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Digital Wine Ventures (ASX:DW8) - CEO, Dean Taylor - The Market Herald
CEO, Dean Taylor
Source: The Market Herald
  • Digital Wine Ventures (DW8) will increase its customer base by 150 per cent if it buys Wine Delivery Australia (WDA)
  • Digital Wines' WINEDEPOT platform will onboard the 186 South Australian wineries currently on WDA's books
  • The incorporation of the WDA system into the WINEDEPOT platform is expected to create synergies and reduce operating costs across both businesses
  • WDA founder James Munn will also join the DW8 executive team as Head of Business Development (Logistics)
  • The total consideration for the acquisition comes in at $2.4 million, consisting of a $600,000 cash payment and over 40 million shares — but still needs shareholder approval before it's finalised
  • Following the buy, DW8 has pushed back the launch of its Direct-to-Trade Marketplace until March next year to allow time for the incorporation of WDA
  • Digital Wine Ventures is trading 1.61 per cent lower at 6.1 cents

Digital Wine Ventures (DW8) will increase its customer base by 150 per cent if it buys Wine Delivery Australia (WDA).

Key acquisition

Digital Wines' WINEDEPOT platform will onboard the 186 South Australian wineries currently on WDA's books.

WDA is a South Australian-based fourth-party logistics provider, offering cellar door-to-door services to allow enhanced delivery of small consumer orders from regional sellers.

The incorporation of the WDA system into the WINEDEPOT platform is expected to create synergies and reduce operating costs across both businesses.

WDA founder James Munn will also join the DW8 executive team as Head of Business Development (Logistics).

James is an experienced operator, with over two decades in warehousing and logistics under his belt.

In just a few years, James has built WDA into a robust business which generated unaudited revenues of approximately $1.5 million in the 2020 financial year, a 60 per cent year-on-year increase, and banked a net profit of $110,000.

James says he's excited by the opportunities ahead.

"By combining forces with WINEDEPOT, I am confident that we have a fulfilment solution capable of servicing every winery in the country," James said.

"I am genuinely excited to be part of the team creating a platform that has the potential to release so much value back to the wine producers, who are at the very heart of the wine supply chain," he stated.

Key terms

The total consideration for the acquisition comes in at $2.4 million, consisting of a $600,000 cash payment and 40,660,807 DW8 shares at 4.43 cents each.

The deal is set to get the go-ahead pending due diligence by DW8 and shareholder approval for the issue of shares and performance rights to James Munn.

Aside from his base salary, James will also receive 25 million performance rights in two tranches based on the performance of the WDA business over the next two years.

The necessary milestones include revenue goals and the expansion of WDA into other states aside from South Australia.

Digital Wine Ventures CEO Dean Taylor says the acquisition will be a win-win for both companies.

"The acquisition of Wine Delivery Australia perfectly compliments our WINEDEPOT business and greatly enhances its customer value proposition by providing a mechanism to fulfil consumer and trade orders from inventory held at the wineries," Dean said.

"The combination of our respective freight volumes will also generate economies of scale that can be leveraged to reduce costs for both our business and our customers," he continued.

"However, what made this transaction especially attractive for DW8 was that it provided relationships with an additional 180 wineries, allowing them to engage in our Direct-to-Trade Marketplace, when it goes live early next year," Dean concluded.

Launch deferred

The legwork required to incorporate WDA into DW8's business has meant the launch of the WINEDEPOT Direct-to-Trade Marketplace has been pushed back to March 2021.

Dean Taylor says its the smart choice to delay the launch for a number of reasons.

"To launch a marketplace successfully, you need to have sufficient supply, demand and ideally both. History also shows that if an online user's first experience is disappointing then they are unlikely to come back," Dean said.

"The majority of Melbourne’s hospitality venues are still in lockdown due to COVID-19. Given it’s one of the largest markets in the country for fine wine and craft beverages, it would be a shame to launch at a time when we are unable to service that market," the CEO stressed.

"We are also just weeks away from what experts are forecasting will be the busiest period in Australian history for online order deliveries. Given logistics is one of the pillars of our value proposition it is important that we apply the resources required to maintain a high service level over this period," he concluded.

Digital Wine Ventures is trading 1.61 per cent lower at 6.1 cents at 11:27 am AEST.


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