The Marketplace Boom   //   May 21, 2024

Cocktail Courier has acquired alcohol delivery platform Thirstie

Cocktail kit delivery service Cocktail Courier has acquired alcohol e-commerce provider Thirstie, which helps alcohol brands create DTC channels through design and distribution compliance. 

Thirstie first launched as an alcohol marketplace in 2014 and pivoted to white-label delivery in 2017. Now, Thirstie’s technology is being integrated into Cocktail Courier’s operations. Thirstie started looking to pool its proprietary technology and resources with a similar operator about two years ago after it faced a drop in client demand as alcohol brands pulled back on investing in e-commerce. That’s what ultimately led to its sale to Cocktail Courier.

The deal is the latest consolidation in the alcohol delivery space as companies have been forced to adapt to post-pandemic shopping habits. Most recently Full Glass acquired wine delivery service Bright Cellars, just a few months after buying out Winc. Terms of the Thirstie deal were not disclosed, but the company said the merger deal was a mixture of mostly stock and some cash. 

Maxim Razmakhin, co-founder and CEO at Thirstie, told Modern Retail, “We thought that if we built ‘Shopify for alcohol brands’ compliantly, it would be enough to move a lot of products.” However, he said, many consumers returned to buying their favorite spirit at a liquor shop.

“There is little incentive for them to pay a shipping fee and wait when they can get it locally,” he said.

Cocktail Courier also launched in 2014 and has built a bootstrapped consumer-facing business by partnering with brands on exclusive recipe kits. It sells cocktail kits — which include everything needed to make a cocktail, from the liquor to garnishes to a recipe card — directly to consumers. Given its knowledge of selling spirits online, Cocktail Courier also specializes in alcohol compliance and fulfilling orders under state and government rules.

Razmakhin said he has known the Cocktail Courier founders for years. He initially began discussions with them about how the two companies’ models could complement one another, by combining Thirstie’s B-to-B technology with Cocktail Courier’s marketing resources and established customer base. 

The challenge with Thirstie’s Shopify-esque model, Razmakhin said, is that the business constantly relied on alcohol brands to provide unique or exclusive SKUs to attract customers. “It’s an operationally intensive process to create and offer limited-edition bottles,” he said. 

“Many assume Covid was good for us,” said Razmakhin. In some ways, it helped accelerate Thirstie’s growth. However, it also brought on more competition from other alcohol delivery services. The big delivery apps like DoorDash, Instacart and UberEats have all begun offering alcohol delivery over the last couple of years. 

“They really commoditized alcohol brands and delivery, and it became really difficult to compete with that due to their capabilities,” Razmakhin said. He added that this consolidation also led to some apps like Drizly, which Uber acquired in 2021, being shut down. “There is no need for a dedicated alcohol delivery app anymore,” he said.

Thirstie isn’t in the business of instant delivery and wants to keep its focus on helping booze brands generate DTC sales through branded storefronts. But there has been an overall drop in demand for online alcohol orders, which Razmakhin said was due to the brands pulling back on this channel to focus on bigger distribution opportunities. 

The startup last received capital investment from alcohol distributor RNDC in 2022. That year, the company began looking for a way to make its model work long-term. Thirstie collaborated with Cocktail Courier on operations before eventually merging.  

For the past two years, ​​Razmakhin said, “We restructured the business to right-size the company and reach profitability.” Thirstie held off on building any new B-to-B offerings and focused on its niche e-commerce compliance service. The company also reduced employee headcount through two rounds of layoffs. Thirstie has 10 employees now, down from a peak of 50 employees during the pandemic. Thirstie will now also share resources like finance and customer support departments with Cocktail Courier. “We’ve been close to breaking even in the last 12 months,” Razmakhin said.

Razmakhin said selling booze online is already a tough business. Many branded DTC alcohol sites tend to have low conversion rates, hovering between 1% and 2%. But through cross-promoting kits from Cocktail Courier to the brand sites, that number typically jumps to about 10% to 15%, Razmakhin said.

“[Cocktail Courier] figured out how to create delicious, creative cocktail kits and deliver them in a compliant manner,” he said. Cocktail Courier is currently profitable, according to the company, with one of its biggest revenue drivers being corporate gifting and group orders. “I was also pleased to see over 15% of their transactions are subscriptions,” Razmakhin said. Cocktail Courier offers monthly recipe boxes featuring a rotation of brand partners, like the Campari and Wild Turkey kits currently on offer.  

Brad Jashinsky, director analyst at Gartner, previously told Modern Retail that redundant delivery services will likely need to be folded into bigger platforms to survive long term. As such, dedicated alcohol delivery services don’t make sense without the audience and shared resources required to operate profitably. For example, Drizly’s tech was folded into Uber Eats after its acquisition to help streamline operations and better reach the core customer.

Going forward, Thirstie will continue to focus on working with large alcohol companies, such as William Grant & Sons, Bacardi, and Grey Goose.

“Some brands decided they don’t want to continue investing in an e-commerce storefront because it requires investing in design and marketing,” Razmakhin said. That being said, a number of the brands have since re-started their programs with Thirstie. “I think DTC will continue to serve as a hub for the biggest fans, but unique offerings will help grow digital alcohol sales in the long run.”