Uber to shut $1.1 billion alcohol-delivery service

will shut down the alcohol delivery service Drizly three years after acquiring it for $1.1 billion.

Drizly will continue operating until the end of March. Uber will still offer alcohol delivery through its Uber Eats platform.

An Uber spokesperson, Meghan Casserly, confirmed the closure, first reported by Axios.

Uber bought Drizly in February 2021, at a moment of pandemic-induced home delivery frenzy. It followed the San Francisco tech firm’s 2020 acquisition of Postmates, which delivers food from restaurants and other goods; Postmates has since been merged with Uber Eats. At the time of the acquisition, Drizly seemed poised to help Uber, which did not then deliver alcohol, immensely expand its delivery capabilities. The startup operates in 36 states and more than 1,500 cities, according to its website.

But Drizly always operated differently from the rest of Uber. It works by allowing liquor stores to do their own delivery, facilitatkeys ing the transaction between the customer and the retailer. Unlike Uber Eats, it doesn’t use Uber drivers, and requires a separate app.

Since the acquisition, Uber has added alcohol delivery to Uber Eats. In a statement, Uber explained that it wanted its 142 million users to now be able to use a single app for alcohol delivery, food delivery and ride hailing. Globally, instances of alcohol delivery on Uber Eats have more than doubled in the last year, the company said.

The change may come as a challenge to the many local liquor stores that have come to rely heavily on Drizly.

About 40% of the business at Adeline Market and Liquor, in Oakland, comes from Drizly. “I don’t know what we’re going to do,” said owner Rham Korin.

Korin has been using Drizly since 2018, and his team delivers liquor throughout the Bay Area, from San Jose to Santa Rosa. Recently, he bought $800,000 worth of products specifically because they sell well on Drizly, including expensive whisUber like Macallan.

When Drizly notified him of the closure via email Monday, it said he could continue selling products via Uber Eats. But Korin is wary. “Since Uber took over Drizly it’s been really bad,” he said. “It slows down a lot. I don’t think it will be a good company to deal with.”

For other local merchants, Drizly was never especially helpful. Cara Patricia, co-owner of the boutique wine shop Decant SF in SoMa, said she considered using Drizly during the pandemic, but ultimately never did. Decant SF primarily stocks small, limited-production wines, most of which weren’t in Drizly’s central database. Even if they had entered the wines in the database, Patricia said, they never had enough bottles of each wine to make Drizly worth it.

Decant SF accepts delivery orders through its website. Korin said he plans to start a similar venture. “In the meantime, we don’t know how we’re going to deal with this,” he said.