Wine consumption has grown across all regions in recent years, with premiumisation evident globally, and is expected to continue. Global alterations in technology, economics, consumer behaviour and the environment drive evolution and innovation in the beverage alcohol industry.
The wine industry has recognized that the digital environment is a vital medium to interact with consumers, inform them, learn from them and ultimately to sell them, keeping regulation in check. Technological innovations are changing the way consumers interact with products, companies and brands.
One such evolving technology company providing simpler, swifter and cheaper end-to-end supply chain solution and is aiming to digitally transform the global wine industry by is- Digital Wine Ventures Limited (ASX: DW8), led by start-up and wine industry veteran Mr. Dean Taylor.
The Global And Australian Wine Business
The global beverage market is worth USD 423.59 billion, with a CAGR of ~6%. Australia produces ~$6 billion wine and is growing healthily at rate of ~3.6% per annum, with its 2,500 wineries. South Australia and Victoria lead the number of wineries in the country, accounting for 33.3% and 27.3% of the total. In Australia:
- ~2.76 billion worth of wine is exported per year via 2,298 exporters, with China leading with 55% of the export ($1.12 billion) followed by the US ($424 million) and the UK ($384 million). The export growth is forecasted at 5.6%.
- The Direct-To-Consumer (DTC) market is worth ~$750 million and is growing at a rate of 11% per annum. It has the highest margin channel and accounts for 10% of the market in volume terms.
- The wholesale market is worth ~$2.2 billion, and wine is sold via 2,000 distributers, the number of licenced venues being 50,000.
- The retail wine market is Australia is worth ~$4.38 billion (of the total $11.7 billion liquor market).
- ~$850 million worth of wine is imported each year, majorly from New Zealand which accounts for 45.7% of the total imports.
- The ever-evolving virtual space builds the wine market sentiment positive, with ~500 million worth of wine sold and growing at 11% per annum.
How Is DW8 digitally disrupting the Wine Industry?
An emerging technology company in the Australian wine space, Digital Wine Ventures Limited provides the access to capital, expertise and shared resources to early-stage technology-driven ventures, which, in the Company’s view have the potential to disrupt and digitally transform their specific market segments. DW8’s particular areas of interest include the B2B marketplaces & smart logistics, SaaS applications, Digital marketing technology and e-Commerce, POS & CRM systems.
The company is firmly backed by a strong pipeline of potential customers and a solid existing user base, an experienced and skilled management team, strategic partnerships and industry relationships, scaling the DW8 business rapidly.
Recently, DW8 partnered with Australia Post, which is catalyzing the Company to establish a solid network of depots in the country way ahead of the schedule, while encouraging savings in time and capex. The partnership is a key doorway to expand in Singapore, NZ, China, the UK and the USA.
Another strategic partnership with a logistics services provider having worldwide orientation, Wine Storage and Logistics Pty Ltd, paves the way to have a devoted central storage and distribution facility in Australia.
On the customer front, DW8 stole the show in the Australian wine industry. In October 2019, Casella Family Brands was onboarded, the country’s most successful and largest family-owned wine business, as one of the customers of WINEDEPOT’s trading, integrated logistics, and order management platform.
DW8’s cornerstone investment WINEDEPOT, was successfully acquired in May 2019 and is a cloud-based SaaS platform that provides the wine industry with an order management, an integrated trading and logistics solution, consequently shunning costs and administration. The platform is expected to help retailers and suppliers alike, to boost direct to customer (DTC) and online sales by proposing a national same day as well as next day delivery service.
The WINEDEPOT platform will commence onboarding customers and create revenue in the second quarter of FY20.
Strengthening the WINEDEPOT executive team, DW8 welcomed two well-respected and highly experienced wine industry professionals- Mr Richard Van Ruth, as Business Development Manager, and Ms Anna Donald with as Inventory & Operations Manager.
Entitlement Offer and Share Performance
The Company is undertaking a pro rata non-renounceable offer to eligible shareholders for the issue of 1 new Share for every 10 Shares held at the record date on 20 November 2019 at an issue price of $0.006 each to raise approximately $612,000 (before costs). The funds will be used towards additional human resources, technology research and development, marketing and advertising and general working capital.
On 22 November 2019, after the trade session concluded on the ASX, DW8 settled the day at $0.007. The stock has generated a year to date return of 20.85%.
This changeover to the digital platform will enlarge the landscape for alcohol beverage. It shall help to provide recognition and market for a plethora of brands, as their reliant on winning shelf space from the renounced retail chains decreases. The prospective alcoholic market will be diverse and more competitive.
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