Retailers turn to digital rebates as alcohol sales slump

Within roughly the past six months alone, Swiftly expanded its alcohol rebate programs from about 11,000 stores to more than 33,000 stores in 44 states. Swiftly had built an alcohol cashback product in 2023 but scaled it through the acquisition of alcohol promotions platform BYBE in 2024.

Grocers and alcohol manufacturers are doing this in hopes of growing sales amid declining alcohol consumption. Spending at liquor, wine and beer stores fell 5% year over year in January, according to Bank of America transaction data. Fewer 21- to 34-year-olds are binge drinking compared to a decade ago, according to a Bank of America Institute analysis of research from the U.S. Substance Abuse and Mental Health Services Administration.

“That represents a challenge for the alcohol suppliers to be able to reach that younger demographic and really speak their language,” said Sean Turner, co-founder and chief technology officer of Swiftly. He added that grocers also hope to expand customer usage of their mobile apps and e-commerce websites.

In fact, Swiftly and its retailer partners have tailored the marketing of the rebate programs specifically toward younger customers. They won’t call them “rebates,” because Gen-Z consumers may not be familiar with that term; instead, they call them “alcohol cashback.”

“They haven’t experienced the world where you actually get a mail-in rebate, where it comes in a box and you find an envelope and you mail a letter,” Turner said. “A lot of your Gen-Z customers rarely even open their own mail, let alone send mail-in rebates of their own. And so, having a digital-first solution for that shopper base is a really important key to being able to engage them.”

Turner said consumers are also turning to digital platforms in hopes of finding deals or savings, given the challenging economic environment.

“Your costs at the grocery store, even though down from their peak, still remain high compared to consumer income,” Turner said. “That’s driving a lot of consumers to look for ways to economize, and they’re turning to retailers, digital tools and digital properties — things like a retailer’s mobile app and loyalty program — as ways to find that savings and capture that savings and value.”

The alcohol rebates are funded by the manufacturers, not the retailers, Turner explained. They can be as small as 50 cents off or as large as $10 off. “Because those discounts are so meaningful, it’s certainly something that consumers feel is well worth sort of the time investment, to see what deals are available and to take advantage of those deals.”

In the past, alcohol manufacturers may have done mail-in rebates, but Swiftly presents its program as a much quicker, digital alternative. “Having a digital solution where shoppers can get their cash, oftentimes in minutes, … that’s just so much better of a world than getting home, having to cut off paper, mail your receipt in and pay 65 cents or whatever it costs for a stamp fee, and waiting eight weeks for a check in the mail,” Turner said.

Retailers see a 30% increase in sales lift, on average, when a manufacturer offers a rebate, and basket sizes for those with an alcohol rebate offer are 62% larger than those without one, according to Swiftly.

Still, grocers and manufacturers are limited by state laws on alcohol promotions. For example, Missouri had prohibited manufacturer rebate coupons for beer and wine until last August, when the state laws changed to allow the practice for wine. The state still prohibits beer rebates, but allows them on any other intoxicating liquor.

Laura Dierberg Padousis, evp at Dierbergs Markets, said the St. Louis grocer pushed legislators in Missouri to allow rebates on both wine and beer, but was only successful with wine. Dierbergs has used Swiftly’s alcohol rebate program since the fall of 2024. Padousis said that when Dierbergs first launched alcohol rebates in 2024, with spirits only, they weren’t well-adopted because of the lack of variety. “The addition of wine is where we’ve seen, what I would say, tremendous growth,” she said.

Padousis added that while coupons on food or household goods are simple — you clip the coupon in the grocer’s app and redeem it at the register — retailers are not allowed to offer digital coupons on alcohol in Missouri and other states. Thus, manufacturer-funded alcohol rebates facilitated through tech platforms allow grocers like Dierbergs to offer alcohol promotions while complying with state law.

“It’s another lever that we can pull for our customers to offer more value,” Padousis said. There is a section in the Dierbergs app where customers can clip offers for wine and spirits. Customers have to add a Venmo or PayPal account to the app to receive the rebates. “It is not an immediate reconciliation, from what I recall, but … it’s a lot faster than the old rebates, where you literally just have to mail them in, and you might wait weeks for $5 to come back in the mail.”

Alcohol rebate programs may create a more direct connection between the alcohol manufacturers and the grocers themselves, in terms of promotions and first-party data. Alcohol brands are usually distributed to retailers through wholesalers, creating a three-tier distribution system of manufacturers, wholesalers and retailers. Grocers can go to a company like Swiftly for access to brand-level data rather than working through a wholesaler. The promotions themselves are set up and funded by the alcohol manufacturers rather than the wholesalers, though they are accessible through retailers’ apps.

“Digital is giving a new avenue to get to these alcohol shoppers with targeted, personalized promotions and collecting first-party data,” said Barry Thomas, a senior global thought leader for Kantar and a former Coca-Cola marketing executive. “You’re operating differently with a little more freedom within that three-tier distribution system digitally that you generally would never see physically.”