Saucey CEO on the surge in alcohol delivery as coronavirus changes consumer habits

Chris Vaughn, Saucey CEO, joined Yahoo Finance's Jen Rogers, Andy Serwer, Akiko Fujita, and Rick Newman to discuss the rising popularity of alcohol delivery services as more and more people are staying home due to the coronavirus crisis.

Video Transcript

JEN ROGERS: Welcome back to Yahoo Finance. It's no secret that alcohol sales have been up during this time of shelter-in-place. We've done stories on wine businesses, craft beer doing well. I want to bring in the Saucey CEO Chris Vaughn right now. Saucey is an alcohol delivery app. So I mean, Chris, it goes without saying, I know your business is doing well. Just tell us how well it's doing.

CHRIS VAUGHN: Sure. Well, I think we're very, very blessed to have fallen into one of the categories that's obviously doing well during this period of time. I think the biggest thing that we've seen is that usually, somebody's buying behavior in our category is spread across many different venues, whether that be, you know, sporting events, music festivals, bars, restaurants, movie theaters that serve alcohol, as well as at-home consumption.

And right now, we're seeing all of that effectively be consolidated down to not only the home, but home and delivery. So since we saw some of the stay-at-home orders go in place, we saw over a 400% increase in sales month over month, which has taken a lot for the team to scale up and handle during this period of time.

But we've also seen some interesting trends emerge beyond purely just alcohol so people are staying sane while being at home.

RICK NEWMAN: Well, what are some of those trends? And how are you able to tell the differences in what people might be ordering? Are people ordering cheaper stuff because they're worried about money? More expensive stuff because they feel like it's end times? What are some of the trends?

CHRIS VAUGHN: Well, for example, we have products beyond alcohol, like our essentials category, which we shot up 1,000% in those early days. So that could be anything like Tylenol, Advil, frozen pizzas, ice cream, et cetera. I think what we're seeing is a lot of pairing of foods, and we're seeing it peak around Netflix release times where people are watching a show or a movie, and they're ordering and a bottle of wine and ice cream, or gummy bears, or whatever it may be.

I think in terms of cart size, we saw the cart sizes actually go up. If you think of that contextually with how people spend in the category, again, if I go to a bar or restaurant, I might be buying a $12 or $15 cocktail. And I think similar to what you saw post-2008, the consumption in the category didn't necessarily go down, but where people did it changed.

And it changed from being primarily in an on-premise environment to heavily skewing towards the off-premise purchase, so the liquor store, grocery store purchase. And then obviously, we're seeing a lot of that be captured by delivery right now. So I think that we we've seen the cart size go up by a meaningful component, but we've also seen people increase the number of items that they're adding in every buy.

AKIKO FUJITA: How sustainable do you think that kind of demand is? I mean, we've talked so much about the spike in delivery, whether it's restaurant delivery, alcohol delivery. But people are going to eventually start to go out. I'm wondering if you're thinking about that in terms of what more you need to do to keep this kind of demand going.

CHRIS VAUGHN: Sure. I mean, yeah we think about it a lot. I think the big change that we're seeing is that alcohol delivery is a relatively new business. I've been able to have my groceries delivered for decades. I've been able to have food delivered for decades, whether it used to be, you know, sending in your order via fax, or calling the restaurant, or then a website, and then apps.

Alcohol delivery, six or seven years ago-- unless you were in New York and had the bodega deliver to you-- really didn't exist. So our biggest uphill battle for the past six years has just been awareness. Most people don't know that you can have this as a service. And once they discover it as a service, it's about how you get them used to the shopping behavior of having it delivered to them.

And I think what we're seeing right now is the acceleration of not only awareness and adoption, but then people forming the purchasing habits. I tried it once. I tried it a second time. I tried it a third time. Now I like shopping on this platform. You know, it has personalized recommendations and tailors products to me. And I think that we've always seen that once we get somebody to their second or third purchase, they are an extremely loyal customer. And right now, I think we're seeing all of that accelerate into a very short window.

ANDY SERWER: Hey, Chris, you guys are doing a tremendous service, some would say, to American society. Other delivery companies, as well. But there have been reports and complaints, not necessarily about your company, but about the Grubhubs and Uber Eats gouging-- price gouging. So I want to ask you how sensitive you are to pricing right now? Number one.

And number two, just a quick question. Mostly, I'm doing this for Jen Rogers. Very concerned about underage kids ordering booze. Do you card people? How do you card people? Like Jen's kids, they couldn't just order liquor from you, could they?

CHRIS VAUGHN: No. No, they couldn't. So I'll take those in sequence. I think for the first point, yeah, we've kept all of our prices the same or lowered prices in many areas and tried to hold off on fees. We've never had a surge infrastructure, where we're surging during certain hours. And you obviously saw Uber and other people have to pull back some of those programs.

When it comes to underage, I mean, before we even launched the company, we made, I think, the conscious decision to say, we're gonna be stricter on ID verification than retailers. Right now, when I go to a retailer, the general guideline says, if you look under 30, check the ID. We made it mandatory from day one that we both check and scan an ID on every order on our platform.

And I think it's honestly a better shopping experience. You know, when you go to the store or you're at a restaurant, and you order a glass of wine, they kind of look at you funny and say, can I see your ID? You almost feel like you're under investigation or something. It's this weird, awkward moment. But if I just knew to purchase, I had to show my ID every time, regardless of where I was, it's very seamless. And we see customers show up with their ID out of hand.

And I think even in the early days, we did a lot of other moves. Like, we never targeted college campuses. We carved out universities specifically because we knew the person at the door might be 21, but everybody inside was underage. So I think we've always taken a much more precautious approach and adhered to very, very strict operating guidelines to make sure that we stand above board there.

JEN ROGERS: Andy read my mind, of course. Before we let you go, though, I just want to ask about the bestseller during the time of COVID. So I guess everything's been pretty much the same, except for La Marca? Is that a prosecco? And what do you think's going on?

CHRIS VAUGHN: Yeah. Yeah, I mean, I think what you've seen it get a little bit warmer in certain parts of the country. The second it's getting warmer, people want to be able to enjoy whether it's brunch at home or whatever it may be. I mean, we've seen all sorts of unusual trends with gifting. You know, friends gifting each other different cocktail packages, not telling them what's showing up, and then jumping on Google Hangouts or Zoom meetings and talking to each other.

I think we're seeing the same thing with La Marca right now, where people on the weekends are ordering in La Marca's or prosecco-- you're exactly right-- and just trying to relax a little bit in any way that they can.

JEN ROGERS: All right. I got to get some La Marca. Chris Vaughn, Saucey CEO, thank you so much for talking to us about your business.

CHRIS VAUGHN: Thank you for having me.