When the COVID-19 pandemic forced most Americans to stay home except for essential errands last spring, on-demand alcohol delivery e-commerce platform Drizly’s sales skyrocketed.
“We saw years’ worth of growth — five years’ worth of growth — in just a three-month timeframe,” Drizly chief operating officer Cathy Lewenberg said during a webinar this week reflecting on the pandemic’s effect on beverage alcohol consumer trends.
In fact, alcohol e-commerce more than tripled its household penetration rate, growing from 1% to nearly 4% during the pandemic, Constellation Brands e-commerce national accounts manager Kristin TerHorst added.
For Drizly, this amounted to a massive spike between March 2020 and May 2020, which settled into sustained 350% year-over-year growth, Lewenberg said.
Its 2020 growth and potential didn’t go unnoticed. Tech giant Uber struck a deal to acquire Drizly in February 2021 for $1.1 billion.
Drizly’s 2020 Growth Drivers
Lewenberg identified three key growth drivers propelling Drizly in 2020:
- New users drove the most traffic to the digital platform. People outside of Drizly’s core demographics — 25-35 years old living in urban areas — created Drizly accounts, including “older millennials, Gen X-ers, even some baby boomers,” Lewenberg said.
- The number of retailers accepting and delivering Drizly orders more than doubled. The platform had fewer than 2,000 retailers on the platform at the beginning of 2020, and ended the year with nearly 4,500.
- Drizly also expanded its territory through regulatory approval, as Georgia, Oklahoma, Idaho and other markets legalized alcohol e-commerce in 2020. In 2021, the company added Las Vegas, Arkansas and New Mexico, and expects Alabama and Mississippi to follow suit.
Continuing Consumer Trends
In addition to providing an online marketplace to connect consumers and bev-alc retailers, Drizly also publishes data and insights gleaned from sales made on the platform, which Lewenberg shared.
- Spirits overtook wine as Drizly’s best-selling category. In February 2020, wine accounted for 41.4% of all sales. During Drizyl’s peak pandemic-driven sales period from March-May 2020, wine’s share shrank to 39% and spirits accounted for 40%. Last month, spirits accounted for 43% of all Drizly sales.
- Sales of ready-to-drink cocktails grew 2,000% off a small base, but Lewenberg thinks they are “a trend that is here to stay.”
- While sales of wine and spirits dwarf beer sales on the platform, several beer category sub-segments stand out, including hard kombucha, which increased sales by 4,500% off a small base, Lewenberg said. IPAs, particularly hazy/New England and imperial/double styles, sustained growth and “remain among the fastest growing beer subcategories on Drizly,” she said. Hard seltzers remain the best-selling segment in beer.
- In 2020, consumers increasingly turned to Drizly to send gifts. Pre-pandemic, gifts accounted for about 10% of Drizly orders in December and 3% in all other months. Last year, 20% of Drizly orders were gifts during the holiday season, and about 10% were gifts during the rest of the year. Gift orders, which are primarily wine or spirits, tend to be 54% higher in value than non-gift orders, Lewenberg said.
- Amid a national reckoning with racial and social injustice following the killing of George Floyd in May 2020, consumers became more interested in supporting minority-owned brands, which Drizly facilitated by adding filters to its user interface so consumers can search for Black- and women-owned brands to purchase. As a result, Black-owned brands’ share of sales on Drizly grew 240% last year, and the company added 48% more Black-owned brands.
- About 40% of users visit Drizly for research ahead of a trip to a brick-and-mortar retailer, meaning “there’s a lot of discovery happening on our platform that is informing the in-store piece,” Lewenberg said.
E-Commerce Bev Alc Shoppers Spend More, According to Constellation Brands
Consumers who purchase alcohol online are spending more money more frequently, Constellation Brands’ TerHorst said.
“The pandemic did not change our future when it comes to e-commerce,” she said. “It simply brought it forward faster by accelerating the consumer shift online.”
E-commerce Shoppers’ Habits in 2020:
- The average e-commerce shopper spends $24.07 per trip on 47 annual trips, for a total yearly spend of $1,124, according to data from Numerator Insights for the 52 weeks ending May 31, 2020. By comparison, the average alcohol consumer across all channels spends $19.72 on 20 annual trips for a total yearly spend of $397.
- Beverage alcohol e-commerce’s household penetration rate was 1% before the pandemic, and has grown to almost 4% today, TerHorst said.
- After making their first alcohol e-commerce purchase, about 47% of consumers repeat the practice in the future, making it “incredibly sticky,” she said.
Hard Seltzer and Ready-To-Drink Fuel Growth
- Four in 10 beverage alcohol shoppers purchased hard seltzer in 2020, nearly doubling from the segment’s 2019 purchase rate, which itself doubled from 2018, TerHorst said.
- Hard seltzer purchases are usually in addition to other alcohol products, “proving that hard seltzers are basket builders, not just substitutions,” she said.
- The RTD segment saw $8.5 billion in sales in 2020, up from $5.2 billion in 2019, TerHorst said.
- RTDs include liquids that are wine-, spirits- and malt-based, creating “fuzzy” lines between categories for consumers, she said. Consumers select RTDs for “experience and accessibility,” and tend not to care which category they represent.
Massachusetts-Based Georgio’s Liquors’ Embrace of E-Commerce
Georgio’s Liquors, a family-owned operation with two stores in Massachusetts, increased its delivery zone and expanded driver availability to meet consumer demand, said co-owner and principal manager Zannis Mamounas, who joined the panel.
“The pandemic has changed the way we do business,” he said.
Georgio’s created its own e-commerce website in 2015 and joined Drizly in 2016. Its 2020 online sales mimicked Drizly’s, with a steep peak in March 2020 as shutdowns began that settled over the summer and spiked again with holiday orders in December 2020.
During the spring peak last year, Mamounas said customers gravitated toward familiar brands.
“People wanted what they knew,” he said. “In the beginning, newly launched brands, private labels, small sizes [and] nips all suffered.”
As they have on Drizly’s national platform, ready-to-drink cocktails also sold well at Georgio’s, which Mamounas attributed to brands’ social media efforts, particularly through relationships with influencers and celebrities.
E. & J. Gallo Winery’s vodka-based High Noon Sun Sips’ partnership with Barstool Sports founder Dave Portnoy generated “massive demand for the product,” Mamounas said. Cacti, Anheuser-Busch InBev’s 7% ABV agave-based hard seltzer created with musician Travis Scott, has been “flying off our store shelves in a matter of two days,” he said.