Cheers to Uber’s New Acquisition
Uber to Buy Drizly for $1.1 Billion
Uber (UBER) announced yesterday that it has reached a deal to acquire Drizly, the alcohol delivery startup, for $1.1 billion in stock and cash. The pandemic has battered Uber’s core ride-share business. Meanwhile, demand for food and beverage delivery has soared, giving Uber a much-needed lifeline.
Uber has seen rising demand for its original delivery service, UberEats. It also acquired the food delivery app Postmates last year in a $2.65 billion stock deal. Now Uber will add Drizly to its delivery arm. Uber plans to integrate Drizly into its food delivery app while also maintaining Drizzly as a standalone service.
Online Alcohol Sales Boom During Pandemic
Drizzly’s founders say the app began in 2012 because of a text—“Why can’t you get alcohol delivered?”Now, you can. Drizzly currently provides alcohol delivery services in over 1,400 US cities through partnerships with thousands of retailers.
Online alcohol sales surged by 80% last year. Some analysts expect buying alcohol online will continue even after the pandemic subsides and people can return to restaurants and bars. In 2019 ecommerce accounted for only 1% of US alcohol sales, but that number is expected to hit 7% by 2024. During the pandemic, a number of states have loosened restrictions on alcohol delivery regulations to help restaurants and bars stay afloat. Some expect that these changes will be permanent, which will help online alcohol sales stay strong.
Uber’s Emphasis on Delivery
Uber has recently sold some of its less profitable segments like Jump, its electric bike and scooter business, and Advanced Technologies Group, its autonomous vehicle project. The company seems to be shifting its focus from high-tech transportation initiatives to delivery operations.
In addition to purchasing Drizly and Postmates, Uber recently bought the Chilean delivery startup Cornershop. Through this acquisition, it has begun delivering groceries in the US and Canada. It has also partnered with Walgreens (WBA) and CVS (CVS) to deliver medicines, cleaning supplies, and other products. The deal with Drizly is still subject to regulatory approval, but is expected to close within the first half of this year.
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