Digital Wine Ventures reports strong July performance across WineDepot business

Online beverage merchant Digital Wine Ventures (ASX: DW8) has completed the acquisition of Parton Wine Distribution, providing it with a significant lift across the key performance metrics for its cornerstone WineDepot business.

In July, Digital Wine Ventures announced it had entered into an agreement to acquire the specialist wine and beverage logistics service provider, claiming it would enhance WineDepot’s value proposition and help take its service offerings to the next level.

The acquisition is also expected to support growth strategies for WineDepot’s market and direct divisions, improve margins and reduce the time and capital required for the logistics business to become profitable.

Consideration for the deal remains performance-based through the issue of earn-out securities, distributed in two tranches upon the achievement of certain milestones.

The first milestone is the achievement of a minimum $15 million annual revenue and minimal earnings before interest, tax, depreciation and amortisation (EBITDA) of $350,000 in the 2022 financial year.

The second milestone comprises the same minimum revenue and EBITDA targets for the 2023 financial year.

Adelaide warehouse

WineDepot’s logistics division is set to open a directly-controlled warehouse in Adelaide within a 9,000 square metre purpose-built wine bottling, storage and distribution facility located in the Edinburgh Parks industrial estate.

The new facility will see WineDepot consolidate its South Australian operations which had been spread across two sites after the $2.4 million acquisition of Wine Delivery Australia last year.

It will also allow the company to service Parton Wine Distribution customers seeking a logistics solution in that market.

Shipment record

WineDepot’s logistics division set a new record in July with the shipment of a total 30,468 cases.

This volume was generated on the back of 14,296 orders, equating to an average of 2.13 cases shipped per order.

The company also signed up 24 new suppliers during the month.

WineDepot Market

The newly-launched direct-to-trade WineDepot Market platform continued to sign up trade buyers and generate new orders from customers in Sydney and Melbourne despite lockdown restrictions.

Digital Wine Ventures chief executive officer Dean Taylor said he was pleased with the early performance of the new business.

“Despite the uncertainty and disruption associated with ongoing lockdown restrictions, we have managed to sign up more than 300 venues and the feedback from users on both sides of our marketplace has been extremely positive, demonstrating latent demand for a solution like the one we have created,” he said.

“We are very comfortable with the growth rates achieved so far and excited about the potential to scale customer acquisition rapidly once the current restrictions lift.”

Mr Taylor said the company would reassess its go-to-market schedule with a view to launching earlier than expected in cities which are not currently locked down, such as Adelaide, Perth and Brisbane.