Online wine platform Wine Depot is offering a support package to Australian wineries struggling amid the COVID-19 pandemic to help maximise their margins through online sales.
The industry is still reeling from the recent bushfires which affected about 6000 grape growers and 2500 winemakers. Even for those surviving vineyards, smoke taint has affected business, resulting in the lowest yield in seven years. Now, the global health pandemic has impacted wine export markets, trade distribution and resulted in the closure of cellar doors.
“Never before have Australian wine producers faced a challenge like this. The silver lining is that consumers across the country are rushing to order wine and other essentials online for home delivery,” Wine Depot founder and CEO Dean Taylor said.
Wine Depot’s Cellar Door Support Package is worth over A$5,000 per winery and wineries will receive benefits including A$500 free credit; three months free storage; free initial stock transfer into bulk storage; delivery from A$7.95 / case for metro areas and waived platform access, set up and integration charges, usually worth A$995.
Taylor said the Wine Depot platform will enable wineries in regional areas to provide a fulfillment service that rivals major retailers. Wineries can deliver the same or next day to customers in any major city in Australia.
The package is offered to all Australian owned and operated wineries, who establish accounts and has move inventory in before the end of April. There are no lock-in contracts or requirements to continue using Wine Depot services after the free storage period ends.
“I believe that the impact from coronavirus on the wine industry will be significant and include: a. A dramatic increase in the volume of wine sold online. Prior to the crisis it was about 7-8% of all retail sales. I expect that number will more than double. Competition will be fierce and as a result free fast delivery will become the norm,” said Taylor to Inside FMCG on how Coronavirus will change the wine sector.
Taylor said there is an increase in sales via direct-to-consumer channels since wine companies will engage more with their customers to offset any sales lost encountered in other channels.
“The silver lining of this is that those that do a good job will end up with stronger and more profitable businesses from recurring revenues at substantially higher margins,” explained Taylor.
He told Inside FMCG that the virus outbreak can also lead to “a complete restructuring of the wholesale market” as small and medium sized distributors are forced to shut down their businesses due to the closure of on-premise venues. The surviving wineries will find new ways to cut overheads by adopting cost models in finance, customer service, warehousing and distribution departments.
Taylor said the premiumisation of wine will slow down as consumers adjust “to a softer economy, wage reductions and higher unemployment rates”. He sees prices softening as well as the shut down in export markets increases the supply available for the Australian market.
“Our entire office has been working from home for a number of weeks now. However as a technology focused business, this hasn’t been too disruptive to us. In fact the team has rallied incredibly well and in many ways our productivity has been as high or higher than before. We have managed to maintain morale by holding daily meetings, that include novelties such as crazy hat days and other fun activities to put a smile on everyone’s face,” Taylor said.