Beer Business Daily:
Beer delivery app Drizly has been in the news often lately: Weeks ago, Wine & Spirits Wholesalers of America announced a minority stake and board position. And then this week, the company secured another $13 million in financing from a group of investors — including deal fixers and private equity company, First Beverage Group.
We caught up with CEO Nick Rellas on the expanding company’s strategy. They’re slated to be in 30 cities by year’s end — and more soon, with robust financial backing. Get ready to sell some beer with these guys.
TOP SELLERS. Last year, Bud Light held the top seller spot for Drizly. But Tito’s Handmake Vodka has toppled it in the first half. While beer comprised 39% of Drizly’s 2014 sales pie, it’s now running at 35%.
Their number two overall seller is still an ABI beer brand, though: Stella Artois. “It’s funny because it’s across the country,” said Nick. “Stella is number one in Seattle, Boston, L.A. … places you’d think that are demographically very different. … And below that it’s hyperlocal,” said Nick. “Which means when you go underneath, it’s incredibly fragmented.” National craft like Lagunitas does well for them — especially in California — but uberlocal brands make it into their top five beer brands in each market.
MECHANISM. We wanted to make absolutely sure we understand the service they provide. Simply, Drizly is the software connecting consumers to area retailers through whom they can order beer. Drizly has nothing to do with the delivery itself. “So we are just the software guy directing you to store,” said Nick. “Consumers download the app, tell us where they are, [and we populate] stores in that area.” After the consumer places an order, “we send the money and order to the store. The store processes funds, and they do the delivery.”
They do, however, provide proprietary age verification software to their retail partners.
INDUSTRY RECEPTION. We asked if beer industry players have been as receptive as the WSWA. Nick said they absolutely have. “I get asked quite often from people outside the industry — ‘do people push back?’ Because there’s a lot of regulation here. It seems like people would be wary of this. That was our initial take. But to be honest it’s been the exact opposite. WSWA has made that [obvious]: people are receptive because we don’t disrupt three tier. We have talked with people on the beer side — both large multinationals and local crafts, suppliers and wholesalers — and all say, ‘all you’re doing is helping [the beer industry] come into the 21st century.'”
Finally, we asked if it was hard to stay on the right side of the law in so many different areas — i.e., heeding advertising laws in California, for example. Of course, it’s part of their business plan. “We have lawyers in every single market,” said Nick. “We’ve worked with our lawyers to make sure if we’re advertising, it’s compliant. It’s difficult, it’s hard, it’s state by state … for a young company, the overhead is difficult. But it’s very much the cost of doing business for us, to make sure the law at the local level is maintained.”