Vivino reported its best year yet during the pandemic thanks to surging home consumption (pic: Vivino)
China Wine

Vivino looks to subscription service and China for future growth

The wine app Vivino, dubbed the ‘Netflix of wine’, will pivot towards subscription-based wine recommendations in the future and expand into new markets including China, following its successful funding of US$155 million, its co-founder has revealed.

The wine app Vivino, dubbed the ‘Netflix of wine’, will pivot towards subscription-based wine recommendations in the future and expand into new markets including China, following its successful funding of US$155 million, its co-founder has revealed.

Launched in 2010, the wine app now boasts over 50 million users in 17 different markets and has evolved from a wine recommendation app to an influential community-based wine marketplace.

PANDEMIC IMPACTS

Vivino reported its best year yet during the pandemic thanks to surging home consumption (pic: Vivino)
Vivino reported its best year yet during the pandemic thanks to surging home consumption (pic: Vivino)

Last year, amidst the pandemic, the company had perhaps its best year on the record. It bucked a downward trend and its wine sales in 2020 reached US$265 million, more than double of 2019’s US$130 million, says co-founder Heini Zachariassen at a webinar hosted by Vinexpo.

But it wasn’t a smooth ride all year along. In February last year, early border closure and strict social distancing measures in Hong Kong, a market that has the highest basket price of all Vivino’s 17 markets, alarmed the co-founder.

“Is this gonna kill us? Are we gonna not being able to ship for six months? What’s going on?” he questions but then in late March, as he describes, “things started going crazy!”

In April, the company had its best month ever as more countries entered into lockdown. “We had three times of the revenue that we used to, we have to scale up everywhere,” he exclaims.

Vivino co-founder Heini Zachariassen (top right) talking at a webinar organized by Vinexpo this week (pic: screengrab)

The company subsequently upgraded its operation to meet the new demand. “Once we get everting under control, we just saw more users come in and more buyers come in and they kept coming back. We had this really crazy boost in April and May. And then it stopped but at a totally new level, and we haven’t seen that really slow down,” he explains.

This pandemic-induced shift to online marketspace for him is a “tipping point” for the industry and the wine industry won’t go back to pre-Covid level. “I don’t see any signs of coming back. Once you get into the habit, we are just not going back, these are tipping points for industries,” he asserts.

Going into 2021, the blistering growth might flatten for a while but it won’t regress to 2019 level, he adds.

SUBSCRIPTION AND BROADER SERVICES

Bouyed by its strong growth, the company earlier this year raised US$155 million in series D funding, twice as big as its previous two fundings combined.

With the capital, the Danish entrepreneur plans to upgrade its product by hiring more engineers to improve app functions. Its operation so far has been quite “frugal” as he says. For an app with 50 million users, the team has only three engineers. “We are aggressively upscaling to give people a better product,” he states.  

The company also looks to increase its local market penetration to be able to serve all 17 of its local markets better, he says. “We are in 17 markets and we need to double down on local presence,” while detailing his company’s growth plan with the fresh injection of investment.

One of the more recent new features the app has introduced is a subscription based version that allows the app to customize wine selections for users based on their taste preferences.

Vivino operates in 17 markets and has 50 million users (pic: Vivino)
Vivino operates in 17 markets and has 50 million users (pic: Vivino)

“We have been testing a subscription product in the US for some time under the radar and we start to push it right now. It’s the only subscription made for you, no box is made the same,” he asserts, describing a personalized wine selection service for premium users.

According to him, the wines will be delivered to users every six weeks and the new subscription will be rolled out globally if US market reception went well.

Meanwhile, beyond wine services, the company could be adding spirits into its rating system, such as whisky, rum and gin.

The app at the moment rates about 100,000 wines a day, whereas wine critics and wine publications like Wine Spectator rate about 20,000 a year, according to the co-founder, while highlighting the app’s capacity and unrivaled scale.

“The scale of things are so different that means small producers in some small village in France will be rated. That’s great for the industry that we get everything rated,” he spoke with conviction.

CHINA

China has the world's largest ecommerce market size (pic: iStock)
China has the world’s largest ecommerce market size (pic: iStock)

Having tapped into 17 different markets, Vivino is now “heavily looking at China”, a country with the world’s largest ecommerce market and 939 million strong online users, the entrepreneur revealed.

The Asian economic powerhouse could poise to become “the world’s biggest wine market in the world” in terms of online wine sales, Zachariassen predicts.

The company right now is stepping up its presence in Asia Pacific region in markets like Hong Kong, Singapore and Australia.

China is currently the world’s sixth biggest wine consumer but its online wine sales, which currently contributes about 30% of overall wine sales in the country, could jump further, thanks to Chinese consumer’s entrenched online shopping habits.  

“We really want to do China. We look at China from an online point of view, it could become the biggest wine market in the world,” he said.

China ranks as the world’s biggest e-commerce market with a volume of US$1.94 trillion in 2019, more than three times the size of the US market. This year, for the first time, online sales in the country is projected to surpass brick-and-mortar sales, according to eMarketer, making it the first country to have online sales dominate its retail market.

“Although the wine market in the US is still much bigger than China,” he admits but the penetration of online is much higher…We are excited to do something there, probably next year.”

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