Why Australia’s Fragmented Wine Industry Presents A Business Opportunity For Integration
From the sale of my first business Wine Ark, a climate-controlled storage business managing over $100 million of collectable wine, to today building my eighth successful wine venture WINEDEPOT, I’ve been passionately pushing industry boundaries with new technology, questioning ‘business-as-usual’ and exploring ways to break from wine industry norms.
Never has this been as pertinent as today, facing a global pandemic which has forced millions of businesses globally to re-imagine their core operations and adapt to a new normal.
Australia’s wine industry has long been fragmented, with more than 6,000 grape growers, 2,500 winemakers, 2,000 distributors in the country selling through a multitude of platforms and over 50,000 licenced premises. Some through traditional retail, others online and – worst-impacted by Coronavirus – some reliant solely on cellar door revenue.
WINEDEPOT, my latest venture sitting under ASX-listed Digital Wine Ventures (ASX:DW8), presents an opportunity to streamline Australia’s highly fragmented wine industry which to date has been inefficient and fails to meet modern consumers expectations.
My vision is to digitally transform the wine industry, allowing sellers to expand their reach internationally and domestically, by providing access to inventory from thousands of suppliers and drop ship orders directly to consumers from strategically placed depots. For producers, this smart logistics solution dramatically reduces delivery costs and shipping times, but also simplifies administration and increases sales opportunities.
Since the pandemic broke, countless winemakers have scrambled to increase or even just establish an online presence to reach their customers – who now more than ever have been sitting at home enjoying a glass of wine.
In an industry dominated by a handful of major players, the need to compete on price and delivery speed has proven as critical to sales as being visible online. While many wineries were quick to offer ‘winesolation’ discounts, research has shown 93% of customers actually prefer free shipping to discounts. Part of WINEDEPOT’s role beyond service provision is to educate wineries in making decisions that best meet the needs of their customers.
Over the past 10 years there has been an enormous shift in the way consumers buy wine. Supply chains, dominated by distributors with high-cost warehouses, haven’t adapted to provide the range of wines people want, the prices or the speed of delivery; They’re as inefficient, fragmented and lacking in technology as they were when I launched my first business 20 years ago.
We’re harnessing the full potential of technology to eliminate all the double, triple and sometimes quadruple handling that goes on behind the scenes to get a single order delivered, whilst also providing a faster and cheaper delivery, wider consumer choices and the ability to easily purchase wine online by the bottle rather than case.
Recognising the potential of Australia’s fastest growing wine sales channel – the $1 billion online direct-to-consumer market – WINEDEPOT combines technology, storage, logistics, wholesaling and retailing together via one platform, to leverage this opportunity and bring the thousands of existing wine sales platforms and distributors together in one unified platform that not only meets but exceeds consumer expectations.
With depots in each state of Australia, we’re able to connect boutique Tasmanian wines with customers across the country in record speed. Once our presence and operation have been well cemented locally, we plan to look at how this solution can be applied to global markets.
There’s a saying that the greatest opportunities come in time of change. With COVID-19 turning the entire wine supply chain on its head, there’s never been a better opportunity to try and reinvent Australia’s highly fragmented industry – which is exactly what we’re trying to do with WINEDEPOT.
