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On-Demand Delivery, Part 2: New Players Take Aim

April 27, 2022

On-demand apps and delivery providers not initially established for beverage alcohol have been getting aggressive in the space as it continues to gather momentum.

Instacart is now partnered with more than 300 retailers, including large chain operators like Costco, Aldi, Albertson’s, Publix, Safeway, and Meijer, for same-day delivery and in-store pickup of beverage alcohol products from 17,000 stores in 26 states and Washington, D.C. According to the platform, beverage alcohol is one of the most popular digital aisles on Instacart.

DoorDash, primarily known for on-demand orders from restaurants, has been expanding rapidly into other channels, including grocery, convenience, and liquor stores. The online marketplace now facilitates beverage alcohol delivery across 20 states and Washington, D.C. via thousands of on- and off-premise licensees. Among the retailers it’s now partnered with for beverage alcohol orders are Total Wine & More; Spec’s Wine, Spirits & Finer Foods; Meijer; and Hy-Vee. Beverage alcohol sales on DoorDash more than doubled from January to June 2021, as compared to the year-earlier period, the company says.

Vertically integrated operating models are also aggressively looking to expand their share of on-demand beverage alcohol sales. Philadelphia-based Gopuff acquired California’s BevMo chain in 2020, followed by Kentucky’s Liquor Barn last year, in efforts to leverage their physical and license infrastructures and industry expertise to accelerate growth. Unlike operators like Drizly and DoorDash, Gopuff owns its inventory, giving it the flexibility to control, localize, and update inventory quickly. In total, Gopuff’s footprint now numbers 700 warehouses serving 1,200 cities in North America and Europe, as well as over 400 alcohol licenses across 30 states. Sales reached $2 billion last year. “We listen to our customers and continuously analyze the robust data we have so we can make the best decisions,” says Randy Ornstein, senior director of beverages for Gopuff. For beverage alcohol, he continues, “we must optimize and localize our assortment to become customers’ go-to for new innovations.”

Chicago-based Foxtrot is another vertical player, which, like Gopuff, was founded as an e-commerce marketplace that has more recently moved into brick and mortar. Foxtrot operates 16 modern convenience stores in Chicago, Dallas, and Washington, D.C., with plans to open as many as two dozen more in markets like Boston, Austin, and Chicago this year, followed by expansion into new markets in 2023. According to the company, half of all sales are via its courier delivery program, with delivery service provided within a few miles’ radius of each store. Beverage alcohol accounts for 40% of Foxtrot’s sales.

Even long-established delivery providers are expanding in the beverage alcohol segment. FedEx SameDay City has been working with beverage alcohol retailers since 2020 to provide delivery of e-commerce orders in less than four hours. “We’re seeing broad and expanded interest in same-day delivery of alcohol,” says Mike Preston, vice president of network operations at FedEx Office, of which SameDay City is an offshoot. “It’s a growing portion of our business. We expect to see continued growth in this market.”

On-demand ordering and delivery of beverage alcohol isn’t going away, those involved with the programs say. Drizly forecasts e-commerce sales of beverage alcohol to reach an 18% share in the next few years. Says FedEx’s Preston, “Everything we’re seeing is that consumers are adapting to a new normal and want and expect to be able to order items for quick delivery to their homes.”—Terri Allan

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