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Vivino Founder Heini Zachariassen: Online Wine has “Reached a Tipping Point”

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Wine & Spirits Daily

November 11, 2020

Vivino Founder: Online Wine has
“Reached a Tipping Point”

Dear Client:

Like other e-commerce platforms, online wine marketplace and wine-rating app Vivino has experienced a surge in sales and new users during the pandemic. In April, the company saw 157% year-over-year growth and growth was still in the triple digits for August (up 107%). The app has about 47 million users globally and is on track to achieve $250 million in wine sales in 2020.

Your editor recently caught up with Vivino founder Heini Zachariassen to discuss the company, recent growth, the impact of COVID, and the larger wine e-commerce category.

ABOUT VIVINO. The idea for Vivino (which launched in 2010) was spurred by Heini’s personal frustration with wine-buying, and wanting to feel more capable of choosing the right bottle of wine from the thousands on shelves. “Like, I don’t want to feel dumb here, I want to feel smart. We thought to ourselves, ‘Hey, why don’t we start building that?’ So that was what it’s all about – ‘this wine in front of me, is it good or is it not so good?’ That’s what I wanted to find out.” Turns out, many consumers felt the same way.

The app allows consumers to scan different wines and see what others have to say about it. “We do not ever say what’s good or what’s bad. We totally leave that to the users,” he explains. “But we do look at the data and try and make sure data is as accurate as we can be….so we have a relatively big data team to make sure everything is in order.” The online wine marketplace also uses community data to suggest personalized wine recommendations.

Vivino has built a network of 800 different suppliers around the world to support its marketplace. “What that means is that we have a fully integrated system, where we know exactly what they have in their shop or warehouse.” The order is placed through Vivino, they send the money to the supplier, the supplier ships to the consumer, and Vivino retains a marketing fee.

AN “ASPIRING” USER BASE. As mentioned, the app has about 47 million users, and “every single day, 20,000 people install the app,” says Heini. With that many users, there’s no one kind of person using the app, but Heini did say they tend to share a few characteristics. One of which is that they are “aspiring,” he says. No matter the wine education level, Vivino users are always aspiring to learn more, according to Heini.

BENEFITING FROM COVID TRENDS. “Obviously we have been affected like everyone else” by the current pandemic, he says. At the start it was “really difficult” due to the increased demand. “Suppliers also had a difficult time, because in some cases there couldn’t be as many people in the warehouse and so on. So it was a little bit tricky.”

“But the bottom line has been incredibly positive for us. It’s heartbreaking to see all these companies struggling, but we have done incredibly well. We’ve seen our biggest growth ever.” Indeed, Vivino will likely end the year with revenues up 100%+ compared to last year.

LONG-TERM IMPACT. “The thing we find interesting is that we see no signs of this being a short-term thing. It looks like a change in behavior,” says Heini. Take Europe for example, over the summer things returned to normal-ish in some European countries, and consumers kept up their online wine spending.

“So we really see this was an accelerated [trend]… it’s like pushing us forward two years. Sometimes I say to our board and investors, ‘We knew this was going to come. We just didn’t know it was going to take a virus to accelerate it, right?’”

ONLINE WINE REACHES A TIPPING POINT. “Online wine has reached a tipping point,” says Heini. Pre-pandemic, Heini says there were certain players “that we had a hard time getting on the platform,” but then “all that turned around” once COVID hit.

“It was like somebody pulled the switch and said, ‘Okay, there’s no such thing as not having an online strategy for a wine producer.’ Where it used to be something, ‘it’s small, it’s not important for us.’ Overnight it was like, ‘Okay, we need to be a part of this.’ And we see that all over the world, that it’s just suppliers coming to us on a very, very large scale.”

“And again, I think the ‘tipping point’ is an important word in that we’ve now reached a certain scale that it can’t be ignored.”

MORE COLOR ON GOPUFF’S ACQUISITION OF BEVMO

Last week Philadelphia-based e-commerce retailer goPuff announced it is acquiring California-based liquor store chain BevMo for $350 million [see WSD 11-05-2020].

GoPuff currently operates in more than 500 cities through a network of 200+ micro-fulfillment centers, delivering a host of everyday products to consumers within 30 minutes. The acquisition of BevMo “will accelerate goPuff’s entry into California through access to infrastructure, licenses, a beloved brand and a built-in customer base,” goPuff spokesperson Elizabeth Romaine tells WSD.

Elizabeth clarified that this acquisition “does not represent a greater focus on alcohol going forward.” Rather, it’s just part of the larger goal of expanding product inventory.

“Over the years, goPuff has expanded well beyond convenience items, having introduced categories such as baby, pet, over-the-counter medicine, beauty and local favorites all within the last 18 months. Through goPuff, BevMo customers will soon have access to these immediate, everyday needs across goPuff’s rapidly expanding product inventory.”

IWSR: TOTAL US BEV ALC VALUE DOWN NEARLY 12% IN 2020

The US bev alc market has been relatively resilient throughout the pandemic thanks to its dominant retail channel and growth in the ready-to-drink category (which includes hard seltzers), according to IWSR.

Overall, this year’s consumption increase is on par with 2019 trends, with total US bev alc volumes expected to increase about 2%. However, the 13.6% increase in off-premise retail and e-commerce sales are not enough to offset the 44.5% drop in on-premise sales. As a result, IWSR expects total bev alc value to be down almost 12% for the year.

Declines in the beer and wine categories are projected to continue this year “in line with pre-COVID trends,” per IWSR. Wine consumption has been “boosted by more meals being prepared at home, bringing premium-plus products to the fore – prosecco and boxed wines have been particularly successful,” but the category is still weighed down by still wine.

A “key trend” that accelerated during COVID was category-switching, according to IWSR. “The category-switching story during Covid-19 is in fact a category expansion story, in which consumers increased their drinking habits across all categories,” including beer, wine, whiskey, vodka and hard seltzer. In fact, only a few categories have seen a net decline in consumption overall.

IWSR anticipates that e-commerce value across 10 key global markets, including the US, will grow by more than 40% this year, reaching $17 billion in 2020 and growing to over $40 billion by 2024.

WSD BRIEFS:

STE. MICHELLE WINE ESTATES NAMES CHIEF SUPPLY OFFICER. Ste. Michelle Wine Estates has appointed Dr. Stuart McNab to the newly-created position of chief supply officer, effective November 10. In this role, Stuart will lead all winemaking, vineyard and operations functions for the company and will report directly to newly-appointed president and ceo David Dearie. Stuart joins the company from Treasury Wine Estates, where he worked as chief supply officer.

DELICATO FAMILY WINES LAUNCHES STONELEIGH BRAND IN THE US. Delicato Family Wines has inked a long-term agreement with Pernod Ricard Winemakers to become the exclusive importer of Stoneleigh in the US and Caribbean. “The addition of Stoneleigh to our Transcendent Fine Wine portfolio diversifies Delicato’s range of ultra-premium and luxury offerings, and provides Delicato with a powerful entry point into the fast-growing New Zealand sauvignon blanc category,” says DFW ceo Chris Indelicato.

THE LONG DRINK EXPANDS DISTRIBUTION. The Long Drink has expanded distribution of its RTDs to California, Florida and Arizona through Southern Glazer’s Wine & Spirits. Moreover, music producer Kygo and professional golfer Rickie Fowler joined the company as co-owners earlier this year.

Until tomorrow,

Sarah

“Today’s mighty oak is just yesterday’s nut, that held its ground.” – David Icke

(Source: https://winespiritsdaily.com/vivino-founder-online-wine-has-reached-a-tipping-point/)

Posted with permission from Wine & Spirits Daily