Thirstie partners with AB InBev venture and raises $7M in funding
- Thirstie is providing technology to Drinkworks to help the Anheuser-Busch and Keurig Dr Pepper venture sell products directly from its site, rather than requiring consumers to go to a retailer or a third-party marketplace. Drinkworks is a pod-based cold beverage system that makes cocktails, brews and ciders, among other products.
- "As an alcohol producer, Drinkworks is restricted from working directly with retailers or selling directly to consumers. This creates a massive challenge for them in terms of how they conduct their business," Thirstie CEO and co-founder Devaraj Southworth told Food Dive in an email. "Federal regulations don’t allow them to directly transact with customers, so we’re helping Drinkworks overcome that obstacle while still remaining compliant to regulations."
- Thirstie, which also works with brands including Dom Perignon and Makers Mark, said in a release it raised $7 million in a recent funding round, adding up to $12 million total. The money will help improve its technology and assist liquor brands in offering new ways of accepting payment from consumers, selling personalized products and customizing subscription plans to shoppers.
As consumers do more shopping online, it stands to reason that one of their favorite products in alcohol would make the transition as well. But federal regulations make it challenging to work directly with retailers or the public, opening the door for companies such as Thirstie to find innovative ways to help alcohol producers participate in this rapidly growing market place.
Southworth wrote that on-demand alcohol delivery soared between 2014 and 2016, but lost momentum in 2017 because of challenges of the business model, including high shipping costs. But at the same time, regulators became more comfortable with third-party platforms. This has created a lucrative opportunity with alcohol e-commerce growing 30% annually, according to a 2017 Internet Retailer study, compared to 20% for food. Southworth said only 0.6% of alcohol products are currently sold digitally, but predicts that figure will surge to 10% in a decade.
For Thirstie, the partnership with AB InBev's Anheuser-Busch will open up the opportunity to buy pods from Drinkworks.com to make beverages like Stella Artois Cider or classic beverages like a Long Island iced tea or old fashioned on a machine at home. Thirstie already has several partnerships with other large alcohol makers, but working with the world's largest beer maker is a major coup if AB InBev decides to grow its e-commerce presence in the future depending on sales and regulations that are in place.
To be sure, Thirstie does more than just help large alcohol companies conduct a sale online. It also assists in collecting behavioral and transactional data that would otherwise be lost on a third-party site. In the case of Drinkworks, the company will eventually have access to more than 2,000 data points on every transaction.
Alcohol companies could use the valuable data to develop new products or know how to better target shoppers online. This could be especially important as large beer companies look to boost growth as sales of their core brews struggle amid strong competition from craft and Mexican players as well as spirits and wine.
"Our objective is to power alcohol e-commerce for any third party — whether a liquor brand, a content producer, or any other innovative business operator," Southworth said. "To be candid, we’re positioned well to support any company that touches liquor delivery, even peripherally."
Drinkworks' machine is not cheap, selling for $299 preordered, according to The Wall Street Journal. The pods themselves, which contain a shot of alcohol plus flavorings, go for $15.99 for a four pack. The newspaper said following a recent test in St. Louis, where Anheuser-Busch is based, Drinkworks is rolling out the machine across Missouri, Florida and California.
Consumers seemingly are always looking for convenience and ways to save time, but it's uncertain how many people would be willing to put a pricey pod in an expensive machine rather than mix their favorite drink at home for a fraction of the cost. Still, AB InBev can not afford to wait on the sidelines as drink consumption habits and tastes change, and Drinkworks at least positions them to tap into a portion of that growth if it develops.
Thirstie is not the only non-alcohol company in the rapidly growing space. Drizly, the country's largest online alcohol seller, is in more than 100 North American markets where it partners with retailers to deliver products in as little as an hour or to arrange pickup at a store. And Instacart earlier this month expanded its alcohol delivery to more than 40 million households across 14 states and the District of Columbia.
Thirstie said its latest round of fundraising was oversubscribed, attracting investments from former CEOs of Coach, Citibank and Credit Suisse USA. The interest in investing in the e-commerce and logistics company from some big-name business leaders underscores just how lucrative the segment could be going forward.
Follow Christopher Doering on Twitter