The Digital Wine Ventures Ltd (ASX: DW8) share price has bolted to 5.0 cents today, increasing 13.6%. The company revealed in an announcement today that its WineDepot business has partnered with online wine marketplace, Vivino.
What is management clinking glasses to?
Described as “the world’s largest wine app and marketplace”, Vivino can be accessed via an app or online and has amassed 50 million users worldwide in 17 countries. Vivino’s uniqueness lies in its recommendation feature to customers based on searches and purchases.
Through the partnership, WineDepot will offer access to Australian wineries without integrating Vivino’s systems into the winery operations. Instead, as the company has now completed technical integration, WineDepot will manage and fulfil the orders itself.
The value-add for local wineries is the broader sales channels now offered through WineDepot’s singular system. Reportedly, the partnership allows producers to generate higher margins due to the direct-to-consumer nature of the integration. This typically leads to higher margins than distributing to retailers.
CEO commentary
WineDepot/Digital Wine Ventures CEO Dean Taylor noted his excitement towards the new partnership and its possibilities. Significantly, the potential to help local producers unlock direct-to-consumer sales.
Mr Taylor went on to say:
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.
WineDepot has not supplied forecasts for the partnership given there are no minimum fees or maximum order limits involved. WineDepot will pay Vivino a fixed percentage marketing fee on each sale that a WineDepot-affiliated supplier makes through the platform.
Digital Wine share price like a fine wine
Over the past 12 months, the Digital Wine share price has aged like a fine wine, returning 400% to its shareholders. That must be a very palatable payoff for those holding Digital Wine shares.
The question is, will the next 12 months entail big, bold red days or champagne showers for shareholders?
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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