The merger of a large liquor retailer and an online trader could open up significant opportunities in the direct-to-consumer wine space.
The Wine Society, owned by TWS Wholesale, has joined with Cracka Wines, My Wine Guy, and Winegrowers Direct, which are owned by Online Liquor Group.
The new business will combine a traditional direct-to-consumer business model with a digital approach.
The Wine Society, believed to be Australia’s first wine club, has been operating in the local liquor market for more than 70 years, with monthly wine plans and exclusive wine selections for members.
New CEO Lloyd Heinrich has been focused on rebuilding the club by improving its digital capability and offering a vastly improved range of wines.
“This merger puts our group in pole position to lead the expected consolidation in the online liquor industry and be a serious contender for the number one independent within the sector,” Heinrich said.
“With total revenue of $400.5 million in 2016–17, online sales represent just four per cent of the overall liquor market in Australia.
"Online is the fastest growing channel in Australian retail and with our combined credentials, we’ll be a significant player in this space, with the expertise to grow quickly."
The Wine Society has a loyal following of long-term members which buy higher-value products regularly, while Cracka Wines has a dynamic, young audience seeking out wines not readily available from other retailers.
“Cracka Wines had planned to be the first company in Australia to complete a crowd-funded capital-raising project, but instead saw the merit in joining forces with The Wine Society," Cracka Wines founder Dean Taylor said.
"Cracka has invested heavily in technology to drive a direct-to-consumer model, and has grown revenues rapidly since its formation only seven years ago."
The merger has been led by Heinrich and Taylor as joint CEOs.
