“Y
ou can settle for your bottle being on the shelf, but there is high value in end-caps and window displays,” says Mike Carollo, director of marketing at Philadelphia Distilling. When a consumer goes online and sees a product on Caskers, DistillersList, Minibar, or the plethora of other sites marketing craft spirits, it provides another consumer touch point for the brand. “We want them to see our brands in more than one spot,” explains Carollo. With email
THE GROWTH OF ONLINE DELIVERY SERVICES CONTINUES WRITTEN BY RYAN MALKIN
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lists and newsletter recipients often reaching into the hundreds of thousands, these sites offer consumer reach that a small craft brand may not have the public relations or marketing budget to handle on its own. But what are these sites actually selling? Hint: It’s not booze. Instead of selling FEW, Kings County, or Hillrock, these sites are actually selling their marketing savvy and email database. For instance, Caskers co-founder Moiz Ali says, “Caskers enters into relationships with retailers all over the place” who accept orders from Caskers website customers and those retailers ship the spirits to the customers. Similarly, ReserveBar, Drizly, 877Spirits, and their ilk are unlicensed marketing companies and not offpremise liquor stores. In general, these sites work the way FTD does with flower shops. A consumer visits the website or uses the app to place an order. Working with retailers in the local area, that order is immediately sent from the website or app to the retailer. The retailer is asked electronically whether it would like to accept and fulfill the order. After acceptance of the order, payment goes to the retailer and not the third party website or app. Then the retailer packages the product and delivers it to the consumer. In return for marketing products and driving consumer demand, Drizly, for instance, takes a licensing fee from the retailers. Working within the three-tier system, “the consumer orders from the liquor store and transacts with the store,”
explains Nicholas Rellas, CEO of Drizly. The three-tier system of alcohol beverage sales in the United States requires, but for various exceptions, that the producer sell to an instate wholesaler, who in turn sells to an in-state retailer, who in turn sells to a customer. Unlike wine, the shipping of spirits direct to consumers is extremely restrictive. “Whereas wineries can ship directly to consumers in 42 states for offsite sales, spirit producers can only ship to four states plus D.C.,” says Jeff Carroll, VP of compliance at ShipCompliant. Meanwhile, retailers within the state can, in more cases than not, deliver to customers within their state. That’s why these apps and sites seek to partner with retailers in as many states as possible. The retailers working with these services like it because, although delivering to consumers is an added cost, it is bringing incremental business, explains Jo Moak, general counsel for Wine & Spirits Wholesalers of America. “Convenience and having the product delivered to your home is the way the world is going with everything,” she adds. In some stores Drizly orders comprise as much as 25% of the store’s sales, notes Rellas. That translates into not only more sales for retailers, but also wholesalers and craft spirit brands. “I love the online model for boutique spirits,” says Antonia Fattizzi, founder of Cork and Tin, LLC, a company that helps small and emerging beverage alcohol brands enter the market. “It offers these new brands a platform to tell their story and gives WWW.ARTISANSPIRITMAG.COM