Here’s something you need to know about Winc. Inc. (NYSE: WBEV) – in addition to transforming the DTC wine industry, they are the best in it. That’s no exaggeration. For about a decade, Winc has changed the rules of what a DTC wine provider should be. They regularly engage with its customer. They provide best in class delivery service. And most of all, offer a fantastic product. But, those are the expectations. Winc has separated itself from the competitive herd for different reasons. All of them create value for itself and its investors.
In fact, combined, they led Winc to raise about $22 million in its IPO this month. Not only that, but the company also earned a prestigious listing on the NYSE. Why the interest? Because investors are on board with WBEV’s mission, which is to accelerate an omni-channel business plan that positions it as a DTC wine business on steroids.
Moreover, investors are joining a company in motion, producing as many as 10 new brands of wine per year after gathering data on customers and their ordering habits. Also, in addition to offering its clients selections based on their personal palate, they produce the wine themselves from several of the most fertile grape-growing regions in the world.
The result- a total package of service and performance that lets its clients do the three most inviting things in the process: Unbox, uncork and enjoy.
Combining DTC With An Omni-Channel Model
And its customers are doing just that. Winc has sold more than 18 million bottles of wine to a customer list that surged over the past year. Moreover, the options provided are far from typical. Winc has produced and offered over 736 wines from 62 grape varieties grown across 97 regions in the world’s most fruitful grape-growing countries. Their modern cuvée’s have led to exciting brand development, including Cherries and Rainbows, Summer Water, Lost Poet, and Folly of the Beast. But, that’s only a tiny representation of the label list.
Winc has taken client feedback to produce at least 65 appellations within brand categories, making them able to meet individual preferences and accelerate market traction through an omni-channel business model that makes its wine available for sale at markets like Whole Foods, Target, and Vons. Further, its brand reach extends into thousands of local restaurants throughout the country, allowing clients to stay loyal to a brand and varietal favorites. That’s a big deal in the wine business. And for Winc, it has led to hundreds of thousands of bottles of organically produced wines to be enjoyed outside of its DTC model in the past year alone.
On a comparative basis, consider Winc the Harry’s Razors or Purple of its industry. Like those, Winc has broken away from the subscription-only models used by competitors Naked Wines and Blue Apron. In fact, Winc doesn’t even require a subscription fee, and there are no hidden surcharges to mask costs that are, in reality, a sort of membership fee. Instead, Winc focuses on pure organic growth by listening to its clients instead of telling them. There’s a big difference.
Better still, Winc sells clients what they want, not what they’re asked to do by suppliers.
Winc Listens Instead Of Telling
Even better, Winc sells what it produces and sends it only to the customers that want it. They can do that because Winc is not and never has been a one-size-fits-all seller. On the contrary, they listen to what clients and markets say, leveraging deep data and digital expertise to develop brands online through direct customer feedback. Then they take the next step to seed those products with consumers throughout the country and deploy those brands through a national wholesale distribution network and into premium retailers nationwide. The result is loyalty, fueled by mass brand awareness, availability, and client satisfaction.
Better still, its strategy is working, enabling WBEV to grow substantially over the past few years. Even better, while the pandemic created a tailwind for WBEV, it added to the momentum already in place from a message connecting Winc with the next generation of consumers, Millenials, and Gen X.
Those two groups alone now account for more than 75% of its DTC consumers. More importantly for Winc and its investors is that the company knows how to touch that base well beyond the doorstep, positioning their products in retail markets that create what the company calls a “flywheel effect” throughout a consumer’s purchasing experience. More simply, Winc creates a message that its target market can see and feel. Most importantly, when the message is strong enough and seen enough times to inspire action, it leads to tasting.
That’s the beauty of the omni-channel model. Even if an ad doesn’t drive an immediate purchasing decision through enrollment, they’ll at least be inclined to purchase Winc products offline at Wholefoods, Target, Vons, or even their favorite bar or restaurant.
So, it’s a complex analysis made to look effortless. By talking to, taking data from, and listening to its clients instead of solely promoting what it “thinks” they will like, Winc develops both its DTC and its wholesale business. Regarding revenue creation, it’s a win-win business model.
Converting Consumers From Offline To Online
The better news is that its model is working. More importantly, they are timely to take advantage of a Millenial and Gen X consumer market showing a propensity to enjoy and purchase Winc products at their favorite bars, restaurants, and stores in loyal fashion. The result is as intended; increasing conversion for online purchasing, especially after seeing Winc ads on Facebook, Instagram, Hulu, and other prominent social media sites.
From that point, Winc benefits by leveraging the power of the same Tier 1 distributors and retailers used by Constellation, Diageo, and Gallo. However, what differentiates Winc at that point is a digital presence that embraces customer feedback to develop only the products that connect with a generation of consumers in a way that the industry giants can’t or are unwilling to do.
Keep in mind that the behemoths are big enterprises to move. Even if they wanted to start, they are playing catch-up to a company like Winc, with nearly a decade of data and institutional knowledge on optimizing a digital experience, which is then leveraged to perfect its brands. That advantage, by the way, is an ingredient to its expediting market penetration.
Not only that, Winc’s distribution partners realize how powerful data and a direct connection with consumers can be, watching at the same time a Winc strategy that is disrupting the status quo. Of course, distributors want to be on a winning team too. And with Winc creating a competitive moat to distance and protect share even against large industry incumbents, expect the friendly sales alliance to continue.
In addition, keep in mind that Winc is doing more than building distributorship relationships. They are getting increasingly stronger against competing digital-first brands in the industry, like First Leaf, Naked Wines, and others, that have a strategy of disintermediating this wholesale channel instead of embracing it.
Interestingly enough, their lack of interest separates them from a market that accounts for more than 90% of US alcohol sales. But, their disinterest can be fuel for Winc. Moreover, as Winc remains in contact with clients, markets, and trends, which they say is embedded into its Winc Constitution, focusing on that 90% is a means to transform a brand, message, and taste into a revenue-generating juggernaut.
IPO And NYSE listing Set Stage For Banner 2022
Indeed, that’s the plan. And after raising about $22 million simultaneous to an NYSE listing attracting the top tier of investors, Winc is better positioned than ever to maximize its market opportunities. Most importantly, when considering the value proposition in Winc, don’t compare them to typical DTC wine clubs. In fact, referring to Winc in the same sentence devalues the company at least 75% since it doesn’t reflect the massive contributions from its omni-channel strategy.
Further, in nearly every other comparative sense, Winc is different. Not only different, but also one of the few new breeds of companies leveraging and combining the best of legacy wholesale distribution networks with the power of new technology to maximize DTC, data analytics, and a direct connection with the customer. And from a growth perspective, it’s working.
Best of all, revenue-generating momentum is at its back. And despite seasonality being inherent to its business, know that Winc is ahead of the curve there as well by being able to capitalize on multiple markets and seasonal opportunities that all contribute to a high-margin stream. Moreover, its growth curve is steepening. Thus, while the past decade has indeed made Winc a success, 2022 is set up to be its best year ever. Investors may want to toast early to that proposition.
Disclaimers: Level3Trading is responsible for the production and distribution of this content. Level3Trading is not operated by a licensed broker, a dealer, or a registered investment adviser. It should be expressly understood that under no circumstances does any information published herein represent a recommendation to buy or sell a security. Our reports/releases are a commercial advertisement and are for general information purposes ONLY. We are engaged in the business of marketing and advertising companies for monetary compensation. Never invest in any stock featured on our site or emails unless you can afford to lose your entire investment. The information made available by Level3Trading is not intended to be, nor does it constitute, investment advice or recommendations. The contributors may buy and sell securities before and after any particular article, report and publication. In no event shall Level3Trading be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or made available by Level3Trading, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance. The information in this video, article, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. Level3Trading strongly urges you conduct a complete and independent investigation of the respective companies and consideration of all pertinent risks. Readers are advised to review SEC periodic reports: Forms 10-Q, 10K, Form 8-K, insider reports, Forms 3, 4, 5 Schedule 13D. For some content, Level3Trading, its authors, contributors, or its agents, may be compensated for preparing research, video graphics, and editorial content. As part of that content, readers, subscribers, and website viewers, are expected to read the full disclaimers and financial disclosures statement that can be found Level3trading.com/disclaimer.
The Private Securities Litigation Reform Act of 1995 provides investors a safe harbor in regard to forward-looking statements. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, goals, assumptions or future events or performance are not statements of historical fact may be forward looking statements. Forward looking statements are based on expectations, estimates, and projections at the time the statements are made that involve a number of risks and uncertainties which could cause actual results or events to differ materially from those presently anticipated. Forward looking statements in this action may be identified through use of words such as projects, foresee, expects, will, anticipates, estimates, believes, understands, or that by statements indicating certain actions & quote; may, could, or might occur. Understand there is no guarantee past performance will be indicative of future results. Investing in micro-cap and growth securities is highly speculative and carries an extremely high degree of risk. It is possible that an investors investment may be lost or impaired due to the speculative nature of the companies profiled.