Digital Wine Ventures acquires Kaddy

Sydney-based technology company Kaddy Australia has been acquired by Digital Wine Ventures in a deal worth $34.25 million.

Kaddy operates Australia’s leading B2B beverage marketplace. It was established in September 2019 by founders Mike Abbott and Rich Coombes (above) and has quickly grown its network of users to over 1500+ registered wholesale buyers and 400+ suppliers.

Upon completion of the acquisition, Digital Wine Ventures will have 10,000 products across its platforms (which include Winedepot) and service about 1850 buyers, including Cellarbrations, Solotel and Porter’s Liquor.

Despite the strong growth and adoption of the Kaddy platform, the company does not currently have its own logistics solution and is reliant on third party fulfilment by its marketplace suppliers.

Digital Wine Ventures CEO Dean Taylor (above) said: “The combination of a world class B2B marketplace with a tech-enabled national logistics platform will create an unrivaled value proposition that’s relevant to every liquor licence holder in the country. Kaddy strongly complements our technology ecosystem and fast-tracks our ability to develop a stronghold in Australia’ $17 billion wholesale liquor market.”

Kaddy co-founder Mike Abbott, who will join the Digital Wine Ventures Board as an Executive Director added: “We’re pumped to be joining forces with the Digital Wine Ventures team to significantly scale our combined offerings and transform the user experience, particularly in wholesale beverages which is highly fragmented and ripe for digital disruption”.

Digital Wine Ventures has outlined a phased integration plan that will see the two tech companies merge their B2B marketplaces and capitalise on significant strategic, revenue and cost synergies which are expected to reduce the time required to reach scale and profitability. These include increased network effects; up and cross sell opportunities; reduced marketing & customer acquisition costs; improved customer lifetime value and deeper engagement.

Taylor said: “Another key appeal for the transaction is that there’s very little overlap between the two platforms’ user bases, with WINEDEPOT predominantly servicing the wine industry and Kaddy being the go-to solution for the rapidly growing craft beer, spirits, cider and seltzer categories. The depth, variety and diversity of our combined product range will be impressive, with a strong differentiating focus on craft, independent, boutique and emerging brands not currently available through mainstream distribution.

“The technology deployed by each company can be easily and quickly integrated to create an unrivalled offering that unlocks synergies that benefit suppliers, retailers and distributors alike. This will allow us to start releasing value for both the company, shareholders and customers within a few months as well as accelerate our momentum as we integrate further.

“Both teams are predominantly Sydney based, which makes the process of bringing them together fairly easy. The combined talent pool that we’ll end up with creates a formidable team with deep domain experience in our target markets that is near impossible to replicate.

“Bringing the two businesses together also dramatically expands the platform’s addressable market, by making it a multi-beverage offering with applications not just here in Australia but across the entire global alcoholic beverage market.

“Up until now we have been focused on creating an end-to-end solution for the wine industry. This acquisition opens our platform up to users in all the other alcohol market segments.

“By teaming up with Kaddy, we not only accelerate our penetration into the Australian wholesale liquor market by at least two years but should also be able to bring forward our international expansion plans. As both companies expand, we’ll inevitably find ourselves competing for the same customer and supplier base. This transaction negates that outcome while releasing synergies that can be shared with everyone using our combined platform.”

A number of strategic investors will also join the Digital Wine Ventures share register as part of capital raise and acquisition of Kaddy, including John Szangolies, founder of the Urban Purveyor Group and the founders of Four Pillars distillery.

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Categories: Business