Amazon to Become Major Food and Beverage Competitor

Wall Street analyst says the company will be a top 10 food and beverage player by 2019.

March 21, 2016

NEW YORK – Bloomberg reports that “Amazon will be a top 10 player in the approximately $795 billion U.S. food and beverage grocery market by 2019," according to a new note by analysts at Cowen & Company LLC, led by John Blackledge. "We are encouraged by Amazon’s growing footprint in this category, which we see as ripe for potential disruption given younger [demographics] increasingly purchasing food and beverage grocery items via digital channels."

The news source writes that Amazon has been building its grocery offerings and competing with the likes of Walmart, Costco and Publix, and also has in its back pocket last-mile delivery services such as Amazon Prime, Prime Now, Prime Pantry and Amazon Fresh.

Cowen & Company says that now is the perfect time for Amazon to take on the grocery industry, noting two reasons why the online retailer is "set to feast" on the massive U.S. food and beverage industry, Blackledge writes.

First, meet the millennials. According to Blackledge's research, this demographic represents “a massive portion of the online grocery market” and is entering its prime spending years, writes Bloomberg. "Our new proprietary survey data suggests millennials are set to drive [a] long-term shift of rising online [food and beverage] sales as 21% of the 25-34 age cohort are current online grocery shoppers vs. 11% of total U.S. consumers surveyed," he wrote.

Second, look to technology. Apps and websites providing online food and beverage purchases will continue to evolve and become more ubiquitous in the market. Cowen & Company says Amazon Prime dominates as an online platform: "Our survey data suggests Amazon Prime is the most-used platform (49% of online F&B customers said they use Prime), followed by Fresh (18%) and Prime Now (11%)," the team wrote.

Bloomberg notes that other companies making the top 10 player list include Walmart.com, Safeway, Google Express, Peapod, Fresh Direct and Instacart.

Advertisement
Advertisement
Advertisement