Uber announced today that it’s buying alcohol delivery service Drizly in a deal worth $1.1 billion, as the ride-sharing company continues to build out its stable of food and other delivery services.
The eventual plan is for Drizly’s marketplace of beer, wine, and liquor to be integrated into the existing Uber Eats application, giving Uber users a one-stop shop for both food and drink deliveries. The existing Drizly app will stick around, though.
Drizly is effectively an online delivery storefront for existing local liquor stores. The company partners with local sellers and then enlists delivery drivers — similar to Uber Eats — to handle the delivery. The service is now available in over 1,400 cities across the United States.
This deal marks the latest delivery-focused move on Uber’s part in recent months, even as it’s begun to sell off the less profitable parts of its business. Last year, Uber sold off its autonomous vehicle and flying taxi divisions as it sought to be more profitable.
Those moves followed Uber’s failed attempt to purchase GrubHub last year, along with a successful acquisition of Postmates over the summer for $2.65 billion. The company has also recently started to move into on-demand grocery delivery, beginning in Latin America and Canada, and expanded its Uber Health service to add prescription delivery. The acquisition of Drizly fits neatly into the expanding delivery-focused approach for Uber.
It’s a strategy that makes sense. While futuristic projects like self-driving cars or on-demand flying taxis sound cool on paper, neither has resulted in any real profitable products. And in a bruising 2020 that saw Uber post record losses as travel plummeted due to the COVID-19 pandemic, delivery services remained a bright spot on Uber’s ledger, growing massively, thanks to a similar COVID-induced spike in customers wanting to order in more.
Notably, these new delivery services are all businesses that rely on contract workers. Uber recently spent millions of dollars as part of a lobbying campaign in California to avoid classifying those workers as employees through Prop 22. (A group of Uber and Lyft drivers is currently suing, claiming that it “illegally” excludes drivers from California’s workers’ compensation program.) That’s in contrast to the parts of the company that Uber is winding down, like the autonomous vehicle program, which relied on full-time employees.
Uber and Drizly expect the deal to close sometime in the first half of 2021.