Uber Technologies Inc.
UBER 7.01%
said it reached an agreement to buy the Drizly alcohol delivery service for $ 1.1 billion in stock and cash, which showed the company’s ambitions to provide a wider range of items at the doors of the consumers.
The deal could further accelerate the growth of online alcohol sales, traditionally a small portion of U.S. alcohol consumption that general shelter orders instead increased last year. Tuesday’s announcement is the largest offering to date in the U.S. online alcohol space, according to Wine & Spirits Wholesalers of America, a commercial group representing more than 350 distributors.
Delivery has become an unexpected lifeline for Uber, as the pandemic has marked its core business. The company acquired rival Postmates Inc., which delivered food last year, in a $ 2.65 billion share deal.
This combination made its Uber Eats business the second largest food delivery company in the United States after DoorDash Inc.
Both companies have favored their delivery offers during the health crisis. Uber began delivering groceries to the United States and Canada last year, after acquiring Chilean startup Cornershop. DoorDash began supplying over-the-counter cleaning supplies and medications to convenience stores 7-Eleven, Walgreens and CVS, among others.
The pandemic fueled online alcohol sales, a category that has long lagged behind other consumer products in the U.S. and some other key markets due to strict regulations and established drinking habits. E-commerce accounted for only 1% of U.S. alcohol sales to retailers in 2019 by volume, but is expected to grow to 7% in 2024, according to industry tracker IWSR.
It is estimated that online alcohol sales in the United States grew by 80% in value last year over the previous year and that the country is now on the verge of surpassing China this year as the market for alcohol. largest online alcohol in the world. IWSR claims that the pandemic has created a huge awareness among Americans who can buy alcohol online and that 44% of those who buy alcohol through e-commerce only started doing so last year.
“This was a dormant online category,” Doryly CEO Cory Rellas said in an interview in December. Prior to the pandemic, Boston-based Drizly consumer surveys showed that less than half of consumers knew they could buy alcohol online. “Covid changed that overnight,” he said, and online alcohol sales “reached a real turning point.”
The United States is especially ripe for home delivery of alcohol, as most alcohol is bought in supermarkets and liquor stores for consumption in homes rather than in “local” places like bars and restaurants. During the pandemic, a number of states temporarily relaxed regulations to allow craft bars, restaurants and distilleries to make alcohol available for home delivery and collection. These regulations allow an Uber Eats food order to be associated with alcoholic beverages and the alcohol industry is committed to keeping the changes going.
Analysts expect the United States to surpass China this year as the world’s largest online alcohol market. A Drizly worker filled an order in Boston in December.
Photo:
David Degner for The Wall Street Journal
“Where people drink and how people think about it, I think that has fundamentally changed,” Rellas said.
Although home delivery of alcohol has been legal in many states for years, most retailers have chosen not to offer it, in part because of concerns about the legal age of those who place orders. Drizly, whose app connects consumers with nearby retailers who manage alcohol sales and deliver orders, has provided workers with the delivery of iPhones that carry software that can scan an identity document and determine it. the validity.
Uber said Tuesday that Drizly complied with local regulations in 1,400 U.S. cities. The company said it would eventually integrate the Drizly market into the Uber Eats app. The acquisition is subject to regulatory approval and is expected to close in the first half of this year.
Demand for food sharing has skyrocketed amid the pandemic, but restaurants are struggling to survive. In a fiercely competitive industry, delivery services struggle to gain market share as they face increased pressure to reduce commissions and provide more protection to their workers. Video / Photo: Jaden Urbi / WSJ
—Jennifer Maloney contributed to this article.
Write to Preetika Rana to [email protected] and Saabira Chaudhuri to [email protected]
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It appeared on February 3, 2021, in the print edition, as “Uber adds Drizly to its mix, expands on alcohol delivery.”