One retailer reported 25,000 orders and a revenue of $4m in Singapore.
Wine in Singapore was hard to get. It was difficult for consumers to get in touch with the producers of their favourite drinks as too many middlemen hindered them. The cost of just a single bottle here is also one of the most expensive in the world (it’s $23.68, The Economist Intelligence Unit revealed).
However, a recent report by data and analytics firm GlobalData revealed that Singapore's interest in wine is growing and that consumers are likely to trade up to more premium offerings rather than mainstream or value wine products. The market could grow by 5.1% over the period 2016–2021 to reach a market value of US$1.4bn by 2021.
Enter two wine retailers that decided to sell their bottles online, filling in logistics gaps, and stirring the beverage scene in Singapore. The founders of Vinomofo and Dellarosa Wines, both new players, shared the reasons why they set up shop in the country and discussed emerging trends amongst wine connoisseurs in the country that were never seen before.
Wine was inaccessible in Singapore
According to Justin Dry, founder of online wine marketplace Vinomofo, the wine industry gave off an impression seemed elitist and closed off to a younger audience, especially in Singapore. To try and change this, Vinomofo expanded to Singapore in December 2016 and brought in services that were homegrown in Australia.
Dry said, "I guess the original intention was to showcase and democratise wine for a younger audience, and the most important thing around the model was about removing all the middlemen from the wine space and just get going through a direct supply from the winemakers to the winetasters."
Dry previously set up a social network for wines called Quaff, and this allowed him to gauge the tastes of Australia’s wine scene and build the foundations of Vinomofo. The current platform is focused on personalising wine selection for its members.
Owing to the growing consumer interest and demand for quality wine, another player came to the scene. In November 2017, Quintino Dellarosa launched dellarosawine.com – Singapore’s newest online wine service dedicated to offering organic, biodynamic, and natural wines made by artisanal winemakers, with the goal of "exporting the rarity and exclusivity of their products to Singapore."
Unlike Vinomofo, Dellarosa Wine does not require a membership to buy wines. Moreover, wine producers have their own pages in the site and an interactive interface that contains product information for consumers.
Both founders decided to start shop in the country because they observed that small wine bottles in Singapore are slapped with huge logistics costs. A lot of middlemen also got in the way between the producers of wine and consumer.
“Singaporeans were paying way too much for wines for too long,” Dry said, “That's because there are too many people that have been in between the producer and the consumer. There's agents, importers, distributors, and we remove all of those, so there was a huge opportunity.”
Dellarosa concurred with Dry and said logistics costs raised the price of wine. “I have decided to set up Dellarosa Wine in Singapore to offer Singapore the possibility to drink a natural and organic wine selection at an affordable price. An online retail shop helps in cutting most of the logistics costs, which normally burden the final price of a bottle.”
GlobalData lead consumer analyst Ronan Stafford added, "Alcohol sin-taxes coupled with a large Muslim population who do not drink alcohol are limiting factors in the Singapore wine market."
Singapore is thirsty for wine
So parched was Singapore for wine that Vinomofo saw overwhelming feedback similar to what they got in Australia. They were considered one of the fastest growing tech firms in three years. According to Dry, Vinomofo’s revenue grew from zero to $4m.
“When we launched in Singapore, we sent over enough wine that we thought would last for the first month, but we sold out in five days,” Dry said. “It was quite amazing, we ended up having to fly one over rather than ship, because we need it quicker than anticipated. We're increasing the shipments to Singapore at a much faster rate than we actually budgeted. The traction that we are seeing in Singapore after just over a year is very similar to the traction that we got in Australia, where we ended up being one of the fastest growing companies in Australia during that period.”
Dry said Vinomofo has had 25,000 orders from Singapore alone. These orders also leaned towards certain types of wines. “The great thing about the market in Singapore at the moment is its interest in small batch of interesting wines has grown so much that we're getting an opportunity to bring over wines all over the world including New Zealand and Australia - a really small batch, cultish kind of natural, biodynamic, adventurous wines. Some of the ones that we’re bringing in now have never been seen before in the market, and these come from relationships we’ve built covering other countries and finding the producers we want to work with.”
To ensure quality, Dry, his brother, and his co-founder Andre Eikmeier, taste all the wines that get sent to them for selling. “We test everything and we sell only the wine that we love. That means for every 100 wines that we’re trying, we only select about 5% of them. We are a curated range. Basically what we do is we focus on the premium end of the market,” he said.
Challenges plague the process of delivery because wine bottles are generally heavy, fragile, perishable, and bounded by the law. The environment should also be maintained because wines need to travel at a steady temperature. "It can't have too much fluctuation. So there’s a whole lot of things that go into making sure that the wine is looked after, and we probably couldn't have chosen a more difficult product to deliver," Dry said.
For Dellarosa, he revealed that the most challenging part is to discover new wineries. "Our logistic chain from Europe to Singapore is provided with refer shipment, otherwise it wouldn’t be able to guarantee the quality. Natural and organic wines are very sensitive to high temperature and thermal shocks. For this reason, I am fully committed to using latest technological innovations to maintain the quality. For our online retail, I have used a 3 hours delivery system that guarantees quality up until now."
He also noted that the business’ wine has “a short turnover in Singapore, with consistent growing volumes.” With the intention of covering not only the restaurants and bars in Singapore but also a specular online selection, Dellarosa Wine is aiming to reach 50 bottles circa.
Trends in wine demand in Singapore
GlobalData revealed that Singaporean wine market grew at a CAGR of 5.5% during 2011–2016. "Still wine outstripped both sparkling and fortified wines to emerge as the most valuable category during the reporting period," it said.
The growth of the overall wine market can be primarily attributed to the rapidly growing economy and high disposable incomes, coupled with growing affinity towards premium wine products imported from Australia, France and Chile, says GlobalData. "Premiumization opportunities are rife within the market, given that producers need not worry about a significant presence of low-priced private label products," Stafford said.
In over a year of operations, Dry has observed some trends in Singapore’s growing wine market. “There is a brewing trend towards a small batch of natural and interesting wines which are enriched by real stories and crafted by top-end producers,” he said.
Dellarosa, even with a few months experience, discovered that wine aficionados are now increasingly willing to taste rare wines with complex aromas. He said, "Since the word is spreading, people are willing to try more types of wine. The online market space enables us to interact directly and immediately with consumers without barriers. We want to deliver and discuss the entire tradition, cultural trait, and flavour of each wine we selected from winegrowing areas."
Dry, on the other hand, sees the industry as a fascinating market with consumers gearing towards more interesting wines. “And by interesting, I meant a small batch of interesting wines instead of mass-market wines. These include wines in the natural biodynamic adventurous, but they also include super exclusive cult producers.”
Dellarosa said they’re definitely seeing the rise of natural wines. In addition to this - in developed countries like Singapore - the attention to sustainability and health is a driver for most consumers. He posited that all aspects of sustainability must be included in any winery business model and not only limited to discussions about the carbon footprint of wine delivery.
He added, “Sustainability must be applied for the quantity of production, care for the environment, using light-weight glass for bottles, and learning constantly how to solve problems in the vineyard without using chemicals.”
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