Members of the wine industry outside the US may not have been paying much attention to Drizly, a business launched in 2012 after, so it was claimed on its website, one friend texted another asking why it was impossible to get alcohol delivered.
The solution they came up with was an online business called Drizly that sat between thirsty American and Canadian consumers and thousands of liquor stores and specialist wine retailers. During the pandemic, Drizly thrived, thanks in part to investment of over $68m, but it also attracted negative publicity when Techcrunch revealed that a hacker had accessed the records of up to 2.5m of its customers.
Ironically, Drizly had always been proud of the volumes of data it held about its customers and its ability to analyse trends. Sales data and the results of in-depth surveys enabled the business to launch an annual report in 2018 and a Bevalc Insight service that many US industry-watchers found invaluable. If you wanted to know which “black-owned drinks brands to have on your radar”, Drizly was there to provide the information.
By February 2021, Drizly showed enough promise for Uber to come calling with an offer to buy it. For no less than $1.1bn in cash and stock.
Bought for a billion
By February 2021, the Drizly bear logo had become sufficiently familiar to residents of over 1,400 cities and the business showed enough promise for Uber to come calling with an offer to buy it. For no less than $1.1bn in cash and stock. The new acquisition seemed a logical move, following the purchase six months earlier, of a food delivery business called Postmates, for $2.65bn.
Although the concept of transporting food as well as people had been pioneered by Uber as long ago as 2014, Uber Eats became an essential part of its business during Covid lockdowns when its taxi revenues fell by 50%. In the first quarter of 2021, Uber Eats had 81m users worldwide and a turnover of $1.74bn, nearly four times as much as it recorded just two years earlier.
Data protection issues
Last year, Uber Eats revenues broke the $3bn barrier before slipping back a little, but propects for Drizly were less rosy. In January, the Federal Trade Commission found that the company and its CEO James Cory Rellas had not implemented basic security measures to protect its customers’ data, despite having been warned of potential vulnerability, two years before the 2020 hack. The FTC also required to destroy “any personal data it collected that is not necessary for it to provide products or services to consumers and must refrain from collecting or storing personal information unless it is necessary for specific purposes outlined in a retention schedule.”
The company also had to “publicly detail on its website the information it collects and why such data collection is necessary” and to “implement a comprehensive information security program and establish security safeguards to protect against the types of security incidents outlined in the complaint.”
"We've decided to close the business and focus on our core Uber Eats strategy."
Realignment of the strategy
How big a part the FTC ruling played in Uber’s decision to close Drizly in March 2024 is not clear. In a statement to CBS Money Watch, Pierre-Dimitri Gore-Coty, Uber’s senior vice president of delivery stated that "After three years of Drizly operating independently within the Uber family, we've decided to close the business and focus on our core Uber Eats strategy of helping consumers get almost anything — from food to groceries to alcohol — all on a single app."
Some might wonder at the logic of closing a business for which one has recently paid over $1bn. Others, in the wine industry, might also take note of the way that, like supermarkets, Uber has decided that wine and other forms of alcohol do not warrant a stand-alone operation. Whether Uber will continue to gather, analyse and, most importantly, publish retail trends and data, remains to be seen.
