Kaddy Marketplace expects significant lift across key metrics from Bibendum partnership

The foundation partnership between DW8 and Bibendum was first entered into and announced in March 2021. Under the original terms of the partnership Bibendum would list a substantial part of its portfolio of international and Australian wines and craft spirits on DW8’s Winedepot Market and invite its customers to join the platform via a referral program that includes an incentive voucher towards the customer’s initial transaction.

Subsequent to forming the partnership, DW8 successfully acquired the Kaddy Australia Pty Ltd (Kaddy) business, and has now completed the consolidation of its existing Winedepot Market business unit under the Kaddy platform (see ASX announcement 10 March 2022). As a result of this consolidation, DW8 and Bibendum have agreed to modify the terms of their foundation partnership to transition the partnership from the Winedepot Market business to Kaddy Marketplace.

The objective of the original partnership remains unchanged, in that Bibendum will list a substantial part of its portfolio of international and Australian wines and craft spirits on the Kaddy Marketplace platform and invite its customers to join the platform via a referral program that includes an incentive voucher towards the customer’s initial transaction on Kaddy Marketplace. The material terms of the updated partnership are summarised below.

The transfer of the Bibendum partnership agreement allows Kaddy to retire the Winedepot Market platform at the end of this month, further reducing its cost base. 

According to Kaddy’s Head of Commercial, Rich Coombes:

“We are excited to relaunch and migrate the Bibendum partnership to Kaddy Marketplace, promoting our platform across their large database of trade customers, representing thousands of venues across Australia, and we’re confident that this will drive a significant lift across our key metrics.

When Bibendum promoted Winedepot Market to its customers last year, there were only about 800 products available and almost all of these were contained within the wine segment. The Winedepot Market platform also lacked trade specific functionality.

Now, trade buyers whom Bibendum introduces to Kaddy Marketplace will have an entirely different experience. For a start, they will have the ability to choose from a product range that's almost 20 times bigger than Winedepot Market including the best range of craft beers, spirits, seltzers and non-alcoholic beverages in the country.

Importantly, through our expanding network of liquor wholesalers, this range now includes a large portfolio of highly commercial brands and products listed at extremely competitive prices. Being able to purchase all of these products in one place will dramatically improve the buyer's experience, which we expect will lead to an increase in purchasing frequency and average basket size which in turn compounds to accelerate GMV growth.

Secondly, they will also have access to a much wider range of functionality including features such as upfront payment incentives, sample requests, pouring discounts and the ability to connect and communicate with sales representatives from their usual suppliers on the platform. They also will be able to take advantage of Kaddy Community and the news, reviews and insights being shared by fellow trade buyers and suppliers.”

Project One Under Project One

DW8 will consolidate four legacy brands under a single brand umbrella, ‘Kaddy’. Launched in 2019, Kaddy has established itself as the leading wholesale beverage marketplace in Australia based on monetised GMV, revenue generated and new customer growth.

Project One takes advantage of latent synergies available by integrating several strategic acquisitions the Company has made in the last two years (which include Kaddy, Parton Wine Distribution and Wine Delivery Australia). Bringing these businesses together into a single, brand-led, end-to-end solution compounds the value of the synergies and brand awareness while enhancing the customer value proposition and providing step changes in capability across both the Marketplace and Fulfilment divisions of the business.

DW8 CEO Dean Taylor said,

“Project One is an overarching company-wide strategic initiative that embraces and embodies the four pillars of our customer value proposition: connect, simplify, deliver and support. In summary it is all about unifying our four existing businesses with one distinct vision, simplifying the way that we operate and presenting ourselves to the industry as a one stop solution.

“Project One will strengthen our presence within the $37.2 billion 1 Australian liquor market and allow us to take full advantage of the network effect generated by the rapidly expanding ecosystem of suppliers and buyers using our merged platform to further accelerate revenue and Marketplace GMV growth.

“It will also generate material cost savings and incremental revenue generation opportunities, repositioning the Company with a significantly lower and more sustainable cost base. One of the most significant of these will be achieved through the consolidation of our two wholesale marketplaces, reducing the current cost base by circa $3m per annum.

“Over the coming months a number of technology and operational integration projects in our fulfilment division (Kaddy Fulfilment) will also be completed, improving the profitability of that business unit. This combined with the savings achieved by merging brands and marketplaces and cash on hand is expected to help extend our cash runway into calendar 2023.

“Our vision is to create a $1 billion GMV wholesale beverage marketplace In Australia, then look to expand that trading platform into other markets. We believe the only way to achieve this is by providing users an end-to-end solution that incorporates a best-in-class fulfillment experience. Therefore the two divisions must go forward hand in hand. Project One ensures that our whole team is united and aligned with one distinct vision. It’s an exciting time for the Kaddy team as we continue to lead the much-awaited digital transformation of the beverage industry.”

WINEDEPOT bolsters capability, key metrics, revenue and competitive moat through strategic acquisition of specialist wine distribution business.

HIGHLIGHTS:

• DW8 signs binding agreement to acquire 100% of Parton Wine Group ("Acquisition")
• The consideration for the Acquisition is performance based via an Earn Out paid in DW8 shares
• Acquisition expected to provide significant lift across WINEDEPOT’s key performance metrics1 :
  * Total number of cases shipped expected to increase 220% to circa 87,000 per month
  * Total order volume expected to increase over 150% to almost circa 30,000 per month
  * Number of unique suppliers expected to increase by 60% to 600
• Acquisition supports WINEDEPOT MARKET & DIRECT growth strategies by providing access to:
  * Hundreds of new brands representing thousands of products
  * Approx. $200m of customer inventory held on consignment within Parton sites
  * Dedicated fleet of over 30 delivery vehicles servicing Sydney, Melbourne and Perth metro areas
  * 23,000 sqm of warehousing, including climate control, cold chain and bonded storage
• Other financial benefits of Acquisition include:
  * Reduces time & capital required for existing logistics business to become profitable
  * Revenue upside expected from cross selling products & services to existing customers
  * Releases synergies & improves margins
• WINEDEPOT key Acquisition drivers include:
  * Improves value proposition & expands the addressable market o Reduces reliance on 3rd party networks, improving service levels
  * Helps position WINEDEPOT as market leader in 3PL wine logistics
  * Provides the scale & capability to win key accounts
  * Enhances competitive moat
• DW8 has successfully received commitments for $7,500,000 via a share placement with the use of funds to fund the acquisition of Parton and support growth strategy.

COMPANY UPDATE

HIGHLIGHTS:

• WINEDEPOT ships over 25,000 cases in May, up 619% MoM
• WINEDEPOT signs up 24 new suppliers, including another 9 New Zealand producers
• WINEDEPOT adds Amazon.com.au to the list of DTC channels serviced by its platform

WINEDEPOT partners with Vivino the world’s largest wine app and marketplace Digital Wine Ventures (DW8 ASX), or the “Company”, is pleased to announce that WINEDEPOT has completed the technical integration and onboarding as part of a partnership with Vivino, the world's most downloaded mobile wine app and largest online wine marketplace.

With 50 million users worldwide, Vivino’s unique wine shopping experience uses community data to suggest personalized wine recommendations, making wine discovery and purchase fun, accessible, and effortless for wine drinkers of every level of expertise.

Under the partnership, WINEDEPOT will provide Australian wineries the ability to list their products for sale on Vivino directly without having to set up an account, develop an IT integration, monitor inventory availability or manage order fulfilment.

Instead, their products will be automatically uploaded via WINEDEPOT DIRECT, a new part of WINEDEPOT’s integrated trading and logistics platform, that allows suppliers to sell to customers across a broad range of direct-to-consumer sales channels.

Orders generated from Vivino will be picked, packed and delivered by WINEDEPOT, allowing Vivino’s community of users to purchase across multiple suppliers at the same time while taking advantage of same and next day delivery services in locations where those services are available.

The partnership between WINEDEPOT and Vivino allows producers to generate higher margins and take control of their brand within the rapidly growing sales channel. Currently the majority of wine sold on Vivino in Australia is through a network of partner retailers. 

Launched in 2010 by founders Heini Zachariassen and Theis Søndergaard, Vivino launched its marketplace business in 2015. Last year the company helped 700 independent wine businesses sell over USD 265 million 1 of wine as consumers around the world shifted en masse to online purchasing. Australia is just one of the 17 countries where Vivino has a marketplace.

Vivino recently announced that it had raised USD 155 million to expand its presence in key growth markets globally and improve its technology. 

CEO Dean Taylor is excited about the potential of the partnership to help local producers generate direct-to-consumer sales, not just here in Australia but also in other global markets.

“If you want to understand what the future of online wine sales looks like, then Vivino is without a doubt the one to watch. Their mobile first approach is a key differentiator, which combined with 10 years of accumulated user generated content, including over 1.5 billion wine label scans, puts them in an enviable position.”

“I have no doubt that Vivino will play a much larger role in online wine sales in the future. Our partnership provides Vivino’s users more product choice and an unparalleled buying experience. For us, it provides us access to a powerful direct-to-consumer sales channel that allows the wineries we work with to generate incremental and high margin sales.”

“In short it’s a symbiotic relationship that should accelerate the growth and expansion of both our businesses, not just here in Australia but hopefully over time in other major wine markets.”