keep up with demand. We’ve also looked to form new retailer partnerships and activate those who are ready to provide online wine.”
Will the surge last? Holmer believes the quick popularity of online wine is laid properly at the feet of shelter-in-place orders. He also believes that most consumers won’t go back to their local wine and liquor stores anytime soon.
Holmer is not in charge of marketing. However, Louis Amoroso, president of the D2C division, pointed out that Wine Insiders has transitioned to a multi-channel customer acquisition strategy, and is using a mix of offline and online tactics to target a broad demographic and reach customers nationwide. In fact, the Wine Insiders customer base ranges in age from 21 to 91. Some of its marketing tactics harken back to the days of traditional methods like direct mail and package inserts, alongside email marketing, strategic Facebook ads and influencer campaigns. For the retail model, the company has launched promotions with OpenTable customers and American Express cardholders to introduce consumers to the D2C offerings.
While DRINKS and Wine Insiders are well on their way to making sure the surge in orders sticks, CEO Zac Brandenberg says the biggest challenge – although not insurmountable – is encouraging consumers to take that first leap into purchasing a product they’re unable to try or hold in their hands. Discovery, he said, is an inherent part of the wine-buying experience.
“If we can get consumers to make a single purchase, we then leverage our patented PAIR engine technology to bring the personalization of adtech to physical products, allowing us to create hyper-personalized e-storefronts, or digital ‘shelves,’ and display the most relevant wines at the forefront, helping consumers find the wines they’re most likely to enjoy,” he explained.
Holmer might not be on the hook for marketing, but he is definitely on the hook for the supply chain.
“To give you a sense of volume, on any given day, about five 40-foot trailers of wine are leaving DRINKS warehouses to ship to consumers,” Holmer said. “This moment in time has dramatically ushered in increased adoption of online grocery (including wine) in droves, which is likely to stick around long after the pandemic. We predict convenience will be paramount as a result of this pervasive fear and prioritization of safety – both from companies and consumers. Similarly, as consumers look to reduce costs due to economic uncertainty, they’re likely to ‘trade down’ on premium-priced items – and in an effort to reinsert control over decision-making, they’ll move away from subscription-based models.”