Uber’s Drizly Acquisition Signals It’s Shifting Focus from Ride-hailing

Uber Technologies, Inc. and Drizly announced that they have reached an agreement for Uber to acquire Drizly for approximately $1.1 billion in stock and cash deal expected to close in the first half of the year. The deal augments other big moves made by the ride-hailing company in the food and drink market.

Drizly is the leading on-demand alcohol marketplace in the United States, available and designed to be fully compliant with local regulations in more than 1,400 cities across a majority of US states. Drizly works with thousands of local merchants to provide consumers with an incredible selection of beer, wine, and spirits with competitive, transparent pricing.

Last year, Uber was close to acquiring GrubHub, in an attempt to widen its share in the food market. COVID-19 ushered in an unprecedented crisis, restricting businesses and nearly totally collapsing the ride-hailing aspect of Uber’s business, forcing the California-based company to reevaluate its business play.

Now the company seems to be shifting focus to food and drinks delivery, widening its market base through acquisition and partnership with vendor companies.

Last year, Uber sold off its autonomous vehicle and flying taxi divisions, signaling the company’s diminishing interest in taxis and focus on more profitable business. Uber also purchased Postmates last year for $2.5 billion as part of its push to focus more on food and delivery.

The company has also recently started making moves into on-demand grocery delivery, beginning in Latin America and Canada. Last year, as the pandemic took a toll on its ride-hailing business, Uber introduced prescription delivery to its Uber Health service, an attempt geared toward keeping its business afloat.

These moves become necessary due to its model of business and how vulnerable it has become to events of recent times.

Apart from the worries emanating from COVID-19 strains, Uber has had governments to contend with. Last year, the company narrowly escaped a ban in California, its largest market, using prop. 22, a gig worker ballot it used on Nov. 3 2020 to overcome California State’s move to shut its operation down for classifying drivers as independent contractors against the state’s law.

With these events, Uber’s acquisition of Drizly signals a shift from what the company has been known for – ride-hailing, and points to a new direction that will not only eliminate scrutiny from the authorities, but also defy growth obstacles, such as presented by human to human interaction restrictions induced by the pandemic.

The statement from the company said it will collaborate with Drizly in many ways for growth, using technology to up the ante.

After the completion of the deal, Drizly will become a wholly owned subsidiary of Uber. Drizly’s marketplace will eventually be integrated with the UberEats app, while it is run as a standalone company.

While Drizly plans to run as a standalone, the companies are teaming up to use their expertise in their respective fields to foster growth.

Drizly plans to innovate and expand independently in its fast-growing and competitive sector, while also gaining access to the advanced mobile marketplace technologies of the world’s largest food delivery and ridesharing platform.

Merchants on Drizly will be able to benefit from Uber’s best-in-class routing technology and significant consumer base. Delivery drivers will have even more ways to earn. And Uber’s rewards and subscription programs will be able to deliver even greater value to consumers with new benefits and perks on Drizly, the company said.

“Wherever you want to go and whatever you need to get, our goal at Uber is to make people’s lives a little bit easier. That’s why we’ve been branching into new categories like groceries, prescriptions and, now, alcohol. Cory and his amazing team have built Drizly into an incredible success story, profitably growing gross bookings more than 300 percent year-over-year. By bringing Drizly into the Uber family, we can accelerate that trajectory by exposing Drizly to the Uber audience and expanding its geographic presence into our global footprint in the years ahead,” said Uber CEO Dara Khosrowshahi.

Uber currently anticipates that more than 90 percent of the consideration to be paid to the Drizly stockholders in the transaction will consist of shares of Uber common stock, with the balance to be paid in cash.

With this branching into new categories like groceries, prescriptions and, now, alcohol, Uber is gradually creating an exit from ridesharing, a pandemic-proof play that will protect the company from the kinds of losses it incurred last year.