Alcohol sales are spiking amid the COVID-19 pandemic. Drizly Co-Founder & CEO Cory Rellas joins Yahoo Finance Live to discuss.

Video Transcript

AKIKO FUJITA: With bars facing new restrictions across the country, consumers are increasingly turning to-- where else-- online to stock up on their alcohol this holiday season. E-commerce marketplace player Drizly has seen 350% growth so far this year.

Let's bring in Cory Rellas. He is the co-founder and CEO of Drizly. He joins us from Breckenridge, Colorado. It's good to talk to you today. Cory, I am curious to hear if you've seen a big uptick over the last several weeks in terms of sales online, as we've seen increasingly in a number of states, bars being told to close up after being open for much of the summer.

CORY RELLAS: Well, it's been, as you know, an incredibly different year. And this is in a category that is very, very seasonal, almost like clockwork on what you can expect on a week-to-week basis. That's been thrown out the window. And we have seen an uptick over the last several weeks. It's tough to attribute it to COVID closures at this moment. But we've seen it continue into December, as more and more people are coming back at growth rates that more resembled May and June versus a little bit more of the decline that we had expected in August and September.

ZACK GUZMAN: Cory, in Q2, you guys more than doubled the customers there as well. I'd be curious to get a sense, too, in terms of-- since you guys were profitable earlier in the year-- talk to me about what customers are coming to the platform here, what you're seeing there in terms of the demographic shift and people who want booze delivered in 2020.

CORY RELLAS: Well, I think it's become a little bit more mass-market. We were coming off a very, very low base. This category was less than 2% shopped online prior to this moment. And so the acceleration of COVID awareness, the knowledge that you can purchase alcohol online, and then what Drizly can do for you that the liquor store cannot do has started to open us up to a different audience.

We're about 50-50 male, female. We're starting to move into a more suburban audience. And more than anything else, the occasions of drinking at home have changed so significantly that we're seeing more people build their own cocktails, that cocktail culture at home. Starting to think about, you know, different occasions you might have gone to a bar, how do I start to appreciate those at home? And online can play a big presence there. So, you know, I don't see this changing too much going forward based on the experience that consumers have had to date and growing off a very low base thus far.

AKIKO FUJITA: Cory, what are people buying right now? You know, like you said, seasonally, the holiday season you certainly see a big uptick. This year, the trends in the way in which you've seen the growth a little different from past years because of the pandemic. But is it about hard seltzer's again? It sounds like you've highlighted Mexican spirits, too? Where specifically are you seeing the demand?

CORY RELLAS: From a category perspective, liquor's done incredibly well during COVID. It's an easier product to transport. Cocktail culture's taken off at home. You can imagine the cordials, the liquors. And, you know, pick your favorite cocktail, but margaritas have done incredibly well, driving Mexican spirits through the roof. So that's continuing. We're continuing to see cocktail culture.

It's getting colder. It's getting towards the end of the year. Hopefully people have something to celebrate in 2020. And so we're starting to see red wines come back and bubbles. So, you know, we're starting to see a little bit of that seasonality and the normalcy creep in. But I think overall, you've seen liquor, and particularly the premiumization of liquor, really take share during COVID. And again, that's going to be something tougher to walk back, because, you know, trends are now becoming a bit of a normalization when you're nine months into this.

ZACK GUZMAN: And Cory, I mean, we're kind of having this discussion back and forth, you know, whether or not those trends are going to continue in 2021. But you think about bubbles, you mentioned that. I mean, New Years is right around the corner. Earlier this year, we were talking about a drop in champagne consumption since there weren't a lot of things to celebrate here. What are expectations for those celebrations? If more people are going to be celebrating indoors-- we saw that over Thanksgiving, you know, fewer family gatherings-- what are your expectations moving forward? And how important is this return to normal for you guys?

CORY RELLAS: Well, we're seeing more micro moments. Relative to previous years, the Wednesday before Thanksgiving, absolutely people stocking up for family. But that was more on an occasion of getting a bunch of different people together. Now we're seeing many more orders, much higher transaction volume, but a little bit different basket size and thinking about what they're drinking differently.

Going into the year, I very much expect some people to find ways to celebrate. It'll obviously just be in a different format. You're going to see much smaller groups. What you drink is going to be a little bit different. But to your question on ready-to-drink and seltzers, those are categories that are not going away. They're doing incredibly well and continuing to grow off of incredible growth rates last year. And they've become categories unto themselves. So I expect those to continue going forward.

ZACK GUZMAN: I know you guys are coming off a $50 million raise not too long ago. I mean, we're talking about DoorDash going public in this environment. It seems like you guys would have gained from a similar boost in kind of this more people spending at home, drinking at home theme here. What are those plans for you at Drizly? And what's your timeline looking like now?

CORY RELLAS: Well, we raised capital because this is the inflection point for this category. COVID accelerated consumer awareness of buying alcohol online. There's been a lot of industry events that are starting direct brand media budgets, as well as retailers and their strategy for e-commerce. Again, not to overemphasize the point, but less than 2% of alcohol sold online prior to COVID. We're probably in the 4% to 5% range today. There is structurally nothing holding this category back from being a 20-plus percent online category.

And so there's $20 billion of alcohol that are going to come online in the next several years. We think we're incredibly well-placed to disproportionately win in that environment. So we have a five-year growth strategy to be the brand that's synonymous with shopping for alcohol and a lot ahead of us.

ZACK GUZMAN: All right. The co-founder and CEO of Drizly, Cory Rellas. Thank you again for coming on. Appreciate it, man. Be well.

CORY RELLAS: Good seeing you. Thank you for having me.