Drizly, for Online Alcohol Delivery, Raised $50M in Series C Round
Online alcohol delivery marketplace Drizly raised $50 million in a Series C fundraising round led by investment firm Avenir. Other participants in the Series C round included Tiger Global Management and Polaris Partners. The closure of many bars and restaurants combined with the cancellation of large social gatherings amid the coronavirus pandemic has driven up demand. Drizly’s efficient delivery speeds and large selection of wine, beer and spirits has put the startup in a prime position to fulfill the needs of this growing customer base.
Drizly is Largest E-Commerce Platform for Alcohol in North America
The Boston-based startup is the largest e-commerce platform for alcohol in North America. Drizly partners with local retailers in 235 markets. It has a network of 3,300 retail partners across mostly the United States and Canada. They help both independent and retail chain partners move their store shelves online for on-demand delivery. Drizly charges the wine and liquor stores a monthly fee to list on its site. It does not mark up the prices of the alcohol to consumers.
The Drizly platform is accessible both through their website and a smartphone app. Built into the platform is a proprietary ID verification system. It ensures users are over the legal drinking age in the respective jurisdiction. “As the largest alcohol delivery marketplace in the U.S., Drizly is rapidly bringing the $120 billion off-premise alcohol market online,” said Andrew Sugrue, co-founder of Avenir.
Increase in Demand for Home Delivery of Alcohol
Even before 2020, demand for alcohol delivery services accelerated. Thanks to COVID-19, 2020 has become a whirlwind year of growth for the startup. Drizly has experienced over 350% growth this year as compared to 2019. Its profit figures have also sharp risen since last year. This surge in order activity occurred almost immediately after lockdowns started in mid-March. As the pandemic has dragged on, data shows an increase in the frequently and quantities per order.
Some regional markets have experienced steady growth while others have witnessed more dramatic spikes in demand. During the last week of May, New York City had record-level order growth and then demand moderated. Other markets have seen more consistent high order volumes since the pandemic started. For example, Westchester, New York has consistently had 1,000% to 1,800% growth above the national average week after week.
Type of Alcohol Vary by Season
The data shows interesting trends in terms of the types of alcohol in demand in lockdown conditions and based on seasonality. Drizly has discovered that in the summer months, hard seltzers and cocktail ingredients such as vodka and tequila saw upticks in demand. As evidenced by the surge in demand for mezcal, mixers, syrups, garnishes, and liqueur, stay-at-home orders may indeed have inspired more amateur cocktail-making enthusiasts. In the wine category, dessert wines have been the only subcategory experiencing higher than average growth above baseline.
Drizly Founded in 2012
Cousins Nick and Cory Rellas, along with their two friends, Justin Robinson and Spencer Frazier, founded Drizly in 2012. Together they came to the realization that they could technologically modernize the alcohol industry. They thought of scenarios that would fit the an online alcohol delivery service model. The obvious idea is when a party host needs to quickly replenish alcohol supplies that were consumed quicker than anticipated without the hassle of leaving the party. An on-demand app could also be useful for casual social gatherings among friends, who might spontaneously want to get some beers. Today, Drizly has approximately 200 employees.
The company was originally headed by Nick Rellas before he left the company in 2018, and Cory Rellas was installed as CEO. Prior to co-founding Drizly, Cory worked at Bain Capital and the University of Norte Dame Endowment. In 2019, a conflict ensued between cousins Nick and Cory, with Nick allegedly violating his non-compete agreement by launching a competing venture after departing from Drizly.
Applying the Model to Cannabis Sales?
The team behind Drizly recently launched a new startup called Lantern, which is an on-demand cannabis delivery service. Some funds raised by Drizly’s Series C round were used to develop Lantern. The founders hope that Lantern can replicate Drizly’s success and become a go-to marketplace for cannabis products delivered from multiple dispensaries. The website is structured so that patients can create a Lantern account by entering a state-issued medical cannabis prescription number. Users can then search through a wide variety of vape, edible, flower, concentrate, topical and accessory cannabis products. As with Drizly’s commitment to fast delivery speeds, Lantern touts delivery times of under one hour. Lantern charges marijuana dispensaries a flat fee to list on the Lantern platform, and users just pay delivery fees that are set by individual dispensaries.
While Lantern is currently only partnering with medical dispensaries, it hopes to expand to the recreational-use market. That market shows bigger business opportunities. The startup is closely monitoring regulations in states across the country to get the green light on expanding its services to the broader adult-use market.