Uber’s acquisition of Drizly has a lot more dig and discuss.
For the alcohol delivery industry, every deal is just another excuse to break out the glasses. And with the acquisition of a premier business player, the marker for making liquor delivery the next golden goose has been well and truly laid out.
In a significant development for the whole of the alcohol delivery industry, San Francisco-based Uber is set to acquire the leading alcohol delivery company Drizly for a whopping $1.1 billion.
Announced via a press release put out by both the companies, the purchase is constituent of both stock and cash, primarily consisting of Uber’s stock, with less than 10% in cash.
Having been christened the “Uber for alcohol delivery”, Drizly will continue maintaining its own app, before giving way to eventual integration with the Uber Eats app.
So far, Drizly has had a trailblazing year. With the horrifying pandemic ensuring consumers being stuck at home and forced to order in alcohol, sales rocketed up to a staggering 400% above historical levels around the peak of lockdowns in the US.
Now with the deal in their kitty, the Drizly will add an expansive selection of products from its alcohol inventory for Uber to deliver.
The Boston-based company currently operates in more than 1,400 US cities, helping connect customers with local stores to order beer, wine, and liquor. Since the time of the pandemic, the company has also put out data saying how consumers have ordered more frequently and bought more per order.
Uber’s push towards a delivery empire
Pandemic being a common narrative for businesses all around has had a transfiguring effect on the ride-hailing giant too. From a company that primarily transported just people, it has developed into a diversified entity, which has also started spreading its roots in tech. After a tepid last year, Uber’s allocation of resources to delivery services, saw the company’s delivery sales increase by 125% in the third quarter.
Now foraying into the liquor delivery market, Uber’s acquisition could have a very transformative effect overall on the industry.
The accretion, for all its substance, is another in a long line of delivery apps that Uber has come to devour. Having an eternal rival for DoorDash and Seamless, Uber also forked out $2.6 billion for food-delivery start-up Postmates last July.
Before Postmates, Uber was reportedly engaged in talks to buy Grubhub for $7.3 billion in June ’20, before backing away due to antitrust murmurs and losing out to European food-delivery company Just Eat Takeaway.
The key thing to notice was, if the merger with Grubhub would have gone ahead, it would have given the rides-share giant control of about half of the overall food delivery market, per data from the research firm Edison Trends. It also provides a glimpse of the scale at which alcohol delivery operations could amount to under Uber.
For a company that was valued at $73 million in 2017, Drizly has come up a long way. But spinning off from this merger, what does it herald for the liquor delivery market ahead?
What’s in store for the liquor industry
Coming right out and saying it, a deal of this magnitude is hint enough that the industry insiders expect demand for home delivery to persist, even after the coronavirus pandemic subsides.
As consumers continue to adjust to the effects of Covid-19, beverage alcohol e-commerce has become an increasingly important retail channel across the globe. One of the few sectors to have recorded an unexpected boom, IWSR forecast across 10 major markets that the value of alcohol e-commerce will increase by 42% this year, expected to touch valuation figures of US$24 billion. An appreciative increase, seeing as how alcohol e-commerce grew only by 11% in 2019.
In the land where the deal took place, there are further signs of what could be. After witnessing a value growth of over 80% in 2019-2020, the US is now poised to overtake China to become the largest alcohol e-commerce market in the world by the end of 2021.
Relaxed legislations and increased consumer awareness to thank, IWSR consumer research data shows an interesting stat that in the US, 44% of alcohol e-shoppers only started buying alcohol online in 2020, compared to 19% in 2019. Growth driving factors being supermarkets and traditional retailers seeking to rapidly enhance their online offering, it augurs well for popular on-demand players to cut themselves a healthy slice of the market share.
Challenges for the online players will surely be to keep the consumers hooked by providing a wholesome and innovative experience. With other players like Minibar and Wine.com wading though, the time looks ripe to expand the 19.2% market share held by Drizly in the alcohol e-commerce marketplace. With its impressive array of flavours and offerings in tow, Uber has all the essentials packed to make a profitable cocktail of online liquor delivery domain.
With the evolving nature of the alcohol industry, it will be interesting to see if the consumer flock to the online apps have the legs for the long terms. But if the shrewdness displayed by the American titan is any indication, the bets placed by Uber are set to pay off a handsome reward, making the online liquor delivery sphere the next multi-billion dollar moneyspinner thanks to it.
Stay tuned for more updates. *clink*