Digital Wine Ventures Limited is pleased to announce that it has entered into a binding term sheet to acquire 100% of Kaddy Australia Pty Limited (“Kaddy”), a Sydney-based technology company which operates Australia’s leading B2B beverage marketplace. The acquisition brings together two rapidly growing technology companies.
Established in September 2019 by founders Mike Abbott and Rich Coombes (“Kaddy Founders”), Kaddy has become the leading wholesale beverage marketplace in Australia for discovery, ordering and payments.
Kaddy has quickly grown its network of users to over 1,500+ registered wholesale buyers and 400+ suppliers. Kaddy has also leveraged a strong niche in emerging categories such as craft beer, spirits, seltzer and cider, segments that are strongly complementary to DW8’s core business, WINEDEPOT.
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. Bringing WINEDEPOT’s tech-enabled national logistics solution and Kaddy’s market leading technology platform in the B2B beverage market will unlock significant value for its users and support the rapid scale of the merged businesses to leverage the strong network effects of a combined user ecosystem.
DW8 CEO Dean Taylor says, “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 DW8 Board as an Executive Director says, “We’re pumped to be joining forces with the DW8 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”.
DW8 has outlined a phased integration plan which 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 & cross sell opportunities; reduced marketing & customer acquisition costs; improved customer lifetime value and deeper engagement.
Dean Taylor adds, “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.”
Individual investors of the KTM Ventures Fund and Spring Capital, two of the major independent shareholders in Kaddy, have invested in the DW8 Placement. Martin Rogers, CIO of KTM Ventures Fund, has also personally invested in the Placement.
Mr Rogers said: “There are considerable synergies in this acquisition for DW8 to be reaped from the integration of the Kaddy platform which has already achieved strong industry adoption and feedback. Combined, DW8 and Kaddy are poised to accelerate the disruption of the digital commerce of ordering, payments and logistics in the wholesale alcohol industry. It’s a true 1+1 =3 transaction.”
A number of strategic investors will also join the DW8 share register as part of capital raise and acquisition including John Szangolies, founder of the Urban Purveyor Group and the founders of Four Pillars distillery.