WineFriend customers subscribe online and have cases of wine delivered direct to their homes monthly or every two months. Founded by wine experts Debbie Sutton and Yvonne Lorkin, the company aims to take the hassle and guesswork out of enjoying a reasonably priced bottle of wine.
Rather than standing in the supermarket squinting at labels, WineFriend customers receive a selection of six bottles of wine matched to their individual taste profile.
A western supermarket typically shelves 48,000 items. About 1500 of those items are bottles of wine, making it the largest choice space in modern supermarket. The wine market can be confusing for consumers, Sutton says. "Wine buyers have never had it better in terms of the choices available from around the world. And they’ve never had it worse regarding the possibility of confusion and the pressure to find the perfect wine."
Most people seek a particular variety of wine to narrow down the search, before relying to visual clues like label design or a familiar name to make a decision.
Both the founders of WineFriend wanted to prove there was a better way to find the perfect drop. Sutton has worked in various roles in the wine industry for 24 years. Her diverse roles include production, management, marketing and sales. Despite her experience, she found herself unable to choose the right bottle of wine in a supermarket. "I wondered how other people went about choosing wine and if they felt stuck, unsure of how to branch out without getting it 'wrong' and being disappointed with their selection," she says.
Inspired by Nadia Lim's My Food Bag, Sutton and Lorkin decided a new approach to wine retailing was necessary. At WineFriend, using technology to personalize a customer's wine delivery is key to the business model. Unlike My Food Bag, each customer's selection of wine is unique to their tastes, which they have imputed through an online quiz.
The simple, eight-question test used to determine a person's taste has been honed by Lorkin for years to make sure it provides real insight into each person's thresholds for sweet, sour, bitterness and intensity of flavour. It also has to achieve these results without being frustrating or boring to complete.
There are similar businesses to WineFriend in the United States, the United Kingdom and The Netherlands, but all operate in the high-end of the market. WineFriend has three tiers depending on budget and the 75 different wines change each month. That means Sutton and Lorkin have had the arduous task of tasting and vetting 900 wines since the business began.
The biggest appeal for suppliers is the prices. Small producers can be badly affected when retailers squeeze margins and heavily discounted prices and damage a brand’s reputation. Sutton wanted to make sure WineFriend bucked the trend and stands by her goal to deliver value to customers without compromising on the suppliers’ businesses.
So far, so good. Business has been busy, and while it's staying mum on exact customer and revenue numbers, in the last two months alone WineFriend's revenue doubled. Christmas case sales have tripled since last year and it's not yet December. That growth, and the potential to grow further has attracted some big-name investors, with Rob Fyfe, former Air New Zealand CEO and current Icebreaker CEO, Sarah Wickens (formerly Gibbs) and Catherine de Groot, co-founders of Trilogy, taking a 25 percent stake between them.
Sutton says that access to ‘smart money’ would be key to expanding their loyal customer base, which boasts an enviably low churn tracking at around just 2% a month.
“At the end of the day most investment decisions come down to people. With Sarah, Cath and Rob we felt that we had a shared vision for WineFriend but we knew that they would challenge us to think differently. As a group they have a similar down-to-earth, pragmatic approach, but they all bring different and complementary skill sets which we can draw on as our business grows. Rob has a proven track record as an innovator in the corporate world and knows how to nurture a company culture based on authenticity and integrity. Sarah and Cath understand the requirements of starting a business from scratch and leveraging a unique proposition to bring it to scale. Together they make a pretty impressive investor team.”
The service isn't just for city slickers either. Customers come from Paihia right down to Invercargill. The youngest is 22 and the oldest is 84. "The most exciting thing is how engaged and loyal our customers are and how they've really embraced discovering new producers and exciting new wines that they would never have thought to try themselves. They're our best advocates and almost all of our growth to date has come from their word-of-mouth recommendations."
The biggest challenge at the moment is keeping up with the ever-increasing demand. At present, it's all hands on deck and the wine is being distributed from Sutton's house. But the WineFriend team are currently working on a project that will automate a large chunk of business processes and are considering outsourcing the distribution, changes that Sutton says will be key to rapidly scaling the business.
"This IT project will also improve our 'rate and review' feature so has real customer experience benefits as well as logistical benefits to us. That's something we're really mindful of as a startup - being agile and only building what we need to but ensuring that customer experience is always top of the agenda."
New Zealand wine sales are pushing $2 billion a year, and the wine industry doubled its earnings in the last decade. Traditional retail is still king, but online delivery platforms are starting to creep in to disrupt the market. Most major vineyards in New Zealand have wine clubs were members are delivered wines quarterly, but they tend to only offer high-end products.
Hawke’s Bay-based company Advintage is a stalwart of the online wine market. Founded in 1999 the company now delivers thousands of cases to customers nationwide through its online service. The Good Wine Co. is another fast-growing online wine store. On both of these sites, users select their own wine choices, much like in a traditional shop, and have them delivered to their homes.
At the top end of the market is Australian online wine retailer, Vinomofo, which launched in New Zealand this year. On the back of a $25 million investment the company is entering six global markets this year, including the UK and US. In just five years, the retailer has built a member base of more than 400,000 people.