Uber’s $ 1.1 billion Drizly deal set to deliver alcohol online

Delivery has become an unexpected lifeline for Uber as the pandemic has hammered its core operations. Last year, the company acquired food delivery rival Postmates Inc. in a $ 2.65 billion share agreement.

The combination made its Uber Eats business the second largest food delivery company in the United States after DoorDash Inc.

Both companies tightened their delivery offerings during the health crisis. Uber began delivering groceries in the U.S. and Canada last year, after acquiring the Chilean Cornershop. DoorDash has started delivering cleaning products and over-the-counter medicines from 7-Eleven stores, Walgreens and CVS, among others.

Online sales of alcohol with pandemic are turbo, a category that has long lagged behind other U.S. consumer products and other key markets due to strict regulations and entrenched consumer habits. E-commerce accounted for just 1% of U.S. retail sales by retailers in volume in 2019, but is expected to grow to 7% by 2024, says IWSR industry tracking.

It is estimated that sales of alcohol in the United States grew by 80% last year compared to the previous year, and that the country is now prepared to overtake China as the world’s largest online alcohol market this year. IWSR says that the pandemic among Americans has created enormous awareness that they can buy alcohol online and that 44% of those who buy alcohol via e-commerce only started doing so last year.

“It was a sleepy online category,” Doryz CEO Cory Rellas said in an interview in December. Prior to the pandemic, Boston-based Drizly’s consumer surveys showed that less than half of consumers knew they could buy alcohol online. “Covid turned it around overnight,” he said, and selling alcohol on the Internet reached a real turning point. ‘

The US is particularly ripe for the delivery of alcohol, as most liquor is bought at supermarkets and liquor stores to be delivered in homes, rather than on a ‘premises’ such as pubs and restaurants. During the pandemic, a number of states temporarily relaxed regulations to allow pubs, restaurants and art distilleries to make alcohol available for delivery and drop-off at home. Such regulations allow a Uber Eats food order to be linked to liquor, and the alcohol industry is betting that the changes will continue.

“Where people drink and how people think about it, I think it has changed fundamentally,” he said. Rellas said.

While delivery of alcohol has been legal in many countries for many 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 retailers in the area that handle alcohol sales and deliver orders, has equipped delivery workers with iPhones that carry software that can scan an identity document and determine its validity.

Uber said Tuesday that Drizly complies with local regulations in 1,400 U.S. cities. The company said it would eventually integrate Drizly’s 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.

—Jennifer Maloney contributed to this article.

Write to Preetika Rana at [email protected] and Saabira Chaudhuri at [email protected]