Morrisons yesterday revealed it is to enter the online wine market later this year. Retail Week takes a look at the category.

Why are we talking about this now?

Morrisons has revealed it is to launch its first Morrisons-branded transactional website with a dedicated wine site – Morrisonscellar.com. The site will launch later this year and offer wine by the 12 bottle case or half case. The service comes after significant long-term speculation over which category Morrisons would select to trial a non-food online service.

Why has Morrisons decided to enter the wine market?

Morrisons chief executive Dalton Philips has been clear that the wine, which it classes as non-food, debut is a precursor to a potential online grocery launch in 2013-14 if the supermarket can find a profitable model. Bryan Roberts, retail insights director at Kantar Retail, believes wine is a “nice halfway house” for Morrisons to start its venture with. The grocer already has an extensive supply chain in wine which is currently a £600m category for the retailer. The Bradford-based grocer will leverage the capacity that exists in its Kiddicare distribution warehouse in Peterborough and share the same web platform as the kids etailer.

The wine market, excluding sparkling, it is estimated to be worth £1.7bn a year, according to CGA Strategy, and shoppers are used to ordering the bulky purchases online and having them delivered. While the champagne market and corporate events dampened at the start of the recession in 2008, the trend for shoppers saving up for a premium treat at home has continued and the online wine market is healthy.

There is also a vast range of customer from those ordering for expensive weddings to those throwing a small party.  “The market is very competitive, there are a lot of specialists and non-specialists and it’s proven to be a strong category online,” says Roberts.

Who will Morrisons be up against?

The online wine market is highly developed and as competitive as any. Morrisons will be up against rivals Tesco, Asda, Ocado and Sainsbury’s as well as specialists including Majestic Wine, Laithwaites, Virgin Wines,The Wine Society and fine wine merchant Berry Brothers. Retailers approach the sale of wine in different manners; Majestic has a strong focus on quality of service online and in store and selection while Waitrose groups the category with flowers and gifts online.

How is Morrisons likely to fare?

The actual sales and profit gained from the site may not be top of the grocer’s priorities. “It probably won’t be huge volume or particularly profitable,” says Roberts. “It’s a good category to try it out on, Morrisons can dip its toe in the water rather than launching an assault on the wine market.”