Online beverage supplier Digital Wine Ventures (ASX: DW8) has welcomed Australia’s largest family-owned winery, Casella Family Brands, as a foundation customer of its specialised wine distribution platform, WINEDEPOT.
Casella Family Brands is Australia’s largest and most successful family owned wine business. Each year the group crushes between 160,000 and 200,000 tonnes of fruit making them the second largest wine producer in Australia.
The deal extends across the entire Casella brand portfolio, which includes the iconic Australian wine brand [yellow tail], as well as Casella Family Wines, Peter Lehmann Wines, Brand’s Laira Coonawarra, The Magic Box Wine Collection, Morris of Rutherglen and Baileys of Glenrowan.
Under a newly inked agreement, WINEDEPOT will manage of Casella Family Brands’ entire product portfolio across a range of domestic channels.
Digital Ventures’ chief executive officer Dean Taylor believes that the agreement with Casella Family Brands validates the need for a disruptive supply chain solution such as WINEDEPOT.
“Casella’s Yenda winery site covers a working area of 95 acres and can store over 260 million litres of wine. At the other end of the spectrum, we also work with micro producers who hand make just a few hundred cases of wine per year.”
“What this shows is that our platform caters for wine businesses of almost any scale. Having that degree of product market fit at this stage in our business cycle is very exciting.”
Flaminio Dondina, Casella Family Brands’ general manager of procurement, distribution and strategy, believes that WINEDEPOT will provide several important measurable benefits to the company.
“WINEDEPOT’s network and technology offering perfectly complements our domestic distribution model with a reliable solution for small deliveries. Due to the scale of our business and the number of regional wineries under the Casella Family Brands’ umbrella, this partnership will add significant value to our organisation by reducing complexity, increasing operational efficiencies and improving delivery times. We look forward to a successful and long-term partnership with WINEDEPOT.”
Streamlining the wine supply chain
WINEDEPOT is a cloud-based technology platform designed to streamline the wine supply chain by providing wine producers the ability to hold inventory reserves in a network of ‘depots’ located in the major Australian capitals.
According to Digital Ventures, this new ‘end-to-end solution’ can offer same-day or next-day delivery of wine to consumers and is potentially “up to 60% cheaper than existing solutions”. It also cuts down on freight costs and the risk of breakages.
In July, Digital Ventures inked a deal to build its first four depots within existing Australia Post distribution centres in Sydney, Melbourne, Brisbane and Perth.
Shortly after, the company announced a deal with Wine Storage and Logistics to establish a large depot in Adelaide.
WINEDEPOT’s platform works by linking wine producers, distributors, importers and retailers directly to consumers and generates revenue through fulfilment fees, storage and slot fees, surcharges for various optional services and software as a service (SaaS) fees for using the cloud-based application.
Digital Ventures also plans to launch a business-to-business marketplace, with additional revenue expected from trading fees for processing orders through this platform.
Growing industry interest
In today’s announcement, Digital Ventures also confirmed several smaller-scale wineries are now using WINEDEPOT’s services, including South Australian companies Redman Wines, Gatch Wine and Maan Wines, as well as Brown Hill Estate in Western Australia’s Margaret River region.
Mr Taylor said the take-up rate of customers is “in line with expectations” with the pre-Christmas period presumed to be challenging.
“For most of those in the industry, the majority of profits are generated in the spring quarter, so they tend to shy away from making operational changes during this period.”
“The fact that we’ve had this many of the pre-registrations already convert to customers is a great testament to the strength of the proposition that we are providing the wine industry,” he said.
Today’s news follows the company’s announcement in September that industry interest had grown considerably since the launch of its specialised wine distribution service WINEDEPOT, with registrations tripling from 50 to more than 150 interested suppliers.
In the same market update, Digital Ventures also announced five strategic partnerships with leading software providers and consultants serving the global wine industry.
These companies, namely Commerce 7, CRU, Troly, VinCreative and WithWine, each provide software applications that wineries use to operate their cellar doors.
Tapping into an emerging market
In the September update, Mr Taylor described the direct-to-consumer market as a “sleeping giant” worth $1 billion.
He said the industry is reaching the end of a 15-year global wine glut and emerging technology and marketing platforms are enabling producers to connect directly with consumers “very cost-effectively”.
According to Mr Taylor, Digital Ventures’s recent string of customer signups show its WINEDEPOT platform “caters for wine businesses of almost any scale”.
“It also confirms there’s plenty of latent demand for a fulfilment solution for the $1 billion and rapidly growing direct-to-consumer market segment, which is the sweet spot that our platform is targeting,” he added.