Covid-19 accelerates South Africa’s wine ecommerce boom

by | Jun 30, 2020 | Article

Online wine sellers have reported triple-digit sales growth as South African consumers pile the virtual shopping trolley during the Covid-19 pandemic.

Ecommerce sales are surging for necessities like groceries as South African consumers continue to adjust to numerous stay-at-home directives during the coronavirus pandemic. For many consumers, it appears that wine is among the essentials they value.

The latest Nielsen data shows global alcohol ecommerce has more than doubled – growing 234% –compared to last year. Wine has enjoyed the largest success, making up nearly 70% of total online retail sales tracked in the report. And South Africa is no exception.

Cellar master Charles Hopkins says sales on De Grendel Wine Estate’s online wine store has shot through the roof during lockdown. The estate’s online sales nearly tripled for the period March to May 2020, rocketing to 1 400% compared to the same period last year. Of this, nearly 65% were first-time buyers. From April to May, online sales at De Grendel have nearly tripled.

James Pietersen, head of sales at Wine Cellar, says the company saw a significant increase in sales when the ban on alcohol was lifted. “We’ve seen an increase of between 50% and 100% in online wine sales.”

According to James, Covid-19 has, without a doubt, kick-started the international online uptake in wine sales. “We’ve seen it happen internationally. It has pushed many consumers to the ecommerce platforms. And we’ve seen the same thing happen here.”

To sell, or not to sell?

During the most restricted stages of lockdown, when government took a merciless and unmoved stance against alcohol (including the temporary ban of exports), fear and uncertainty among wine merchants were rife. This resulted in wine sellers like Caroline Rillema, owner of Caroline’s Fine Wine Cellar, putting a stop to all online orders.

“We were worried that we might get in trouble. We didn’t know if wineries would have stock, or whether we could honour our orders or not.”

But then in May, she decided to open shop once again, and online sales just took off. “We’ve been selling wine 12-fold! There’s been an unprecedented amount of sales.

This boom in online wine sales has allowed Caroline and her business enough turnover to pay overheads for the coming two months. “For the first time, we didn’t mind not getting enough feet through the doors. All business was done online.”

New customer growth

Charles believes that if it wasn’t for the lockdown restrictions, they would not have seen such a dramatic spike in sales.

“When consumers are deprived of their favourite things, only then do they want it even more. We’ve seen a tremendous increase in new consumers who have adopted the brand, and who may be trying online wine shopping for the first time.”

Caroline agrees, “We’ve even seen the slightly older generation (55 years and older) – those who often resisted registering on a website – starting to realise the convenience of online wine sales. We’ve seen a definite shift in consumers’ online behaviour.”

She has also noticed the emergence of various consumer trends throughout this ecommerce boom. “We’ve seen new customer buying brackets. We found a sweet spot in wines that sell for between R75 and R100 per bottle (Noble Savage, Landskroon, and Bruce Jack). It’s not the bottom end, it’s just below the middle tier.”

“We’ve also seen an increase in sales from a more discerning wine shopper. Those who buy wines between R120 and R150 per bottle. The kind of consumers who take note of how long the wine was in wood, and for instance, what percentage of Cabernet Franc can be found in the Bordeaux Blend. We’ve definitely seen a significant shift in consumer behaviour.”

Growth spurts

James says in the past, South Africa (as well as the African continent) has been lagging behind the international trend of conducting business online. “We’ve seen the continent joining in the normalisation of ecommerce. Covid-19 has definitely accelerated the trend, but it has also exposed a lack of infrastructure.”

Courier companies have been inundated with orders. Continuing to meet delivery in two-to-three-days promise – as most companies had always done before lockdown – has proved impossible, especially in light of restricted trading conditions for online alcohol trading: no deliveries on weekends and public holidays to consumers.

“We’re not quite there yet when it comes to smooth, seamless delivery service. It’s something we kind of expected to happen. You can’t trade, facilitate and complete all orders with only four working days at your disposal. It’s a real challenge from that point of view. However, we’re fortunate that sales are still carrying on, and that customers still want to drink wine. That’s the best thing about it.”

Will the trend continue?

Charles and James both believes that the current trend in ecommerce will continue in the future.

“If South Africa were laggards compared to the rest of the world in terms of online sales, we’ve caught on very quickly. Consumers love the idea that they can make wine purchases from anywhere, pay farm or wine club prices, and that the product can be delivered to any doorstep in the country,” says Charles.

James says wine ecommerce will not track down in percentages, but could lose value as consumers might struggle financially in the coming months. “But I believe ecommerce will keep its percentages. People have seen the convenience. Avoiding queues and contact with people will form part of our society for quite some time to come.”

Nielsen also predicts that DTC (direct-to-consumer) and online ecommerce stores will be significant channels in the future. “We’ve placed considerable focus on our online sales over the past five years. We’ve picked the fruits of our labour, especially during the lockdown, considering that we’ve build up a big database,” says Charles.

He is positive that consumers who have used De Grendel’s online order service for the first time, has had a safe and easy process. “I’m convinced that they will have the peace of mind to make more use of ecommerce online wine shopping in the future.”

Caroline concludes: “Covid-19 has awoken a deep, underlying love for wine. For instance, when you don’t see your girlfriend for a few months, you quickly realise how much you really love her. You’ll do anything to get to her.”

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