Do you like wine? Drinks wants to make sure that you can pour yourself another glass when you so desire. The company has raised $15 million in Series B funding to advance its platform and direct-to-consumer businesses. The round, led by Beverly Pacific with participation from Shea Ventures and others, brings Drinks’ total funding to $25 million, according to the company.
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Founded by veteran entrepreneur Zac Brandenberg and his colleagues in late 2013, Drinks is better known for its businesses Martha Stewart Wine Co. and Wine Insiders (acquired by Drinks in 2014). The company also operates what it calls a “plug and play” platform for digital merchants and brick-and-mortar retailers in the U.S., which it launched in mid-2017.
“What we saw with the wine industry and alcohol, in general, is that the players that are existing are entrenched and behave in an archaic fashion,” Brandenberg told Crunchbase News. “The interaction between the retailers and the marketing community with the wine producers or the distilled spirits producers hasn’t really changed much either.”
With the Drinks platform service, the company has aimed to bring technology to that process by partnering with unlicensed and licensed retailers to “offer wine as an adjunct service to their customers.” In plain English, Drinks facilitates the relationship between alcoholic beverage licensees, like a winery, and retailers–both ecommerce-based and brick and mortar–and between those retailers and their customers. Think of it like the middle man that could power an online wine delivery service for a company like Sun Basket or Boxed, or even a local store.
On the direct to consumer side, the company has focused on changing customer behavior in the wine industry, much like ecommerce did for individuals who would have normally shopped at a mall. Instead of going to Trader Joe’s or a local grocery store, consumers would buy online. But what about all of the other players doing that in the wine space? Brandenberg told us that he believes that the subscription approach those companies are taking is not effective because they aim to change more than one aspect of purchasing behavior–both moving to online purchasing and to a subscription-based model.
While the company does have a continuity program like Winc, Brandenberg said that subscription program constitutes less than 5 percent of what the company does in total. Instead Drinks focuses on using a matching algorithm to present an appropriate selection of wines from which consumers can choose. The company says on average customers purchase 6 to 12 bottles per package a couple of times a year, and its target consumers are those looking to purchase bottles in the $8 to $28 price range.
“We don’t look at squeezing out 2.3 total shipments to a consumer before the attrition kicks in as a metric we need to hit,” Brandenberg explained. “We look at a multi-year relationship with them.”
For both its direct to consumer and platform services, Drinks features anywhere from 300 to 450 individual products sourced from 150 to 180 individual partners located in the U.S. (mostly California) and globally. With its funding, the company plans to invest heavily in engineering and compliance for its plug and play platform, while focusing on marketing and advertising for its direct to consumer properties.
Drinks has attempted to carve out a space for itself in the direct to consumer space both facilitating connections for existing retailers in the industry while also serving its individual customers. The industry as a whole has been met with funding growth in the past year as our desire for shopping convenience becomes more prominent, and wine certainly is not an exception.
Illusration Credit: Li Anne Dias