Alcohol e-commerce platform Saucey and Los Angeles-area cannabis delivery business Emjay have combined to form Pacific Consolidated Holdings, the company announced today.
The merger “marks the first of several transactions on the horizon for PCH, whose objective is to scale best-in-class vertically integrated vice platforms, with a focus on e-commerce, delivery logistics and cross industry behavioral insights,” according to a press release.
Saucey, which PCH CEO Chris Vaughn and COO Daniel Leeb founded in 2014, has been adding new territories weekly, Vaughn told Brewbound. Although Emjay only serves the Los Angeles, the potential to share cannabis customers’ purchasing behavior gives the consolidated company a wealth of data in another industry.
In addition to providing a platform for consumers to purchase alcoholic beverages and, in some cases, cannabis products and have them delivered to their homes, PCH also provides alcoholic beverage brands with consumer insights.
“In any conversation we’re having with Big Alcohol, they’re laser-focused on what is happening in cannabis,” Vaughn said. “When a drinker starts using cannabis, do they stop drinking? Do they drink the same? Do they drink more? What products do they use?
“In cannabis, it’s the same conversation,” he continued. “That is something that we are uniquely positioned to find the data on.”
Vaughn and Leeb stepped into leadership roles at Emjay in January 2020. Emjay was founded in 2019 by Mario Guzman, the founder of San Francisco-based cannabis company Sherbinskis, and a team of investors, including the Inception Companies, which is a partner in the newly formed PCH. Another early Emjay investor, the One Gun Fund, is also backing PCH, as are Saucey investors Blumberg Capital and Bullpen Capital, according to reports in THCNet and Tech Crunch.
Inception Companies — an investment firm specializing in cannabis supply chain companies with offices in Beverly Hills, California, and London — was founded in 2015.
“The broader cannabis market has largely struggled due to weak underlying fundamentals and poor management,” Inception Companies co-founder Omar Mangalji said in the release. “But much like the dashed expectations that came with the rise and fall in the DotCom era, this industry is now evolving into Cannabis 2.0.”
For now, Emjay only serves the Los Angeles area and delivers from its own dispensaries, which provides the company better margins and allows it to control its prices.
“Because we own the licenses and the infrastructure, we’re less expensive than going to the store, which is much more in line with Amazon’s model,” Vaughn said.
Los Angeles is “the biggest cannabis market in the world,” Vaughn added. As regulations change in states across the country, Emjay will look to expand its business model, which includes employing hundreds of salaried drivers.
On the other hand, Saucey operates in 22 markets, including California, Washington, Texas, Illinois, Florida, New York and Washington, D.C. However, the bulk of its one million users are concentrated in California.
Saucey allows consumers to place beverage alcohol orders with participating licensed retailers with a 30-minutes or less delivery window. Rather than select a retailer to shop from, consumers added to a shopping cart and Saucey sends the order to the nearest retailer that can fulfill the order.
“For us, I think it’s more so removing that decision-making step from the customer and just saying ‘You want Coors Light, we’ll have it available for you at a great price delivered quickly,’” Vaughn said.
By comparison, Drizly, one of the largest alcohol e-commerce platforms in the U.S., operates as a marketplace that presents users with a variety of retailers to choose from. However, Saucey doesn’t believe consumers care which store their beer, wine or spirits come from.
“In alcohol, we have always had this hypothesis that the retailer probably matters less to the customers than the brands, which is different than grocery or food,” he said. “If I say I want a hamburger for lunch, I don’t just want a hamburger, I want a hamburger from In-N-Out.”
Saucey works with retailers to optimize their product selection, particularly their craft beer offerings. On average, Saucey’s retail partners offer 2,500 different products, roughly 10% of which represent the “top sellers that we make sure that they always have in stock and ready to go,” Vaughn said.
“We also try and work in the local craft, ‘Here’s all the top craft spirits brands and beer brands in your area — the customers in your area would really like having this offering,’” he added. “A lot of times they didn’t even know that, so we work to try and push craft.”
With the completion of the merger, PCH plans to hire more than 100 employees in the next few months as it scales both platforms.
Editor’s Note: This story was edited after publication to clarify the investment structure of the combined company.