Liquor Distributors Double Down On Drizly

The investment comes as Drizly faces potential direct competition from Amazon on the horizon, as the eCommerce power player is moving to expand its grocery delivery service in the Seattle area to include wine and beer. Last month, WSJ reported, Amazon officially submitted three applications for liquor licensing in the Seattle area, according to the Washington State Liquor Control Board.

Danny Wirtz, president of Wirtz Beverage Group (a member of the wholesale consortium that just bought in), the nation’s sixth largest distributor by sales, noted that Drizly offers a “great solution to retailers, to buyers and to users to get product responsibly to consumers” on demand.

Apart from allowing alcohol merchants to ride the wave of the sharing economy, the Drizly investment is also about protecting wholesalers’ position in the alcoholic beverages industry from disruption-oriented firms like Amazon. Wholesalers sell to retailers, who in turn sell to consumers. Theoretically, this prevents suppliers from “owning” retailers and protects consumers on variety and pricing – two things that were an issue pre-Prohibition.

Wine & Spirits Wholesalers’ President Craig Wolf noted alcohol’s status as a “socially sensitive product” that “needs to be properly regulated and controlled,” as the three-tier system currently does. He further noted Drizly’s “business model to be three-tier compliant and not disruptive but complementary.”