Business & Real Estate

California alcohol-delivery business did homework before starting out

By Mark Glover

mglover@sacbee.com

January 15, 2017 12:03 AM

Starting a business from scratch in California is daunting enough, but imagine the challenges of a new enterprise with hundreds of couriers delivering liquor to Golden State doorsteps.

That’s what faced the three co-founders of Los Angeles-based Saucey Inc., the alcohol-delivery business that added Sacramento to its service markets in early December.

“We knew we were getting into a fairly old industry … with a strict regulatory environment, so we asked ourselves how do we set up and operate within the confines of the law (and) how does it help the industry?” said Chris Vaughn, the CEO who started forming Saucey with two Southern California colleagues in 2013.

Documents with the California secretary of state’s office show Saucey’s original registration date as March 12, 2014. Now the startup delivers beer, wine and spirits – as well as a few tobacco products and some food snacks – to customers in Sacramento, San Francisco, Los Angeles, San Diego and Chicago.

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Saucey has about 25 full-time employees and more than 1,500 couriers working its metro markets.

Here’s how it works: With the phone app or by logging in to the website – sauceyapp.com – customers are shown a list of nearby stores and their liquor inventories. From there, orders are placed directly to the store by credit card, and a Saucey courier will deliver the order to the customer within an hour, according to Vaughn.

There is a delivery fee of $2.99 on all orders less than $40; the fee is waived for orders of $40 and up. Retail partners include large-volume liquor sellers such as BevMo, but Vaughn said Saucey also delivers products from a large network of independent retailers. Delivery works much like the Uber ride-sharing service. Saucey’s couriers can see orders and sign up to handle a specific delivery.

Vaughn said he and his colleagues tried to anticipate every possible variable from the beginning.

“We did the first 1,000 or so deliveries ourselves (in the Los Angeles area),” he said.

But what about couriers handling liquor? How do they guarantee that the customer is of a legal drinking age? Does Saucey have a liquor license?

Vaughn said he and his colleagues sought out experts to answer those and other questions before the company made its first delivery: “We talked with liquor lawyers with California ABC,” formally known as the California Department of Alcoholic Beverage Control.

Among the things Vaughn and his colleagues learned is that they did not need a special liquor-handling license from ABC.

Chris Albrecht, ABC division chief, explained last week that the delivery entity is “acting as a contract agent for the ABC-licensed business.” California secretary of state spokesman Sam Mahood added that Saucey is registered as a typical business and not subject to special conditions.

OK, but what about checking the IDs of customers receiving the liquor?

Vaughn said the company took liability concerns so seriously that it went beyond the steps suggested by experts to avoid possible drinking-age violations.

“ID verification, that is 100 percent,” Vaughn said. “It doesn’t matter if you’re 100 years old and made 200 orders, you have to show an ID. We’re stricter than any retailer, because we check it and scan it … and a record of that is kept.”

Saucey has about 25 full-time employees and more than 1,500 couriers working its metro markets. The company said it is accepting online job applications for drivers.

Vaughn said Saucey particularly looks for people who have past professional courier experience, “people who maybe worked in the service industry, people used to checking IDs.” He said couriers are subject to a “strict background check,” plus verification of a clean driving record, an up-to-date driver’s license and valid vehicle registration. Couriers are self-insured, Vaughn said.

Nancy Kincaid, spokeswoman for the state Department of Insurance, said she was not aware of any special California requirement for a courier delivering a retail product, but said individual insurers typically spell out such requirements in their policies.

“For some insurance companies, if you are using your personal, private auto for business purposes, you’re not covered,” Kincaid said. So, that’s where they have to be careful.”

As it has done in other markets, Saucey initially is offering its local service in the Sacramento downtown and midtown areas, with plans to expand outward in months to come. It’s the same business model that Saucey used in Los Angeles, starting from a core area and expanding out to Santa Monica and other areas.

Vaughn says Saucey provides a couple of advantages beyond convenience. He said retail partners selling liquor benefit from “incremental income that they ordinarily would not be capturing,” and customers who perhaps have had an alcoholic beverage and want more can place an order without getting into their motor vehicles and driving to a store.

Mark Glover: 916-321-1184, @markhglover