Drizly has closed on a $50 million Series C funding round, the Boston-headquartered alcohol e-commerce and delivery platform announced today.
The funding round was led by New York-based investment firm Avenir, with participation from previous investors, including Tiger Global Management. The latest funding round increases Drizly’s investment capital to a total of $120 million across four raises.
“This investment by Avenir, alongside other existing investors, is a vote of confidence in our industry leadership and enables us to further accelerate our product and customer growth,” Drizly Group CEO Cory Rellas said in a press release. “We look forward to further building out our offering for retailers and brands while continuing to provide a consumer experience that comprises the best place to shop for your favorite beer, wine and spirits.”
“As the largest alcohol delivery marketplace in the U.S., Drizly is rapidly bringing the $120 billion off-premise alcohol market online,” Avenir co-founder Andrew Sugrue added. “With its laser focus on alcohol delivery, Drizly provides a best-in-class consumer experience with the widest selection, best prices and fastest delivery times, while enabling retailers, wholesalers and brands to thrive in the growing online market.”
In the announcement, Drizly said the investment will go to its alcoholic beverage platform, as well as Lantern, its e-commerce cannabis delivery platform, which launched earlier this year and operates in Massachusetts and Michigan.
Speaking to Brewbound, Rellas said Drizly will use the most recent capital infusion to invest in “top of funnel marketing” to drive brand awareness, including television commercials. Drizly’s target audience divides into three segments: alcohol brands, retailers and consumers. Drizly will now be able to focus more on the brands and retailers.
“We’ve largely had to prioritize the end customers, sometimes to the detriment of the other two,” Rellas said. “Now, at our scale and with this capital, we can really build dedicated teams to address all three customers and really build value for them with their own tech products.
“There’s a lot more within that, but you can imagine store pages for retailers and better experiences for the brands to connect with consumers closer to where they’re actually purchasing products.”
Over the last four months, Drizly has hired 75 new employees, bringing its total headcount to about 220 across offices in Boston, New York City and Denver.
In 2020, Drizly said its sales have increased more than 400% year-over-year and has achieved “sustained profitability.” The latest funding round comes amid a global pandemic that has changed the way many consumers purchase consumer product goods, including shifting alcoholic beverage sales to on-demand delivery platforms such as Drizly.
“The addressable market has just expanded so rapidly with consumers now knowing you can buy alcohol online,” Rellas said. “Our ability to acquire more consumers, be more top of mind, do some more top of funnel type marketing is significantly changed.”
According to market research firm Nielsen, online sales of alcoholic beverages have increased from 13% at the outset of the pandemic in early March to sustained triple-digit sales from late March through the July 4 holiday. E-commerce alcohol sales peaked at 551% year-over-year growth during the week ending April 25, and increased to 307% during the week ending July 4.
“We’re fortunate to be on the right side of this,” Rellas said. “We spent seven years preparing for this moment, so we were ready, which was nice.”
Drizly is projecting that 20% of off-premise alcoholic beverage sales to be transacted online within the next five years. In early 2020, that figure was less than 2%.
Drizly operates in 235 North American markets in 33 states via a network of 3,300 independent and chain retailers. Rellas said he expects the company to add between four and seven states in the next year, depending on legislative efforts.
“We’re excited because legislatively there’s more going on in the last four months than in the last four years,” he said.
Previous investors in Drizly include First Beverage, Suffolk Equity, Gary Vaynerchuk (via the Vayner RSE fund) and the Wine & Spirits Wholesalers of America. In December 2018, Drizly secured $34.5 million in Series C funding in a round led by New York-based hedge fund Tiger Global Management and 17 additional investors.