Online Booze Gets a Covid Boost

Liquor e-commerce never took offin the U.S. Then pandemic lockdowns came along

Tiffany Kary

The lockdowns early last year were like a cruel reversal of “a guy walks into a bar” jokes for the alcohol industry. Instead of fun scenarios where anything could happen, people were stuck at home, bars were closed, and in the U.S. most consumers had no idea how to buy booze online. Financial results for alcohol companies were constrained, and their supply chains had to be redirected away from bars, sporting events, and concerts to whatever homebound consumers they could reach. There was even a shortage of the aluminum cans needed for some beers as they scrambled to adjust.

Then, something funny did happen: Alcohol producers, held back from the e-commerce revolution in the U.S. by laws that date to the 1930s, suddenly saw online sales skyrocket. Beverage makers started to open up to technology platforms rolled out by startups such as Thirstie Inc. and Speakeasy Co., and consumers began to catch on that they could get alcohol without venturing out of lockdown. On Feb. 2 one of those upstarts, Drizly Inc., agreed to sell itself to Uber Technologies Inc.—the ride- hailing company that’s ventured into food delivery—for $1.1 billion.

After years of lagging behind other countries in adopting online liquor sales, the U.S. is now expected to overtake China as the largest alcohol e- commerce market in the world by the end of 2021, according to analyst IWSR. Boston-based Drizly predicts that the online share of the $120 billion U.S. market for alcohol will climb to 20% within five years, from about 5% today. “There’s nothing holding this category back now,” Drizly Chief Executive Officer Cory Rellas says. “We know what the interaction of technology and regulation looks like for this industry. Figuring that out was the hardest part.”

For new or little-known liquor brands, online sales provide an opportunity to get in front of consumers in a year when corporate events and bars can’t be marketing vehicles. And for familiar players such as Molson Coors Beverage Co., it’s a chance to get products to consumers at a time when many are still skittish about even going to grocery stores.