Apps Are Coming for Your Happy Hour

(Bloomberg Businessweek) -- As offices in London’s financial district clear out on a Friday evening, workers and students shoulder their way into Shoreditch Grind, a landmark of London hipsterdom in a once-gritty industrial zone. Some come for the hip-hop and indie-rock soundtrack, some for the burgers and smoothies. And this evening, many have come for a free cocktail courtesy of an app called Drinki. “It’s helped me discover so many new drinks and places,” says Alice Tuck, a 23-year-old psychology student who uses the app frequently on nights out. “It’s an absolutely great incentive to discover London without busting your wallet.”

About 250,000 people use Drinki, which has signed up spirits makers such as Pernod Ricard and Diageo. For millennials, it’s catnip: Those willing to disclose their age, gender, and email address get free cocktails at more than 100 pubs across England. They simply show the bartender a code and rate the drink when it’s bottoms up. Bars like it because distillers often foot the liquor bill and the patrons typically stick around and buy another round or two before moving on. And for producers in the $1.5 trillion alcohol trade, Drinki offers a wealth of data on hard-to-track millennials, helping to hone their product lineups and promotions. “We’ve seen some really good results,” says Sophie More, U.K. marketing chief at Scottish beermaker BrewDog Plc, which is working with Drinki to offer samples of its Punk IPA at 25 London pubs. “We want to get people out and trying their first pint” of the company’s flagship brew.

Former bond trader Tariq Aris and ICAP Plc broker Sophie Abrahamovitch co-founded Drinki Ltd. in 2014, and Paul Walsh—chief executive officer of Diageo Plc for 12 years—serves on the advisory board. Liquor producers pay the app maker for information such as how much time customers spend in a bar and what they consume at other Drinki promotions. With subscriptions growing more than 20 percent per month over the past year, Drinki expects to reach profitability by next spring. Aris says the business is raising £500,000 ($675,000) in a funding round that values it at about £5 million. “For the drinkers and the brands using the platform, Drinki’s a mutual benefit,” Aris, 38, says, sipping an espresso martini, the app’s offering for the evening.

For alcohol producers, data from the app helps drag an advertising model based on billboards and television spots into the modern era. These days word-of-mouth is more potent than conventional campaigns—smartphone-addicted millennials are hard to reach via traditional media, and health regulators are increasingly cracking down on liquor promotions. Offering people “a destination to start the night out gives Drinki an emotional and very powerful role in the customer’s social life,” says Michelle Du-Prat, co-founder and strategy director at branding agency Household.

Brands using the app have included Pernod Ricard’s Beefeater gin, Diageo’s Hop House 13 lager, and Heineken’s Czech brew Krusovice. Distiller William Grant & Sons Ltd. last year partnered with Drinki to promote its Drambuie whisky liqueur at London bars, offering a Drambuie Collins cocktail made with mint leaves, lemon juice, and soda. Energy-drinks giant Red Bull GmbH, seeking to diversify from being a simple vodka mixer typically consumed in the wee hours, has hired Drinki to promote cocktails such as the RumBull: rum, bitters, Amaretto, and tropical-flavor Red Bull. The app limits free drinks to one a night, but brewers and distillers can offer discounts on follow-up rounds, letting them track whether customers stick with their brand or switch to something else.

Drinki faces a growing roster of rivals with equally goofy names such as Pubster, Frynx, Chug, and Sluggr. Hooch Inc., a New York company that launched in 2015, has raised about $8 million and includes doom-and-gloom economist Nouriel Roubini as an investor. The app, which costs $10 a month for free drinks at selected bars, has signed up more than 500 venues in the U.S. and Hong Kong.

Aris says he’s not worried about the competition, as many rivals charge subscription fees, vs. Drinki’s model that’s totally free to consumers. He has agreements with several pub chains, providing potential access to thousands of venues across the U.K.—currently his only market while he irons out any kinks. He aims to eventually expand abroad and expects within the next year to put the app’s data to use in other areas of nightlife, for instance letting subscribers signal other users that they’re single. “Drinki wants to help the customer with everything they do at night, whether finding the right venue, viewing the drinks menu, and ordering drinks, all the way to socializing,” Aris says. “These are the basic needs everybody has on a night out, and we want to use technology to facilitate that.”

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