Remember when the subscription box came onto the scene? It was the early 2010s and, as new meal delivery kits and beauty product subscription boxes started to become the rage, Josh Jacobs, CEO and co-founder of Speakeasy Co, saw an opportunity for craft cocktails to play in the same arenas. But he also wanted a way to sell full-size bottles of craft spirits. Before long, the latter goal became the main target.
Founded in 2015, Speakeasy has since ditched the subscription box model and now offers technology, warehousing and order fulfillment for wine and spirits brands. It’s also one of the few white label e-commerce sites that provides brands the tools to implement a digital storefront on their own websites. On the back end, the platform is three-tier compliant through its warehouses, which are operated by the Speakeasy team but licensed by a liquor store, centralizing its fulfillment and minimizing the number of shipping points. The site offers a contrasting model to marketplaces like Drizly that work with independent liquor stores to fulfill on-demand ordering.
Originally trained as a data scientist, Jacobs launched several startups in different industries before landing in alcohol. The company was bootstrapped until mid 2020 when it partnered with Goat Rodeo Capital, which focuses on early stage opportunities in beverage alcohol. That year Michael Boen joined the company as co-founder and full-time COO, bringing a decade of e-commerce experience. Now the team is up to 45 employees.
The timing was fortuitous: beverage alcohol e-commerce grew 43% during the pandemic across ten key markets, according to IWSR data. Over the next five years that upwards trajectory is expected to continue, with alcohol e-commerce sales expected to contribute an additional $10 billion to the alcohol market, reaching nearly $40 billion by 2026, as reported by IWSR. Spirits will contribute the most value over the forecast period, with e-commerce remaining a channel for unusual and rare items, and the premium segment likely to be better insulated from cost of living increases.
That could be a plus for Speakeasy as it aims to differentiate itself from other platforms by providing premium shopping experiences with its brand partners. The company works with over 250 brands, and has launched products like Tesla’s limited-run tequila, Nick Jonas’s Villa One Tequila, and special gift packs from Bacardí. Other big names like Jägermeister have used the platform to launch premium lines.
“Ultimately we’re hearing from brands that they want to focus on appealing to the high value consumer,” said Jacobs. “How are you going to appeal to a high value consumer? You’re going to give them something that they can’t get in store.”
Jacobs is convinced that the brands of the future will be online, which means companies will need to invest in a marketing strategy in order to attract customers to their own online sites.
“Build it and they will not come,” he said. “We get asked this all the time what is separating our partners that are crushing it on the platform versus those that are floundering? It’s marketing.”
For those companies who can’t invest in large marketing budgets, using data from a white label site can help target a demographic, said Jacobs. Emerging craft companies like Frey Ranch have benefitted from Speakeasy’s marketing services: the whiskey brand’s average monthly revenue increased by 113% and average orders per month increased by 187% after six months, according to Speakeasy.
“With as little as a couple of thousand dollars, it’s not really necessarily competing with these large brands, but we can be very laser focused on specific geography, specific demographics, and we can ensure that we’re reaching their consumers in a very profitable and sustainable fashion,” said Jacobs.
That doesn’t mean white label sites are for every brand; ready-to-drink cocktails or other low value items may be better suited for marketplaces where a larger order would entice a customer to spend on shipping. While luxury e-commerce sites like ReserveBar recently announced on-demand delivery, Speakeasy is doubling down on offering unique shopping experiences and increasing shipping times (although short of rapid fulfillment). The company will soon be debuting personalized labels, signed bottles and guitars for a celebrity label, and bottles of whiskey retailing up to $6,000.
“For us we’re going to stay focused on building out the logistics to support our premium partners in these experiences, which means no on demand delivery in the foreseeable future,” said Jacobs.