Recently, Vivino raised $20m in funding led by the investment arm of Moet Hennessy. Wine lovers everywhere rejoiced at the fundraise as Vivino is the world's most downloaded wine app. In class we talked briefly about the fundraise but I wanted to dig into a bit more and try to understand the investment thesis.
Vivino launched in 2010 with the goal of easing consumer’s wine purchasing experiences. After downloading the app, users can take a photo of their wine label and proprietary image recognition technology will promptly deliver pricing, ratings, and provide them with an option to purchase. Additionally, with an annual subscription of $47, users can get their curated wine selections delivered to their door at no added cost.
Vivino plans to use the new investment capital to expand its wine marketplace and add key team members. They’re aiming to reach $1 billion in wine sales by 2020 and have plans to expand into Hong Kong. According to Vivino, since its series B funding round closed, their user base has grown from 13 million to almost 29 million. All this growth and progress but they still have yet to corner the delivery market which is ripe with large and well-capitalized competitors including Blue Apron and Amazon.
Many publications have written about direct-to-consumer wine delivery and AI-powered sommeliers. Vivino is banking on a future where both of those things are ubiquitous and they are betting that they will be the first company to figure out how to seamlessly combine the two, a potentially powerful combination.
Furthermore, Vivino’s move to combine mobile commerce, an online marketplace and personalized recommendation system is an interesting model. It isn’t a stretch to see vertical integration like this become the go to model in the grocery-delivery space. Companies focused on any consumable good (coffee, weed, etc.) where delivery apps exists but where there is not emphasis on consumer guidance could look to the success of Vivino as a model to employ going forward. Vivino itself may even look to push into other adjacencies. It also isn’t a stretch to see Vivino partner with door-dash and Eaze to provide the ultimate take-out experience. The future is bright for Vivino and I’d be interested to see how it plays out.
I came across this interesting article on the success and scale of Vivino, and the numbers are astounding! For example, Vivino users have scanned over 436k wine labels through the app. Assuming an average price of $15/bottle (although the average price of wines purchased in the US could be lower, but people who took the time to scan and look for ratings are probably making a higher price-point decision), that's $6.5bn of wine purchases. Clearly, Vivino plays a critical role in consumer's purchase decision, but how can Vivino most effectively capture the value it provided to the consumer and the wine producers?
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