Brewbound Podcast: MikMak’s Rachel Tipograph on the Post-Drizly Bev-Alc E-Commerce Landscape

[00:00:00] Justin Kendall: Heading to CBC? Kick things off the day before at Brewbound's meetup at Love City Brewing in Philly, Sunday, April 19th from 5 to 7 p.m. Connect with beer industry leaders, grab a drink, and catch up with the Brewbound team. It's free to attend and walking distance from the convention center. Head to Brewbound.com slash lovecity.rsvp. And don't forget to catch the Brewbound team at booth 956 during CBC. What happens to BevAlk eCommerce once Drizzly shuts down at the end of the month? Find out next on The Brewbound Podcast. Hello and welcome to The Brewbound Podcast. I'm Justin Kendall. I'm Jessica Infante.

[00:00:51] Zoe Licata: And I'm Zoe Licata.

[00:00:53] Justin Kendall: And this week, we're going to be joined by Micmac founder and CEO, Rachel Tipograph. She will be here with a conversation with Jess and Zoe.

[00:01:02] Rachel Tipograph: Yeah, we had a great time talking with Rachel and I learned a lot. Yeah.

[00:01:07] Justin Kendall: So for people who don't know what Micmac is, what's a Micmac?

[00:01:11] Zoe Licata: I don't know what the origin of a Micmac is, but what the company does is they kind of help Bev-Elk suppliers be compliant with some of the rules and regulations about how they can interact with retailers. So basically make it so that they can sell their products through these e-commerce channels, through Micmac serving as that intermediate third party.

[00:01:34] Rachel Tipograph: Yeah, Micmac is able to source inventory at all sorts of other e-commerce retailers. So let's say when you go to a beer brand's website and they want to direct you to see how you can order it online, Micmac is providing that layer that is pulling in inventory from other retailers. So the brewer is not providing something of value to any one provider over another.

[00:01:56] Justin Kendall: Well, I'm looking forward to hearing all of that, but let's get to a little bit about your weekends. And Zoe, last week, you said you were going to Scorpion to watch the Superbowl. Did this play out as you expected?

[00:02:10] Zoe Licata: I had a great time. Honestly, it was great. So we, yeah, we went to Scorpion Bar at Foxwoods. It was kind of more like a little bit of a sports bar scene with projectors everywhere, but with comfier club couches, essentially. And it was really good. Like, I had a bummy year for football fandom, and it reminded me of the camaraderie of everyone. Like, really excited about the game. It reminded me why I love football so much. So it was a good time. It might become a new tradition. We might have to say goodbye to the Super Bowl cookies for good.

[00:02:47] Justin Kendall: Whoa. I wasn't ready to hear that.

[00:02:50] Zoe Licata: That's big.

[00:02:51] Justin Kendall: That is big. I know. And you gave us a drinks breakdown and you were tweeting throughout the Super Bowl too as well about some of the ads, but give us a breakdown of what people were drinking.

[00:03:02] Zoe Licata: Yeah, for the group of people we were with, it was almost exclusively High Noons and McUlchers. A couple Coronas peaked their way in there, and there was a round of Patron shots that everyone instantly regretted. But yeah, High Noons were like king. That's what everyone was drinking before the game, during the game, after the game. At the club, like at Shiner, after the whole thing was over, it was all about the High Noons.

[00:03:30] Justin Kendall: Well, one of us drank a beer, and that was Jess.

[00:03:33] Rachel Tipograph: Wow. Yes, I drank exactly one beer as predicted. Revolution Brewing's Cold Time, their new lager. It was delicious, and I actually finished the whole thing, which is rare in this season of my life. But yeah, and you can expect more from us on Cold Time in the next couple of weeks, because I'm speaking to the team later this week. But it was really good. I mean, that's like what I like to drink, though. really good straightforward refreshing crisp they sent glassware when they sent the samples and it's exactly like the glasses that my grandparents had that are still at my mom's house like this funny like basically an hourglass shaped glass i don't know what what its official name would be but Hashtag proper glassware.

[00:04:16] Justin Kendall: Nice. And then I was in my basement watching the game and taking screenshots of Miles Teller partying in the luxury box with a Finnish long drink hat on next to Taylor Swift, which for my money, I think that the long drink really came out on top here. You know, you get that rub of being next to Taylor Swift and you didn't have to pay, you know, seven figures for a Super Bowl ad.

[00:04:43] Zoe Licata: Yes, smart job by Miles Teller, who is invested in the company.

[00:04:48] Justin Kendall: And a former Bud Light Super Bowl ad star, along with, is it Kelly Sperry?

[00:04:55] Zoe Licata: Kaylee, I think.

[00:04:57] Justin Kendall: Kaylee.

[00:04:57] Zoe Licata: His wife, yeah, who is one of Taylor Swift's, at least in public, seems like one of her closest friends, and was also in the big celebrity box with all of them. Do we know who the friend was that Taylor chugged with?

[00:05:12] Rachel Tipograph: No, I don't know who that woman is. I couldn't figure that out either. I kept asking during the game. I was asking Ryan, like, who's this? Who's that? He's like, one, I don't know. And two, just because they're being shown doesn't mean they're famous. Yeah, that's fair.

[00:05:24] Justin Kendall: And she chugged that beer like a champion too. She did. Yeah. And we should mention too, all of 54 seconds. That's the amount of total time that Taylor Swift was on, which I would imagine amounts out to about, you know, a second every time. So that's 54 like shots of Taylor probably throughout the game. But you know, when they need that deep chiefs reaction,

[00:05:51] Rachel Tipograph: Yeah, which I mean, by the reported ad costs would have cost her a little less than $14 million, which I don't know how much it costs to fly your private jet from Tokyo to Las Vegas, but maybe it's up there. I don't know.

[00:06:06] Justin Kendall: Probably not cheap.

[00:06:07] Rachel Tipograph: No, but she made it. She made it to the game. Her man's won. Happy night all around for the Swifties.

[00:06:15] Justin Kendall: And a happy night apparently for Michelob Ultra.

[00:06:18] Rachel Tipograph: Yes, big news just out today. Michael Oboltra at number one draft beer nationwide during the Super Bowl, which there's a lot going on here, Bud Light usually is number one, Bud Light is the official beer of the NFL. Bud Light, as we all know, has had quite a year and its draft decline started last year. So Bud Light draft volume, according to our friends at Beer Board, was down 31.8% compared to last year. And last year it was down 10%. So a good amount less Bud Light being drunk on draft during the Super Bowl year over year. And obviously last year's Super Bowl predates the the conservative-led boycotts that have really taken a toll on the Bud Light brand. So this year, the confluence of all these things led to McAulter being the number one beer on draft. It was the number one beer on draft in Las Vegas where the Super Bowl was, had a really big boost. Bud Light was the number one beer on draft in Kansas City, home of the Super Bowl champion winning Chiefs. And in California, Modelo Especial was the top brand on draft with an increase in volume sales of 14% per our buddies at Beer Board. So, interesting news. Something that was interesting to me was this was the first year that Beer Board included packaged product data in their Super Bowl report, as well as spirits. This won't be surprising to either of you, but White Claw Black Cherry, top selling Beyond Beer packaged product, followed by High Noon Sunsips Pineapple. Those both did well. In traditional beer, Corona Extra was the top-selling packaged product in the on-premise channel nationwide, according to Beer Board. Spirits, Tito's, number one. But yeah, Brewman Insiders can get the scoop on all the rest of that online.

[00:08:05] Justin Kendall: And then Newberator shared some post-Super Bowl ad data that found that Super Bowl commercials that were among the favorites were Duncan and then Budweiser was second. So Duncan was first with 29%. Budweiser with the Clydesdales return was 22%. And then among the least popular was the Bud Light Genie ad. It was the second least favorite next to the Apartments.com ad. And this is also very subjective because I dug through all the USA Today Ad Meter and Ad Age and Ad Week, and it's just the most subjective thing in the world. The Clydesdale ad makes the top 10 of the USA Ad Meter, but then, you know, it's a two star ad or whatever to somebody else. So it's it's just like all over the board. So subjective.

[00:09:02] Zoe Licata: Yeah, it is interesting, though, that none of the beer ads, I think, got an intense amount of buzz, which this Super Bowl had the most views ever this year. That is huge. And I think that's a huge missed opportunity for not just the beer brands, but a lot of advertisers. I don't think we're fully bringing their top game or we're fully prepared for this to have the amount of views that it did. And so it felt overall a little lackluster. when they had the opportunity to get the most eyeballs they ever could have for this game.

[00:09:37] Justin Kendall: Only $7 million for 30 seconds to get all those eyeballs.

[00:09:42] Rachel Tipograph: We all could have known this was happening. Taylor started coming to games, what, back in September? And I think the Chiefs are, you know, kind of, forgive me for my football ignorance, but I would say they're kind of a lock to be in the Super Bowl the past couple of years. Yeah. Sorry, Zoe, but yeah. Hey Zoe, at the club, what was the commercial situation?

[00:10:02] Zoe Licata: volume up, everyone was paying attention to them. So the volume, I mean, we are this was inside of casino. So everywhere you went, audio was on full blast, including inside of the bar we were at. And the club had like a full projector, everyone was paying attention to everything, which I was even like halftime show had people up dancing and interacting like it was people were all paying attention. But there was no obvious Like, at least you couldn't hear any reactions to any of the ads, really. You couldn't really gauge what people's responses were. So they were watching them, but I don't know how they perceived them.

[00:10:40] Justin Kendall: There's just not the same like shock value to them anymore, because as we saw with all the beer ads this year, they were released ahead of time. And a lot of them in like 92nd, you know, you mentioned Zoe and a tweet that. Molson cores kept in like the dig at constellation brands with the train pushing by and the, uh, bucket going flying with the Corona's or Corona like product with limes in it. But. We'd seen it all at this point. There wasn't really that whoa moment that had the special feel of the past.

[00:11:13] Zoe Licata: Yeah, well, that's why and I'm biased here, but a shout out to Duncan, because sure, they were teasing this ad the whole time of having Ben Affleck doing something and making a song. No one knew Tom Brady was going to show up. Matt Damon was going to show up, that it was going to be like anything like what it was. So it still had that surprise factor that got everyone's attention. And you knew everyone was keeping their eyeballs on the screen for that. I don't think they were as much for this very quick going by chill train or with Another Round of the Clydesdale ad that they've seen a million times.

[00:11:51] Rachel Tipograph: Apparently there's a four minute cut of the Duncan ad.

[00:11:54] Zoe Licata: I've seen some of the behind the scenes cuts, which are like behind the scenes in quotes where they definitely still were staged, but also very funny. So they're continuing to put out more content related to this that is equally entertaining when they have a whole menu in their app.

[00:12:12] Rachel Tipograph: related to the commercial. I am a sucker and got the hazelnut heartthrob iced coffee yesterday. So clearly very influenced by the advertising.

[00:12:21] Zoe Licata: Yeah, I thought about it today when I ordered my Dunkin. I know some people who were able to get their hands on the track suit in the very short amount of time that it was available for sale yesterday. So we'll have to get some photo proof once they finally get their packages.

[00:12:37] Justin Kendall: Does that person live with you?

[00:12:39] Zoe Licata: No, no. One of my closest friends, shout out Rachel DeSantis, who definitely does not listen to this podcast, but she is probably the biggest Dunkin' fan that I know. Worked at Dunkin', has Dunkin' shoes, multiple clothing items. Like if anyone from Revere, Massachusetts, accent at all, If anyone deserves a track suit, it's Rachel. So glad she got her hands on it.

[00:13:03] Rachel Tipograph: I was going to ask if she was going to be like turning this for profit on eBay, but no, this sounds like Rachel's keeping. It's going to be a cherished item for sure.

[00:13:13] Brewbound Podcast: This episode is brought to you by the Craft Brewers Conference, where big ideas, bold beers, and brutally honest shop talk collide. Join thousands of industry pros leveling up their game. Don't miss it. Register now at CraftBrewersConference.com.

[00:13:33] Justin Kendall: Let's get into some of the headlines that are out there right now. And you can read all of these stories by becoming a Brewbound Insider. But let's start with the Boston Beer non-compete lawsuits that you covered, Jess. We talked about them last week and you have far more detail that you can go into, but just break it down for us.

[00:13:54] Rachel Tipograph: Yeah, so high level, we talked about the non-compete angle to these lawsuits last week, but there's another angle in both of them that alleges the company fosters a toxic work environment. And both of the plaintiffs mentioned the same former manager. And they said, you know, in the lawsuit filed by John Brennan, who was a rep in New Hampshire, he said that he noticed his standing within the company started to change after he corroborated a teammate's allegations that she was being discriminated against by their shared manager for being a woman. And John Brennan, the plaintiff, and his teammate Katie Fritz, who I believe is being added as a plaintiff, I don't know that that has happened for sure yet, but They both, you know, Katie claimed that their shared manager was not giving her the same opportunities as other men on the team. Notably, and very clichedly, she says she was not invited to a golf outing where, you know, their clients would be because male colleagues were invited instead of her. And they both made complaints to the Massachusetts Commission Against Discrimination, which handles like EEOC type complaints. Both of their claims were dismissed for lack of probable cause, but worth noting, there was a statute of limitations 300 days prior to their filing. So the only things that could have been considered in this investigation that Massachusetts performed started on the day that Katie made her official complaint to Boston Beer HR. Different circumstances there. Max, who's the plaintiff in Washington State, he says the same manager, when he had worked in New England, allegedly forced him to look at sexually suggested photographs of women that this manager was dating and it made him uncomfortable. Just a few things that have been alleged here. Something that popped up in John's lawsuit was that allegedly this manager had very close personal relationships with his managers, which they think provided him some protection from the complaints that the coworkers were making against him. So unfortunately, it's not unique to Boston Beer. It's pretty pervasive in the beer industry. People who may not be the best of actors often find safe haven due to personal relationships. And I'm sure that's not unique to beer.

[00:16:05] Justin Kendall: But non-competes are fairly rare within the craft brewing industry, right?

[00:16:11] Rachel Tipograph: Yeah, they are. And even rarer is that Boston Beer actually enforces them.

[00:16:16] Justin Kendall: But there are at least two lawsuits that we know of

[00:16:19] Rachel Tipograph: So yes, Boston Beer has tried to enforce the non-compete a few times. The one that everybody still talks about was in 2011, when the former district manager for San Francisco left Boston Beer to go work for Anchor Brewing. And he was backfilling somebody who had left the company to go work for Coronado. So he thought, hey, this should be no problem. I'll just go to Anchor and get a different job. And Boston Beer sued both him and Anchor over a decade ago. In the fall, Boston Beer pursued enforcement of its non-compete against a former employee who left Boston Beer to go work for Down East, which is a hard cider maker, also in Boston, which made this kind of a hometown lawsuit situation here.

[00:17:00] Justin Kendall: And then Boston Beer has justified the reasoning behind the non-competes as they've invested in training into these employees and they're seeking to protect their, I guess, strategy and such.

[00:17:17] Rachel Tipograph: Yeah, so we've actually gotten a copy of an internal email that went out to all coworkers last week in which they basically, you know, was their response to our story. And they explained their reasoning behind wanting to enforce the non-compete in which they said, we hire, I'm paraphrasing, but we hire many of you early in your careers and we make this intense investment in you. And yeah, there's a lot of training at Boston Beer, particularly in sales. And the teeth part of the non-compete is that if you break the non-compete and go to a competitor, they say that you could be held responsible for up to $1,000 per day of all company-sponsored training that you have had in the last five years, which can add up a lot. Orientation's a week long in my time. Orientation was a week long selling skills was a five day class. There's, you know, negotiations was just like a three day class and on and on and on, you know, it's, it's very common for sales reps to fly in and out of Boston for these multiple day training classes. And that is the investment that they're trying to protect.

[00:18:15] Justin Kendall: Yeah. Well, you can read all about that at brewband.com. And I'm sure this is a story that we're going to be following, but let's talk a little bit about another story that you worked on, which is the latest data from Cercana. And you did a deep dive into craft, but I just want to focus on one part of that. And that's that. just under half of the craft brands in the top 30 brands in the C-Store channel were Brewers Association independent craft.

[00:18:49] Rachel Tipograph: Yeah. I thought that was super interesting because Circana reports, they break down data from grocery stores, convenience stores, and then multiple outlets and convenience stores, which is kind of both of those two plus other stores, you know, like, like mass retailers, like Target and Walmart mix in. And they do top 30 for craft. I don't know why, because every other list that you get in this data is 25, but craft is 30. And 14 BA defined craft brewers were among the top 30 brands in C-stores. Now this includes, you know, the usual suspects here in Nevada, you know, Samuel Adams is in there. but the B.A. also includes Tilray, which now owns several craft beer brands in the U.S., but they're primarily a Canadian cannabis company, and also Monster, which bought the Canarchy portfolio and primarily makes energy drinks, but those guys fall under the BA craft definition as well. So, you know, other brands that were in this list, you know, Sierra Nevada has got Hazy Little Thing, Shiner Box, Sierra Pale, Firestone Walker 805, Hi-Li IPA, Sam's Seasonal, Sierra Big Little Thing Imperial IPA, Rheingeist Truth, Georgetown Bodhisattva IPA. Sierra Torpedo, Tilray's 10-barrel pub logger, and from the great state of Vermont, Fiddlehead IPA, formerly a Brewbound Podcast brewery of the year. What I really wanted to zoom in and hear was the success of Georgetown Bodhisattva IPA and Fiddlehead IPA. Those are both regional craft players that are doing really well in C-stories with a small footprint. Georgetown only sells in most of Washington State, Oregon, Idaho, and Montana. Fiddlehead is concentrated in the Northeast. They are completely cold chain distribution, but a bunch of their most populated markets like Mass in New Jersey are independent markets. So like they don't even really have C-store sales. So clearly like they're selling a ton of Fiddlehead IPA in the States where it's possible. Both of those brands recorded really strong double digit growth in both dollar sales and volume in the first four weeks of the year. So we should definitely keep an eye out on both of these products as 2024 unfolds.

[00:20:55] Justin Kendall: Definitely. And, you know, Rheingeis popping too is another regional craft that doesn't usually show in scans, but here we are. Here we are. Yeah. Or at least the scans we get to see.

[00:21:07] Rachel Tipograph: The scans that we get to see. Yeah. Their trends were on the negative side, but just that they made the list at all is huge.

[00:21:14] Justin Kendall: And then since we're just off of dry January, what was the athletic breakdown?

[00:21:19] Rachel Tipograph: Glad you brought that up. Athletic had a tremendous month, 23rd largest beer category vendor overall, which is huge. Beer category vendors started Anheuser-Busch and worked their way down. So that Athletic has made the top 25 of that list is massive. But in grocery stores, which is a huge stronghold for Athletic, they're the 14th largest beer brand. through the month, and this report, you know, was through January 28th. So there's still a few more days of dry January in the data that we haven't seen yet, but it is coming. And Athletic's dollar sales in those four weeks increased 82.6% and their volume increased 95%. Huge numbers, but they're off smaller bases. So, you know, dollar sales, according to Cercana, overall Athletic did six and a half million dollars. And in grocery stores alone, they did $5.4 million. Their grocery store sales, that's an increase of 75%. So it's a little smaller than their overall because they are established in grocery, but still massive.

[00:22:19] Justin Kendall: And let's talk about one last story that you can read at Brewbound.com if you're an insider, and that's Two Robbers is pivoting from hard seltzer to ready to drink and cocktails, spirits-based, I believe.

[00:22:31] Zoe Licata: Yes, their beer-based hard seltzers are still around, so they're not off the shelves at this moment, but their priority right now is these new spirits-based vodka sodas. And the way they're differentiating themselves is they're really focusing on the ingredients and calling those out on the can and where they source their ingredients from, real fruit juices. pretty high quality vodka, and they're focusing on the liquid. So I had a conversation with one of the founders of Two Robbers, and he pointed out that a lot of the top competitors in the, specifically the vodka soda or spirits based hard seltzer space, aren't marketing a lot with images of the liquid itself, because it's not flashy. They say real fruit juice, but then the liquid is pretty clear. And Two Robbers wants to be like, hey, look at our brightly colored liquid. This shows us that we have some real high quality fruit juice in there. This is what makes our product so special. So they just started launching this this month. They're focusing on their home market of Philly first. and then moving into some other kind of high-traffic areas for RTDs, particularly in the on-premise, such as New York City. Also areas where their malt- or sugar-based hard seltzers are sold in separate channels from spirits-based hard seltzers, so they're going to be in different areas. and they're going to see how that works out before expanding to other markets. But yeah, on-premise focus, focus on the liquid, trying to make sure they're still differentiating themselves in this space, and finding a place for hard seltzers to still find success when they've been tackling the kind of brutal decline of the overall hard seltzer category.

[00:24:20] Justin Kendall: Well, you can read that at brewband.com. And then another feature that both of you have really spearheaded and was your idea, Jess, was Another Round width. And the first two installments of that are up there for insiders to read. And we've run shorter versions in our newsletter edition.

[00:24:39] Rachel Tipograph: Yeah, Another Round with is just a fun, casual way for us to catch up with industry leaders and just chat with them about what they're seeing out there in the world. And, you know, hopefully they can share some advice with other entrepreneurs and it's been a lot of fun. So if you are interested and want to be featured, drop us a line at news at brew bound.com.

[00:24:58] Zoe Licata: Yeah, our first two feature Earthrider Brewing founder and CEO Tim Nelson, and then the second one is the founders of Shojo Brewing, who you might remember them from Brewbound Live. So yeah, they're some really fun series that we're going to have for you every week.

[00:25:13] Justin Kendall: Yep. Those usually run in the newsletter on Fridays. So keep an eye out for that. Let's play a quick round of Another Round of Tabbing Out. And that NetSpirits editor, Varun Salnekar reported that Snoop Dogg and Dr. Dre are releasing what else? An RTD. So this one is appropriately named Gin and Juice for all the obvious reasons. Are you buying Another Round or Tabbing Out on 90s nostalgia in your RTDs?

[00:25:42] Zoe Licata: I mean, to connect it back to the Super Bowl, that nostalgia really got people excited. So maybe, I don't know, everyone was jamming to Usher and thinking about all the throwbacks there. So I would tap into this one. And I feel like the gin-based RTD market isn't super crazy right now, so potentially they could be one of the sole or main figureheads there. And it makes sense, but... We'll see. I don't know. There's so many RTDs, but the nostalgia makes sense to me.

[00:26:16] Rachel Tipograph: Yeah, Justin, the way you phrase this question is interesting because I would go Another Round on, you know, 90s hip hop nostalgia all the time. But Snoop, isn't he tired?

[00:26:27] Justin Kendall: He should be.

[00:26:28] Zoe Licata: He's extremely busy. He's everywhere. He's almost like a kind of like oversaturated figurehead at this point. He's on everything. He is.

[00:26:38] Rachel Tipograph: He's doing something with Happy Dad. He's got his own wine, I believe.

[00:26:43] Justin Kendall: He's in Corona commercials.

[00:26:45] Rachel Tipograph: He's in Corona commercials.

[00:26:48] Justin Kendall: Diversification. Get that money, Snoop, I suppose. This also plays into something that I think that you brought up, Jess, about the Super Bowl and the halftime show that Zoe mentioned that I think both of our souls left our body when she called that nostalgia.

[00:27:04] Rachel Tipograph: Yeah, well, I mean, so look, we had the wardrobe malfunction with the man whose name I prefer not to speak and Miss Janet Jackson, who was very unfairly maligned for many years. And after that, we went to like dad rock. It was like dad classic rock bands all the way down. And in fairness, that is the bulk of what I listened to. But in the past few years, they've clearly taken a turn. And I think they're now targeting my generation with songs that were big while we were in college. Like, did I get up and dance like a crazy lady when Usher played? Yeah, yes, I did. It actually made us rewind. the broadcast so that I could have my little dance party after my in-laws had left because I didn't want them to think that I'm crazier than they already do. But yeah, like it's a little weird to realize that the largest pop cultural force on earth is targeting you with what it thinks you will be nostalgic for because that means you're just fucking old.

[00:28:02] Justin Kendall: Well, that is a cheery thought that we will leave and let's get to our interview with Rachel Tipograph from Micmac and talk a little bit about where e-commerce is going now that Drizzly is shutting down.

[00:28:18] Rachel Tipograph: Bev Alec Industry Watchers received a shock when Uber announced in mid-January that it will shut down e-commerce alcohol platform Drizzly just three years after acquiring it for $1.1 billion. This week, the news hit that Uber would lay off 168 Boston-based Drizzly employees. Drizzly was among the most recognizable names on the alcohol e-commerce landscape. It had been in business since about 2012. As Uber attempts to get Drizzly users to migrate to Uber Eats, we wanted to take a look at the e-commerce landscape for beverage alcohol. And joining us to discuss is Rachel Tipograph, the founder and CEO of Micmac, a software firm that provides e-commerce enablement and analytics for multi-channel brands. Rachel, thank you so much for being here. How are you doing today?

[00:29:06] Uber Eats: I'm good. Excited to be here. Alcohol is a big part of McMac's bread and butter.

[00:29:11] Rachel Tipograph: Awesome. I mean, you know more than anybody how complicated it is to navigate all of this. So I'm so glad we've got an expert. Let's just dive in. How big of a deal is it that Drizzly is shutting down in March? I know the news broke when Zoe and I were both out of town at a conference in Coronado near San Diego for our colleagues at Beer Business Daily, their annual conference. So we both were sitting next to each other typing away and then all of a sudden, How did we find out? I don't remember.

[00:29:40] Zoe Licata: It was like a major mainstream news outlet, I believe, was the one that originally broke it. It was Axios. Axios, yeah, broke the news. And we're like, oh, wow. So to us, it set off some alarm bells. So this is interesting. But for Rachel, how big was it in your world? Like, what does that in the greater context actually mean?

[00:30:00] Uber Eats: Yeah, well first to just give a little context on Micmac so everyone can understand where we sit in the alcohol ecosystem and who we work with. Helpful. Yeah, we provide really big brands like P&G, Unilever, Anheuser-Busch, Diageo, Bacardi, L'Oreal, Lego, et cetera, with commerce enablement and analytics software. So when you're in an environment like Meta or TikTok or brand website and you're given the power to choose where to check out, that's us behind the scenes powering those experiences. For alcohol, we solve a really big compliance issue, which is in the US, there's obviously a three-tier system, and I'm sure you guys spend a lot of time talking about it, but brands like Anheuser-Busch, Diageo, Bacardi, they legally cannot just send traffic to a retailer. They actually need an intermediary to send the traffic. And so we at Micmac solved this huge compliance issue for alcohol brands where they're investing hundreds of millions of dollars in digital and social media, and they couldn't send traffic to retail without us. Now, there was another player in the ecosystem that also solved this compliance issue, and that was Drizly. And so, in many ways, Micmac and Drizly kind of did similar things, but we had totally different businesses. We're picking up on where alcohol inventory is all around the world, and then we're matching consumers to where that inventory is available so they could go buy booze right now. Micmac approached it from a software standpoint. Drizzly decided to approach it from a point of sale, fulfillment, delivery standpoint. And so I share all of this because we work with 90% of the alcohol brands in the world at Micmac. And so when this Drizzly news hit, and so I first saw the Axios article, but then I opened up my personal email, because I have used Drizzly multiple times, and boom, you got an email from Drizzly letting you know that they were going to be sunsetting the service at the end of March. So in my mind, I was like, okay, our customers, the biggest alcohol brands in the world, I'm sure they got a heads up. And I'm kind of like, why hasn't my team found this out? Why am I finding this out from national news? Well, let me tell you, my alcohol customers who are the biggest alcohol brands in the world found out the exact same time we did. Yes. So, you know, that this was like a boardroom decision. Where they're like, we ain't making money on this thing and this thing's gotta go and let's let go of it as fast as humanly possible. So that's headline number one, like inside story. No one knew this was happening, whether you worked at a big alcohol brand or you're a commenter like the three of us. The second is what happened after that. So at Micmac, we have over 7,000 retailers and marketplaces in our ecosystem, Drizzly being one of them. And on any given day in the US, I would say since 2019, Drizzly would be in the top one to two choices in America of where they want to buy alcohol right now, and the reason being local delivery. So when this news happened, there was very thematic dialogue across our customer base. They first reached out to Micmac and they were like, hey, did you guys? And we're like, this is when we found out, when did you find out? And we all compared notes and realized we all found out at the same time. The second was, well, what do you want us to do with Drizly? Because we can continue to support it through March 31st, or we can redirect that traffic elsewhere. And so across the customers, there have been essentially two business decisions. We have some customers that said, remove Drizly from our commerce experiences immediately. because we don't care about Drizzly anymore. Like it was that easy of a business decision. And let's go redirect that traffic to Instacart, Uber Eats, DoorDash, Reserve Bar, Total Wine, Walmart, like just anywhere else. And then there were other people who were like, you know what, let's just milk it to the very end. We can leave Drizzly there. That reaction from our alcohol customer base, I think goes to show that Drizzly was not a big driver in their business. The value proposition that Drizzly had, the reason why brands were willing to invest there, is because Drizzly would pass back the sales data, while other retailers kept it really close to the vest, and as a result, brands actually felt like Drizzly was a place where they could do retail media. And I'm doing air quotes for those who are just listening. Because you could buy advertising against search keywords in the Drizzly ecosystem. So let's take my customer Patron, right? I'm buying within Drizzly. And then I can understand the effectiveness of those search results because they would report back on the sales data in real time. It was an advertising business. That's it. It lost money on everything else.

[00:35:20] Zoe Licata: That's fascinating. We've had discussions about Drizzly beforehand. they operated a little bit differently than I think we first thought on the surface, because they would put out a lot of this information. They would send us tons of data about what is being sold there, trends there, and were also marketing themselves as, hey, we're more than just a delivery service for you and your company. And even in their data roundups that they would show us of like, okay, these are the quarterly trends this month, you could see that there were really putting an emphasis on these brands that marketed really hard on our website or through our app are seeing really big returns because of that. So it was like a very large chunk of their business that I think when you're just on the surface level thing of Drizzly, you don't necessarily think about. So hearing like from you that that's really what they were is fascinating. It makes a lot of sense.

[00:36:16] Rachel Tipograph: Yeah. Yeah. I mean, it was one of the things where they would give us like reports and press releases and we would kind of, you know, I think Zoe, you touched on this a little bit, but it was like, Do we cover this?

[00:36:26] Zoe Licata: Yeah, it made a weird journalistic scenario where you have to keep in mind that this is not data just from a third party data company. This is data from the company that is making these sales happen, sort of. So it's like they have this increased potential bias of these are the brands that are paying us to promote them, and now we're giving you data on them.

[00:36:49] Uber Eats: Yeah, it's an advertising business. Yeah. Maybe it could have stood on its own two feet if it didn't have to do everything else. But like we all know last mile delivery until drones really become mainstream is a loss. And so you look at Instacart, right? And when they IPO'd, you realize this is an advertising business and everyone questions the rest of the business because how is it sustainable? It's such a drag on the P&L, the fulfillment model. And so when you look at all the players in the ecosystem, I think the ones that are really ripe to win are the ones who diversify their business. And Uber, I do believe Uber can continue to be in a position to win because they do have a diverse business. And they rather not have their advertising ecosystem fragmented across different ecosystems, but rather play for scale within the overall integrated ecosystem of Uber.

[00:37:49] Zoe Licata: Yeah, I'm curious if based on that, from the consumer perspective, do you think that they care at all about having like going to a platform that's dedicated just to beverage alcohol? Like, do you see those drizzly consumers easily transitioning over to Uber Eats for any BevAlc related needs?

[00:38:08] Uber Eats: So I would say like an actual very avid user of Drizzly, I obviously have to do like a bunch of like corporate gifting and employee gifts and like Drizzly was a great platform for that. I do think that Uber Eats, DoorDash and Instacart and Reserve Bar can all pick up that market share. I don't think the consumer is gonna be like, oh man, I really missed, you know, Drizzly's editorial POV or Drizzly's merchandising strategy. I think the other players can do just as fine because at the end of the day, what does the consumer actually care about? Product availability, price, delivery speed.

[00:38:42] Zoe Licata: So what does this say? I mean, you kind of touched on it, but what does it say about like the overall e-commerce space right now? You said it's basically, you just have to lean into that, like more advertising or diversifying, right? That's kind of what it looks like to be successful right now.

[00:39:00] Uber Eats: Yeah. I mean, listen, commerce has really shifted in alcohol now that we're kind of out of the pandemic. E-commerce, pure play e-commerce, in alcohol, there's a clear opportunity with high price point, like luxury premium SKUs. For people who buy like $500 bottles of whiskey or $1,000 bottles of champagne, like that opportunity in e-com is very clear. For everyone else, it's really about buy online, pick up in store. or add to my shopping list so I can complete the rest of my Super Bowl shopping alongside, you know, the beer and tequila that I wanna buy. And so for players in the ecosystem, if they wanna win, they need to have an omni-channel proposition, and their business honestly needs to be more than alcohol to stand the test of time. And really the winning combination is grocery and alcohol. because that's where you get the weekly habitual shopping. That's where you can play for profitability and the profitability plays like click and collect, right? Like that's where you're gonna drive the highest lifetime value around a shopper. And so I think that players that have the combination of alcohol and grocery are the ones who will end up really winning in the end. And that's why personally, like I am bullish on Walmart. And so the challenge of all of that is that retail media, it's very difficult for it to exist when you are the retailer and not just the marketplace that's brokering advertising because of the three-tier system. And so there's essentially an ecosystem of other players, Micmac being one of them. That's the layer on top that allows for retail media to exist in alcohol while still driving sales at your most profitable customer partners, like a Walmart.

[00:40:57] Rachel Tipograph: Gotcha. So how would Walmart e-commerce for alcohol work? So Zoe, to give you some context, Zoe and I both live in Massachusetts, which is largely an independent state. Our Walmarts do not sell anything with alcohol. How does a BevAlc supplier direct traffic to Walmart?

[00:41:17] Uber Eats: Yeah, so there are states where Walmart can sell booze, Massachusetts, not one of them. So in those zips, it's all enabled there. I think the other big play for someone like Walmart is the marketplace strategy. which they're continuing to invest in. I mean, the reality is all of these retailers want skew density because skew density then drives auction density, which drives ad dollars. So I could see in the absence of Drizzly, there is going to be an opportunity for Walmart to really lean into an alcohol marketplace strategy. So what would that look like? So this is just Rachel Tipograph pontificating. There's no evidence that this will happen. So don't think this is like a hot stock tip or something. But imagine that Total Wine and Walmart came Another Round distribution, where all of a sudden Walmart shoppers could shop the Total Wine merchandising portfolio, all within the Walmart ecosystem. You've seen it happen with Kohl's and Sephora. You saw it happen with Ulta and Target. That's my hot take on what we're going to see start to play out in this space.

[00:42:26] Rachel Tipograph: So I've seen a few alcohol brands online. I mean, not recently. So maybe somebody gave them the memo, but we're like directing you from their social channels or their website to Total Wine, which they technically can't do. That's what was nice about Drizzly was that the brand can say, hey, find us on Drizzly because you're not going to a retailer and giving them something of value. But I think this is where Micmac comes in, right? You're able to provide that federally required buffer.

[00:42:54] Uber Eats: Yeah, that's why we have 90% market share in the U.S. in alcohol, because we solve a huge compliance issue and we have really granular alcohol compliance technology where literally at a zip level, we can serve the right retailers, the right marketplaces, have the right impression levels that pass your legal team, as well as, you know, there's DISC, this consortium. as well as disc requirements. It's a huge part of what we do. That's amazing. Did you start out to solve this problem for alcohol providers? It's actually a great story. So in 2018, I spoke at a conference and sitting in the audience was this guy named Adrian Parker, who at the time was the VP of marketing at Bacardi. And I was talking about MCMAC in the early days. And at that point in time, a lot of our customers were beauty brands. So I think I was presenting a beauty case stadium stage and it was like, um, a Facebook, it was called Facebook then a meta conference. Cause we're a meta partner and he tweets me. So then this is also Twitter cause it's 2018 and he was like, Hey, Rachel, love what you're doing in beauty. Could you do that for alcohol? And I'm a founder. I'll take any call with the brand. And so we schedule a call. He tells me all this stuff that I didn't know because I had never worked in the alcohol industry before. And he was like, listen, three tier system. This is how I think your tech could work. And immediately I said to him, please connect me to your legal team. Because what I heard is there's an opportunity to solve a legal compliance issue. And if I'm going to build this, I want to build this in conjunction with a legal team. And so, Bacardi has been a customer ever since, and I tell Adrian this, he's since left Bacardi, but he's like my godfather of alcohol at Micmac. And today, that is 25% of Micmac's revenue, is alcohol brands. It's those types of stories where you have your ear to Another Round, you listen to brands, their pain points, you can build solutions with them that can then scale for the whole ecosystem.

[00:44:52] Rachel Tipograph: That's crazy. Cause this part of the world is, I mean, it is wildly regulated and yet also at the same time, somehow it's the wild west because it is so wildly regulated and there's so much that needs to happen. So we just talked a little bit about, you know, Walmart, like in your mind, what e-commerce platform is doing alcohol sales the right way?

[00:45:12] Uber Eats: Well, it's also nuanced, right? So it's the right way at a state zip code level. And I think everyone is trying to tackle the issue. So I think Walmart and Total Wine are big players to watch in just sort of the national space. I think Instacart, Uber Eats, DoorDash and Reserve Bar are the players, a little bit GoPuff, but GoPuff is struggling. You know, those are the players in the U.S. in the last mile space. I think everyone has recognized that D2C is really freaking hard in this space and the only way that it works. is if you have a premium price point product. And so people have finally like woken up to that. So yeah, I think it's tackling it at a state by state level, doing it at scale, creating an ecosystem where brands feel safe to play. And you know, I work across again, 90% of the companies, and I can tell you like there's nuances from company to company. Every legal team kind of sees things a little bit differently. And so there is a gray area around all this.

[00:46:20] Rachel Tipograph: Awesome. And a lot of our listeners are from smaller, you know, Bev-Elk suppliers, craft breweries, you know, art startups. Yep. What can they do to play in this space? Because I think some people shy away from it thinking you need to be like big and have big pockets and a big legal team.

[00:46:36] Uber Eats: Yeah, no, no, we work with little alcohol companies too, like companies that are just doing a few million dollars in revenue. They need the same software. You can't advertise in the US and you can't direct traffic from your brand websites without a solution like Micmac. Today, we just signed a new tequila coming to market, one SKU. as a customer, because they need a solution like Micmac to enable product discovery and direct traffic to retail partners in their digital social brand website environments. And listen, we're not the only player in the space. So I don't want like, do your diligence. You can figure out who our competitors are and you know, compare the solutions. I obviously feel confident that we're the best, but you should do your own diligence.

[00:47:20] Zoe Licata: What do you say to suppliers or anyone else in the industry who may be thinking, like, we've heard a common theme of, oh, this was really important during the pandemic. Like, this is what kind of drove a lot of people to this, but maybe we don't need to focus much on it anymore. Like, is this something that still sustains itself beyond when everyone was stuck at home?

[00:47:41] Uber Eats: Social is the third shelf. If you're launching a new SKU and you ain't on TikTok, you are irrelevant. I literally had a meeting today with someone, a partner of Micmac, sales data for every bodega, like mom and pop type of store in the United States. And there is a direct correlation to what's trending on TikTok in alcohol, grocery, beverage, and what is being bought at bodegas right now. Product discovery happens on social. Recall happens in retail and search. So if you want to maintain market share or grow market share, you have to invest in digital and social environments.

[00:48:31] Zoe Licata: You have to. That's a really good distinction is that it's like the discovery aspect of your business is so huge, especially with so many brands out there and with so many brands focusing on innovation and new products all the time. And so your need to be looking to the spaces where you can draw the most attention and social media, I think. might get laughed at a bunch or it's seen as like okay we don't need to be the brand that's on TikTok but like you can see even beyond beverage alcohol the impact just like one TikTok can have sometimes on a brand where it goes viral one day and it's sold out immediately like it happens really fast.

[00:49:12] Uber Eats: Yeah, so you're bringing a new SKU to market, you gotta invest in those channels, and then of course, you need shelf space. And the way that you can start to gain shelf space is by telling stories to your retail partner, showing them the demand. So again, whether it's working with Micmac or a solution like Micmac, you can understand the effectiveness of your marketing investments and you can show at a zip code level where there is demand for your product. And then you can walk into a meeting with your retail partner and say, we've got to open up shelf space in the zip code because look at the demand that we've generated.

[00:49:47] Zoe Licata: Related to that, is there anything that you could share that you're seeing with those trends or anything in the e-commerce space that are sticking out with Bevelc right now?

[00:49:58] Uber Eats: Yeah. Let's see, a few things. So looking at some of our latest benchmark data, first of all, outside of Drizzly, Consistent top performers in terms of where America wants to buy booze right now, whether it's online or buy online, pick up in store, Instacart, Total Wine, Walmart, Kroger are top performers. And then in terms of channel investment, Instagram remains to be the highest converting channel, followed by Facebook, then TikTok. And then we day part the data at Micmac. And so if you think about like media buying, what's the point of buying media when no one is interested in shopping your product right now? So where we see peak conversion is Thursdays at the equivalent of your 6 or 7 p.m. local time. So you're probably thinking about your weekend and you're looking to load up and build your shopping list. And then finally, what's the average order value that we're seeing? On average, when someone is putting booze in their cart, now often they put other things in their cart too. It could be other booze or it could be limes, you know, chips, et cetera. But an alcohol purchase drives a total cart that has six items in the cart. So I always say this to our alcohol customers. You're a kingpin for them. Because when someone comes in to buy alcohol, they rarely just walk out with alcohol. It is a Trojan horse that causes people to shop across the rest of the ecosystem. And that's really valuable to your retail partners. And then what we see over the last year in terms of what are the items that people wanna buy when it comes to alcohol, whiskey remains a top performer, especially whiskey-based canned cocktails. So that's a little insight into what's going on in the carts that we see at MCVAC.

[00:52:00] Rachel Tipograph: I assume that's the Jack and Coke RTD.

[00:52:03] Uber Eats: We are not lucrative to say in this interview.

[00:52:07] Rachel Tipograph: Drizzly was really good in 2020 about sharing data about consumer adoption and how obviously, you know, we, we covered this 2020, everything changed and everybody thought this was going to be the new way of the world. But prior to 2020, a crazy amount of people didn't believe you could buy alcohol online. Has that continued? Like, has that education continued to grow?

[00:52:29] Uber Eats: That's such a good point. What we see in our data, which is really interesting versus other categories, is that there are like local favorites. So the alcohol retailer preference in Florida is totally different than the alcohol retail preference in New York. And what that just says to me is that there still is a lack of education across the ecosystem that you can buy alcohol online, because if you take other categories, Best Buy for consumer electronics. Ulta for beauty. Like it's very, very clear that there's a leading horse in the race. And when it comes to alcohol, there's no loyalty yet. So I do think that there's still a lot of education to be done.

[00:53:09] Rachel Tipograph: Interesting. I mean, what have we not asked you that we should have?

[00:53:12] Uber Eats: I think one of the challenging parts, and I was touching upon it in alcohol, is the fact that alcohol brands really do struggle to play in retail media. And I raised that because every other category that's essentially not regulated can give millions of dollars to someone like Walmart or Kroger. And as a result, the alcohol brands get less attention within these conversations with the retail partners. And so I think the big opportunity, because this is also how consumers shop, is partnership, is thinking about, hey, it's the Super Bowl. I'm an alcohol brand. What chip, what guacamole, what pizza, what hot dog company can I team up with so I can leverage their investments, gain search power that way by riding the coattails of someone who can participate. And in return, first of all, you can work out the economics of your partnership in the background and still be compliant. But in return, you can ride the coattails. And then I promise you, because this is how consumers shop, your partner in this will see higher conversion rates. Because no one wants to just check out with chips in their car. They want to complete a whole shopping list. And so that's sort of my encouragement to the ecosystem is that I think there are ways to get creative when it comes to retail media.

[00:54:35] Rachel Tipograph: Awesome. I mean, that's such great advice because you do have to get so creative. That's a perfect place to leave it. Rachel, thank you so much for joining us. We know you're really busy, so we really appreciate the time. It's been really great getting to chat with you about this extremely complicated, nuanced, and fascinating part of the world.

[00:54:51] Uber Eats: Yeah, yeah. And we have a lot of research. So go to mcmac.com. You can see all things alcohol and we're available to chat.

[00:54:58] Rachel Tipograph: Perfect. Thank you. And that is our show for this week. Thank you so much to Zoe for joining me on this audio adventure to Joshua, our technical director who is supervising all of this, and the whole Brewbound BevNET audio visual team and our co-host Justin. If you enjoyed what you heard, we'll be back next week with a fresh episode. And feel free to like, rate and review the podcast wherever you choose to listen to it.