Coronavirus business booms for alcohol app Drizly

Coronavirus business booms for alcohol app Drizly
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Drizly, an alcohol delivery company, is booming during the coronavirus pandemic as orders from Americans stuck at home surge and states temporarily relax their liquor laws to help companies meet that demand.

The company saw nearly 1,600 percent growth in year-over-year new customers at the end of March, and CEO Cory Rellas told The Hill he doesn't believe that growth will slow down over the next two months. It's only the start for a company that is looking to build on its recent success to ensure that the eased restrictions on alcohol sales become a permanent fixture.

As more states allow alcohol delivery during the outbreak, Rellas predicts that could lead to long-term changes in consumer behavior as the public grows used to the convenience of home alcohol deliveries.

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“Over the last few weeks specifically, consumer awareness of the alcohol e-commerce category has exploded as more and more turn to delivery services as a safer alternative,” Rellas said. "We firmly believe that this will lead to a dramatic shift in consumer behavior for the long term. [Consumers] plain and simple will expect this level of service."

Rellas said more states are rethinking their laws.

“There’s probably five or six states that are actively reaching out right now saying, ‘how do we get up to the status quo of some of the other states who have done this,’ ” he said. “I actually think this is something that is going to be a much longer-term shift so we need to set this up correctly.”

Drizly's software connects consumers to liquor stores and the deliveries are carried out by the liquor stores themselves 90 percent of the time, or through a third-party courier like DoorDash, Postmates or local delivery services.

Drizly, founded in Boston in 2012, has relationships with neighborhood liquor stores. The number of liquor stores on the platform has grown by 300 percent this year to about 2,500 stores.

“During this time when many businesses are struggling, e-commerce platforms like Drizly are helping many of these local, independent retailers actually stay in business," Rellas said, calling online sales "critical" for those local businesses.

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“We’ve really tried and we’re working around the clock to keep liquor store doors open. We’re of increasing importance to them.”

Drizly also says it works to be a safer option for alcohol sales. It provides ID scanning technology for all retail partners directly through its app.

“Our message right now has been Drizly was built to add transparency to the overall supply chain,” Rellas said. “The platform itself is better than the status quo.”

With restaurants and bars closed to dine-in services, on-premise purchases in those establishments were down nearly 50 percent in March for wine and spirits compared to the 12-month average, according to SipSource data released Wednesday. 

Prior to the coronavirus pandemic, 31 states and the District of Columbia allowed off-premise retailers, like liquor stores and grocery stores, to deliver alcohol through their employees and 23 states and D.C. allowed third-party companies to deliver alcohol on behalf of an off-premise retailer, according to the Wine & Spirits Wholesalers of America.

During the pandemic, states across the country have been easing restrictions on alcohol sales and delivery. Advocates are eager to see those changes made permanent and to see reforms nationwide, but experts say there are many hurdles.

“There’s a lot that may be being allowed during this pandemic period that may not necessarily align with the law,” said Rebecca S. Williams, research associate at UNC School of Medicine and director of the federally-funded Internet Alcohol Vendors study. "Once the stay-at-home restrictions are lifted, I think that those things may change."

Looking ahead, Williams said that for "long-term permanent change, there are a lot of state laws and company policies that need to be addressed and there’s no one way to do that nationwide."

And on the federal level, Williams said many issues made it a more complicated decision, such as how to handle deliveries that cross state lines, alcoholic beverage control states like North Carolina that limit where you can purchase alcohol, and laws making it illegal for the U.S. Postal Service to deliver alcohol.

“For there to be national access to delivery sales of alcohol ... there are a lot of things that have to happen,” she said.

But momentum for more permanent change will build as more states get on board, advocates predict.

“There’s some bills that were already in the works in some states to try to usher in more delivery capabilities. Items like that, I could see getting kind of expedited,” said Jarrett Dieterle, senior fellow at R Street, a nonpartisan public policy research organization. 

Dieterle cited Georgia, where legislation allowing retailers to deliver beer and wine passed the state House in March and is now before the state Senate.

Roughly 15 percent of Drizly's business before the pandemic was from companies ordering alcohol for office happy hours. While those orders have fallen, individuals are making up for that with larger orders for their homes. Alcohol is also seeing the same stockpiling behavior boosting sales of other goods.

Drizly has seen sales of hard alcohol like gin and mezcal, as well as liqueurs, cordials and schnapps up, as people experiment with cocktail recipes. Champagne and sparkling wine are down, likely due to fewer office parties. IPA sales have gone up a whopping 738 percent, while absinthe is up 737 percent.

The biggest increases in Drizly's growth occurred in Nashville, Phoenix, Indianapolis and Newark during the week of March 23-30, with sales up 726 percent, 458 percent, 802 percent and 649 percent, respectively.  

“Market by market is so, so different. It just speaks to the population and what they’re used to. In some areas, you’re seeing craft beer spikes, in other areas you’re seeing more subcategories like a mezcal take off a little bit,” Rellas said.

"It’s been widely different by city and I think that speaks to mood and temperament and how people generally drink in their own cities."

Whether these changes in behavior, as Americans consume more alcohol at home, will lead to permanent changes in the law remains to be seen.

“I do think it’s possible that the new normal that comes after the lifting of social distancing requirements and the recognition of the demand for something like this may help influence people to push through laws like this, as well as changes to policies,” Williams predicted.