Online beverage supplier Digital Wine Ventures (ASX: DW8) has expanded both its domestic and international stature in one swoop by establishing a major wine storage and distribution centre in South Australia.
The company announced a brand-new AI-powered partnership with Wine Storage and Logistics Pty Ltd (WSL), a privately-owned Australian company that provides specialised logistics services to the wine and beverage industry.
Under the terms of the agreement, WSL has agreed to establish and operate a dedicated central storage and distribution facility for WINEDEPOT, which will serve as their main distribution centre for supplier’s inventory used to support an expanding network of local wine depots.
WINEDEPOT is a cloud-based technology platform that has been designed to connect wine industry stakeholders to reduce the time, margin and capital wasted in the existing supply chain.
The platform caters for producers, distributors, importers and retailers and allows orders to be fulfilled from suppliers inventory reserves held on consignment in ‘depots’ servicing key markets.
Agreeing on expansion
The agreement between WINEDEPOT and WSL has been signed for an initial five-year term with an option to extend if required. Importantly, there are no minimum use requirements applicable to WINEDEPOT, WSL or its parent company Minda Group.
The services provided by WSL will include packaged wine storage, general warehousing, repacking, line-haul freight and export services.
“Each depot in our network holds a very broad range of inventory, but only in limited quantities,” said Dean Taylor, chief executive officer of Digital Wine.
“To maintain sufficient stock cover, the depots will need to be replenished on a regular basis using AI and other predictive software. To support this model we needed a flexible and dynamic operator who was prepared to embrace and invest in new technology,” added Mr Taylor.
Digital Wine said the deal constitutes a “perfect fit” given that WINDEPOT currently operates four sites and tens of thousands of pallets of wine under management with clients such as Treasury Wines, Pernod Ricard, Constellation Brands and Accolade. The deal announced today means that WINEDEPOT could potentially generate significant commercial success by harnessing the scale, capability and experience provided by WSL.
Specifically, Digital Wine sought out WSL for its “willingness to adapt their processes and technology systems to suit its needs”, with the two companies intending to deploy a raft of technology to streamline their operations.
“What clinched the deal for us was finding out that they could also support our international expansion plans, offering export labelling, container packing, air freight and marine shipping services,” said Mr Taylor.
Currently, WSL sends over 500 containers per year to China – a market position that Digital Wine wants to harness for its own growth.
WSL is also leveraging the partnership with WINEDEPOT to expand its existing four-site footprint, opening a new 22,000 square metre climate-controlled facility in Adelaide.
According to Mr Taylor, this serves as the perfect location for WINEDEPOT’s first bulk storage facility given that South Australia is currently where almost 50% of the nation’s wine is produced.
Additionally, the site serves as a back route for line-haul making it very cost effective to ship pallets around the country and to reduce storage rental rates.
South Australia is also a superb location to obtain direct access to an international port allowing Digital Wine to manage export orders on behalf of its growing customer base.