Uber has announced it will be acquiring alcohol-delivery service Drizly for $1.1 billion. For loyal Drizly users, the Drizly app will still be available. In addition, Drizly will also be integrated into the Uber Eats app.
Check out reactions on Twitter and Reddit:
Uber is acquiring Drizly for 1.1 billion. https://t.co/jhQAFT06hQ
— Helena Price Hambrecht (@helena) February 2, 2021
Background on Drizly
Drizly was founded in 2012 and is the leading on-demand alcohol delivery service in the U.S. It is currently available in over 1,400 cities.
On their FAQs page, Drizly boasts that “In most cases, deliveries take under an hour.” There are exceptions, of course. Available products include beer, wine, liquor, and extras like soda, mixers, non-alcoholic drinks, and snacks (subject to state law).
Drizly even encourages their customers to tip their drivers: “We humbly ask that you tip drivers if possible, as they are critical in making Drizly delivery a reality!”
It’s expected that the $1.1 billion deal will be completed within the first half of 2021. It’s most likely that more than 90% of the deal will be paid as shares of Uber common stock with the remainder paid in cash.
Uber is looking to expand its Uber Eats section as delivery has boomed during the pandemic. In July 2020, Uber acquired Postmates, another delivery competitor.
Kate Conger with the New York Times wrote, “Delivery has been a lifeline for Uber during the pandemic, which has caused a decline in ride hailing. In the third quarter of 2020, Uber said revenue from rides was down 53 percent while food delivery revenue was up 125 percent. Uber will report fourth quarter earnings on Feb. 10.”
While Uber has been building up its delivery services, it’s been unloading other less-profitable portions of its business including its electric bike and scooter services (sold to Lime), its self-driving unit (sold to Aurora Innovation) and its flying taxi business (sold to Joby Aviation).
Impact of the Deal
Obviously, Uber will be breaking into the liquor sales market in the United States while eliminating a large competitor in the field.
One consideration is that Uber Eats drivers are currently allowed to make deliveries on the app at age 19. With onboarding liquor delivery, this will have to be raised to 21 years or older to remain legal, unless they offer options within the app that will allow drivers to choose whether or not they will deliver alcohol, or keep liquor delivery disabled for its underaged drivers.
Interestingly, this announcement is coming just about a week before Uber’s quarterly earnings statement is expected. It’s hard not to think that this might be used as a distraction for possible bad news in the quarterly report. Or, it could even be the opening band before a great show is about to start.
Reviews: Drizly Competitors
Delivering alcohol is nothing new. In fact, we at RSG have reviewed a few alcohol delivery services.
Minibar currently delivers alcohol in 18 states and 90+ cities, including Washington, D.C. Minibar works with local liquor stores. It also has partnered with vineyards to allow 3-4 day delivery services from the vineyards directly to customers.
This structure has allowed several small businesses stay afloat during the unpredictability of the pandemic. You can even use Minibar to book a bartender in select markets.
Read our full review titled Minibar: Alcohol Delivery Review.
Saucey boasts alcohol delivery without delivery fees. The app is available for both Android and Apple devices. Saucey is the DoorDash of alcohol delivery apps and one of the most popular options available to anyone looking to drink responsibly at home.
Saucey also sells gifts, snacks, mixers and tobacco—everything you need, whether you’re looking to send a bottle to a friend or mix your own drinks at home.
Saucey services most major U.S. cities like Chicago, San Jose, Dallas, Los Angeles, Washington DC, Orlando and more. There’s even 2-day shipping available in New York and California.
Check out our review: Saucey Review: Getting Alcohol Delivered to Your Door.
Order In For Sin Panel (video)
Check out RSG founder Harry Campbell and a panel of experts discuss the effects and economics of marijuana and alcohol delivery.
I’m not surprised. Uber has been trying to find ways to become profitable so they can keep investors interested in funding their business. The logical next step, after already having delivery services via Uber Eats and the acquisition of Postmates, would be to consider the alcohol delivery market, which is booming during the pandemic, as well.
After all, as Harry covered in his interview with Daniel Danker at the Curbivore conference, it all boils down to how Uber can stand out in the delivery space. The main way to do that? Increase customer frequency. By acquiring Drizly, the leading alcohol delivery service out there, Uber automatically increases customer frequency by acquiring all of those Drizly customers. Now, integrated into the Uber Eats app, Drizly customers will be led to buying other products through Uber, like restaurant delivery, groceries and prescriptions (if offered in those cities).
What Uber likely wants out of this:
-Drizly’s vast trove of transaction data, info on its customer base & buying habits
-Drizly’s regulatory permits to sell alcohol in more than 1,400 cities, something Uber has lagged behind on
-To make it massively accessible through Uber Eats https://t.co/hWkylLh51j
— Faiz Siddiqui (@faizsays) February 2, 2021
It’ll definitely be worth watching what Uber dumps and what it acquires over the next few years to try to gain profitability.
Were you surprised by Uber’s acquisition of Drizly? What do you think will happen to Drizly now?
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