As we have been for the most part locked up over the past year some of our vices have been exacerbated through the idleness resulting from confinement. One such behavioral change is our consumption of alcohol. According to the Global Drug Survey COVID-19 Special Edition, 36% of those comprehensively surveyed to represent the global population have increased the amount of alcohol they consumed during the pandemic and 33% have increased the frequency of times in which they consume alcohol[i]. Moreover, as our overall consumption of alcohol has changed, the channel through which we traditionally consumed it has also significantly changed as safety precautions limit us from attending crowded bars or energy filled music festivals with free-flowing alcohol all around. During its peak cautionary measures, we were really limited to venture off to the supermarket, where at time alcohol sale was limited. As the world has opened up a bit, we have some option outside of our home to consume alcohol, such restaurants that have been severely limited in their ability to maximize the utilization of their space. We are far from living the outward facing social lives we lived a year ago outside our home. Today more than ever we are drinking at home, and we are drinking more than what we once did as we face the uncertainty of these unprecedented times.
As these parallel trends of increased alcohol consumption and reduced activity outside our homes have been fueled by the pandemic a clear has surged, Drizly. Drizly is a technology company powering the fastest, most convenient way for consumers of legal drinking age to buy alcohol and have it delivered right to their door[ii]. Riding on the previously described tailwinds, the company founded in 2012 out of Boston has had a meteoric rise in 2020. During the summer of last year the company was able to raise $50 million in funding by Avenir, Tiger Global, and other existing investors as a result of 350% growth year-over-year with sustained profits and its ability to double the retail partner count during the first half of the year[iii].
On Tuesday February 2 of this year, less than two weeks ago, it was made public that Uber acquired Drizly in a $1.1 billion deal. The New York Times reported that the acquisition was part of Uber’s aggressive push to expand its booming delivery business during the pandemic and that the deal, a mix of stock and cash, followed Uber’s recent acquisitions of Postmates, a food delivery service, and Cornershop, a grocery delivery company[iv]. It was also reported that Uber is planning to incorporate alcohol delivery into its Uber Eats service and continue to operate Drizly as a stand-alone app, and Lantern, a cannabis delivery service owned by Drizly, is not included in the deal[v].
The Uber acquisition comes at a timely window for Drizly. Uber has purchased the company at the all-time high resulting from the unprecedented consumption paradigm shifts that have resulted from the pandemic. This unique context, while having some signs of potentially outlasting the pandemic are by no means sustainable as they are rooted in behavioral changes such as increased overall alcohol consumption due to extra time, decreased in-store alcohol purchases due to safety issues, and increased home alcohol consumption driven by the closure of bars and restaurants. While the comfort of alcohol home delivery will survive beyond this unique context, the current growth rates were by no means sustainable as people will get busier and have less time to drink, it will feel safer and less regulated to go shop for alcohol yourself, and bars will open up again. The bright times for Drizly were most likely about to end as the pandemic starts to be contained through increased vaccination, thus decreasing COVID safety parameters that have been generous to Drizly’s business model. The company had been existing for some time, but the current COVID context as discussed has truly put it in the spotlight, and its founders couldn’t have timed their exit any better. As the world normalizes, the ability for Drizly to justify the current growth rates that backed its $1.1 billion valuation would have gotten increasingly difficult to believe. Now under Uber and its vast coffers, it doesn’t really matter if Drizly was just a COVID winner positioned in the right consumer space at the right time and under the sight of the right strategic buyer that stagnates and can’t grow at its current rate as we go back to a context that is closer in nature to that we lived before COVID.
[i] Global Drug Survey COVID -19 Special Edition URL: https://www.globaldrugsurvey.com/gds-covid-19-special-edition-key-findings-report/
[ii] Drizly FAQs URL: https://drizly.com/how-it-works
[iii] Drizly grabs $50M as growth surges during pandemic, Pitchbook, August 24, 2020. URL: https://pitchbook.com/newsletter/drizly-grabs-50m-as-growth-surges-during-pandemic
[iv] Uber Buys Drizly, an Alcohol Delivery Service, for $1.1 Billion, New York Times, February 2, 2021. URL: https://www.nytimes.com/2021/02/02/business/uber-buys-drizly.html