When Uber completed its billion-dollar acquisition of Boston-based Drizly nearly six months ago, it played up the notion that the companies go together like pizza and beer.
In fact, ask anyone why they think Uber bought Drizly, and you’ll likely get the same answer: Uber can use its fleet of drivers to deliver White Claws and IPAs from liquor stores.
But some observers have said that because of laws that govern the tightly regulated alcohol industry, this is more complicated than it seems.
Drizly is an online marketplace that allows people to purchase beer, wine, and spirits from liquor stores on-demand, but it doesn’t deliver the booze. The reason dates back to the end of Prohibition, when the US government created the “three-tier system,” which requires that alcohol be sold from producers to distributors to retailers before reaching consumers.
Drizly skirts the three-tier issue by simply facilitating e-commerce sales to licensed retailers and never being involved in the delivery process. So how will Uber, Drizly’s new owner, be able to deliver the alcohol?
Previously, liquor stores either used their own staff to deliver, or Drizly helped them sign up with a DoorDash (or other third-party) driver program. But a former Drizly employee with knowledge of the situation said DoorDash abruptly ended its relationship with Drizly soon after the acquisition, leaving the company scrambling for a new delivery partner.
An Uber spokeswoman said Uber has since replaced DoorDash as the leading provider of third-party delivery services for Drizly. Drizly declined an interview but said in a statement that “it’s been an exciting couple of months as we’ve begun working towards the full integration with Uber.” (DoorDash declined to comment.)
“It makes complete sense for DoorDash to pull out,” said Adam Teeter, cofounder of VinePair, a media company focused on millennial drinkers. “Why would they fulfill [orders] for a competitor?”
Beyond the delivery question, there are reasons why Uber and Drizly might appear to be mismatched. The companies’ processes for accepting payments, for example, work in opposite ways.
When people order food on Uber Eats, the money goes directly to Uber, which then passes along a portion of the sales to restaurants. But (again) because of the three-tier system, when people buy alcohol on Drizly, the money goes directly to the liquor store, which pays Drizly a fee.
The former employee said they sensed “that Uber does not understand the legality around what we did and how we did it.”
That has led some familiar with the companies to wonder if payment processes could affect Drizly’s eventual integration into the Uber Eats app. Since the deal closed in October, some have observed a lack of cross promotion between the brands, besides Drizly being a part of Uber’s free delivery program.
The Uber spokeswoman said the company’s “payment systems operate in compliance with all state and local laws, including those on alcohol and including those that govern flow of funds.” She added that “the integration is on track” and that “there is cross promotion between the brands ... as the integration moves forward.”
In the long term, Teeter said Uber will need to figure out how customers can buy a burger from a restaurant on Uber Eats, say, and then add a six-pack of beer from Drizly’s marketplace to the same cart.
“That is where the deal makes total sense,” he said.
This story has been updated to correct the wording around legal questions and include clarifying statements from Uber.