Digital Wine Ventures (DW8) has entered into an agreement to acquire Wine Delivery Australia Pty Ltd, a South Australian based company that offers a fulfilment service to wineries that allows them to dispatch customer orders directly from their cellar doors more economically than through the mainstream carriers.
The acquisition will bolt onto Digital Wine Ventures’ WINEDEPOT smart logistics platform, which has experienced “highly attractive” growth over the last six months as consumers have moved en masse to online purchasing in response to the restrictions imposed during COVID-19 pandemic, according to Digital Wine Ventures CEO Dean Taylor.
Whilst Wine Delivery Australia currently only operates in South Australia, DW8 intends to expand its fulfilment model into other Australian states under the WINEDEPOT brand.
DW8 has agreed to pay an upfront amount of AUD $2.4 million with a further 25 million performance rights valued at $1.5m (based on a share price of $0.06) being released subject to the business meeting performance hurdles.
The transaction remains conditional upon the successful completion of due diligence and the receipt of shareholder approval for transaction at the upcoming annual general meeting (AGM).
“The acquisition of Wine Delivery Australia perfectly complements our WINEDEPOT business and greatly enhances its customer value proposition by providing a mechanism to fulfil consumer and trade orders from inventory held at the wineries,” Taylor said.
“However, what made this transaction especially attractive for DW8 was that it provided relationships with an additional 180 wineries, allowing them to engage in our direct-to-trade marketplace, when it goes live early next year.
“This, together with our current organic customer growth rate, should allow us to launch our ‘paddock-to-plate’ inspired B2B marketplace with substantially more brands and products than the largest three distributors in the country combined.
“For the first time ever, trade buyers will be able to purchase by the bottle from hundreds of wine and beverage producers all via one order, one invoice, one payment and one delivery. This proposition will be very attractive to most trade buyers in a post-COVID-19 world.”
Wine Delivery Australia’s founder James Munn, says he is excited about the acquisition and joining the WINEDEPOT team.
“Over the last few years, almost every Australian winery has recognized how important direct-to-consumer sales are to the long-term viability of their businesses,” he said.
“However much of the additional margin generated from this sales channel is eroded by the high freight costs incurred shipping out of regional areas.
“Wine Delivery Australia set out to solve this problem, by providing wineries access to a delivery service that leverages everyone’s combined volumes to improve service levels and reduce freight costs. In just over three years we have come a long way.
“By combining forces with WINEDEPOT I am confident that we have a fulfilment solution capable of servicing every winery in the country. I am genuinely excited to be part of the team creating a platform that has the potential to release so much value back to the wine producers, who are at the very heart of the wine supply chain.”
Taylor expects the transaction to be approved by shareholders at the company’s AGM on November 25.
“While this is a relatively small acquisition, I expect the synergies, value proposition improvements and customer relationships will generate a lot of value for DW8 shareholders. It also shows the potential for us to accelerate the development of the WINEDEPOT business through carefully selected strategic acquisitions. All in all, it gets us one step closer to achieving our vision of revolutionizing the global wine supply chain,” he concluded.
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