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Having raised R20-million since 2016 from investors, including the family of SA billionaire Anton Rupert, SA startup Quench Delivery is looking to go big.
Later this month, the Stellenbosch-based startup will launch a new iteration of its alcohol delivery app and will begin trialling a new township model in Khayelitsha in two to three weeks. The startup also has plans to open offices in Ireland and Switzerland before the end of this year.
Quench was founded in 2016 by childhood friends Liam McCreedy (pictured above) and Stuart Smith, and was born out of their digs garage, while the two were studying in Stellenbosch. Smith parted ways from the business last year, in what McCreedy said was a mutual split.
In a phone call yesterday with Ventureburn, McCreedy confirmed that an investment was made last year by Anton Rupert’s family, rather than by the entrepreneur himself, but said he could not disclose how much the family had invested.
The investment Quench Delivery netted from the Rupert family in 2019 is part of R20m the startup has so far
To date the startup has raised an amount of R20-million from investors and shareholders.
It includes an investment of an undisclosed amount in 2017 from businessman and investor Werner Roux, who has a wine business and who approached the startup at the time to see how the two could work together. A second investment was made in 2018 by property investor Gerhard de Clerck.
Through the app, customers can order beer, wine and spirits and have it delivered to their door within an hour, for a R30 delivery charge — if the customer is located within a 5km radius of a partner liquor store (the rate goes up to R50 for deliveries in a 7km radius, which is the furthest from an outlet a delivery can be made).
The startup, which currently has a team of nine people, uses a current network of 42 Ultra liquor stores as well as Blue Bottles and Spar’s Tops liquor stores to purchase and deliver orders. The startup is also registered on Uber Eats as an outlet, where nationally it has 13 outlets.
‘Over 48 000 downloads’
McCreedy said the app has so far netted over 48 000 downloads, much of these in the Cape Town area. The platform uses freelance drivers to deliver alcohol to customers.
While there are over 300 drivers signed up to the platform, currently only about 50 to 100 of these are active in any one month, as most drivers have also signed up to other delivery platforms.
The on-demand alcohol delivery platform was launched in the Western Cape in 2017, and expanded to Gauteng and KwaZulu-Natal last year and recently became available in Port Elizabeth, East London and George.
The new iteration of the app will introduce a back-end section that aims to offer liquor stores more data on customer purchases, so that alcohol suppliers and liquor stores will be able to better know to whom to direct advertisements and drinks specials.
This is aimed at complementing partnerships that the startup has struck up in the last six months with the likes of ABInBev, Pernod Ricard and Distell to run advertising campaigns on their behalf on the app.
Smith, who is based in Johannesburg last year parted ways with the startup to go work for a food retail supplier.
McCreedy, 25, said it was a mutual split. “He decided that the company was going one way and he didn’t want to be around, so he has gone to work for a firm in Joburg,” he said.
The two initially ran the business in Stellenbosch out of their own depot (they spent the first 16 months on developing the tech, while waiting to obtain a liquor license) before adding a second depot in Cape Town.
But last year the startup shifted its model from operating its own depots to partnering with the liquor outlets.
Warehousing your own stock adds an unnecessary extra expense on the business, which was behind the startup’s decision to partner with liquor outlets.
The startup generates a revenue by negotiating special rates on alcohol from liquor outlets. The customer foots the delivery bill, which is anything between R30 and R50.
While the business has yet to generate a profit, but McCreedy expects it to do so in the coming months.
Commenting on Quench’s plans to enter the township market, McCreedy argued that an app isn’t necessary the best solution for the township.
It could prove to be too expensive for such users who would likely have to rely on costly data fees to access the app, which uses more data than a mobi-site.
Better, he reckons, is a mobi-site, which the startup would in the next two to three weeks begin trialling in Khayelitsha.
In addition, rather than using freelance drivers to make deliveries, the startup will test an alternative delivery model, where the owner of a liquor outlet in the township would take ownership of the delivery of the drinks.
Like this, McCreedy hopes to gain the trust of community leaders and inhabitants by demonstrating that the startup can help benefit residents there — by for example creating jobs for residents, while generating additional revenue for township liquor outlets.
There’s plenty of potential growth in South Africa. McCreedy points out that most millennials, who are the startup’s target market, still prefer to walk into a liquor outlet to buy their alcohol. So, there’s room to grow.
One limitation is the liquor trading hours. The startup argues that its platform offers consumers convenience. But the government’s liquor trading hours, means that the platform can only sell alcohol from 10am to 8pm (or 3pm on Sunday) — no later.
McCreedy points out that some municipalities allow for the sale of alcohol from outlets, up until 10.30pm and even 11.30pm.
But to take advantage of this, the startup will have to rely on warehouses located in those respective municipalities — an unnecessary additional expense which the startup already decided to do away with last year, by teaming up with liquor outlets.
For now Quench Delivery isn’t stopping at South Africa. The startup is also looking to open up offices in both Ireland and Switzerland before the end of this year.
Is this a startup set to go big?
Featured image: Quench Delivery co-founder Liam McCreedy (Supplied)