UK Local Market:
Mail Order Business Overview
Classic mail order involves sending marketing material and offers via the postal system, and
probably no-one operates just this way any more. Communication methods now include
printed wine lists, mail shots, press, magazines, telephone, email, online – any method of
taking an order without pressing the flesh of the punter and without necessarily having a
physical shop (though many do), and without necessarily speaking to a sales person. This is
effectively mail order, internet and ‘phone sales, and has variously been termed distance
selling, or direct-to-consumer selling.
It is a dynamic and evolving category that is yet to be properly tracked and quantified, let
alone categorically defined.
In 2006, just-drinks.com reported that the International Wine Clubs Association published
figures of over 10 million cases of wine being sold direct to consumers via mail shots, press
and magazines, telephone, fax, email orders and online, for that year. At the time the category
was estimated to be worth £900m, or almost 7% of the total UK wine market, and with an
impressive average bottle price of £7.50. In the total off trade in 2006, Nielsen reported the
average bottle price being just £3.93.
By February 2011, Drinks Business reported that trade estimates put the 2010 size of the mail
order/online market at 12.7 million cases, with 10.2m of these sold via mail order and 2.5m
online. The UK on-trade gets through not that much more, at 17.5m cases.
Direct Wines is one of the biggest players, with sales of 4.6m cases / £350m sales. Direct
Wines includes Laithwaites, plus The Sunday Times Wine Club, Virgin Wines, Avery’s, the
NatWest Wine Club, the British Airways Executive Wine Club, and, internationally, the Wall
Street Journal Wine Club and the Australian Wine Club. The Wine Society was another of the
original UK players, and they turned over £70m in 2010.
All the major supermarkets now have online drinks segments – WaitroseWine, Tesco Wine
Club, Ocado, Sainsbury, Asda, and Marks and Spencer, some with dedicated parcels
available only online. Tesco reported that around 35% of their online sales are web exclusives.
Even Amazon started selling wine in 2010. Traditional merchant Berry Bros and Rudd was
an early adopter of the online channel, launching its website in 1994.
More recently, a plethora of internet-only wine sellers has set up in the UK, 25 of whom
group together under The Association of Small Direct Wine-Merchants (ASDW).
www.asdw.co.uk
The duopoly of Direct Wines and Tesco are said to dominate this sector of the market. Back in
2006 Harpers estimated Tesco accounted for “nearly half of all wine sold online in the UK”.
In the same year Harpers reported Direct Wines turnover was £225million, having grown
from £15m a decade previously. By 2010, Direct Wines’ turnover was £344m with over 1
million active customers around the world, and more than a quarter of sales coming from
outside the UK.
But for some time, the boundaries have been blurring between classic mail order (printed
materials) and online, especially where consumers read a printed wine list or mail shot then
choose to order online rather than ‘phoning to speak with someone. Though key players do
say many of their customers like the personal contact of talking to someone. It’s therefore
unlikely that all consumers will be nudged to the internet alone when they have a clear
preference for human contact.
Thus the ‘multi-channel’ communication approach to distance selling that has evolved over
the last decade and more looks set to continue. According to the ONS, some 18.3 million
(70%) of households in the UK had internet access in 2009, so classic mail order is not a dead
category. But the new frontier of distance selling is social media and the app-world. Justdrinks.com reported (Oct 2011) that 21m people in the UK have access to mobile internet.
In their August 2011 issue, Drinks Business reported IMRG/Capgemini figures showed
alcohol sales through websites to be the fastest growing area of UK retail, with the BWS
sector growing at 23% a year, giving a value of around £700m. Of this, wine is estimated to
be around £200m.
A key advantage of online/mail order is the elasticity of range, with many more wines being
able to be offered online than in a physical store. But transition has gone both ways – from
clicks to bricks, and from bricks to clicks.
Drinks Business, February 2011, Distance selling stats – trade estimates for the UK
 Mail order and online sales in 2010: 12.7m cases
o 10.2 million via mail order
o 2.5 million via online
 Total UK off trade wine sales in 2010: 108.7 million cases
o Supermarkets 69.8m; other retail 18.1m; distance selling 12.7m; multi off-trade
chains 8.1m
 Total mail order wine sales in 2010: £918m
 Total online wine sales in 2010: >£200m
 Average spend online: £80 / 12 bottles
 Average spend mail order: £90
 Key online-only players: From Vineyards Direct (£2.5m turnover in 2010), Naked Wines,
Your Favourite Wines.
o Tesco, with its ‘wine by the case’ web-based arms is the largest online operator,
turning over about £60m.