Disruption leads to opportunity for Vinomofo
Vinomofo is an online wine retailer with a network of over 500,000 customers across Australia and Singapore. Known for their fun brand and impressive deals, Vinomofo is firmly focused on offering good quality wine to their loyal customer base.
Established in 2011 from the garage of Vinomofo’s wine-loving founders, the business has organically funded its growth without any debt. Following an unexpected turn of events, the group faced a unique opportunity to grow their business. By seeking finance for the first time, Vinomofo could move fast, capture opportunities and create a real competitive advantage.
Years of growth compressed
In 2020, the COVID-19 pandemic and lockdowns saw an accelerated shift to buying online, particularly for wine. Growth that was forecast to take years occurred in just a few months, with online retailers needing to act fast.
At the same time, the wine industry was going through significant disruption on the supply side from China. Tariffs as high as 250% were introduced so wineries and wine producers were quick to pivot to alternative sales channels within Australia.
“When COVID hit, we saw rapid growth in a very short amount of time. At the same time, new tariffs from China saw high-quality wine become available back in the Australian market at short notice. We had to find a way to make the most of this opportunity.”
Kieran Donovan, CFO, Vinomofo
Vinomofo were poised to take advantage of this unique growth opportunity, but their hands were tied as they’d never previously had external finance. During this time, Vinomofo began looking for a solution to help.
Flexible finance to move quickly
Vinomofo had no issues with cash flow. But the business needed finance to make purchases outside of forecasted activity, and take advantage of the competitive deals on offer.
The challenge for the team lay in the way their business was structured. With most assets tied up in stock and no other significant assets (e.g. property or warehousing) to lend against, traditional lenders weren’t able to offer the right finance to suit their unique needs.
“Because we were capital-light, we didn’t quite fit the criteria of traditional lenders. We needed a flexible solution from a provider that understood our business model and could see the opportunity.”
Kieran Donovan, CFO, Vinomofo
Vinomofo were introduced to Octet via a commercial broker after discussing their working capital requirements. These included:
- flexible finance
- funding speed to market
- interest-free periods
- competitive pricing
- ability to meet key Christmas season deadline
- smooth onboarding
Octet assessed their business and was pleased to offer Vinomofo a trade finance facility that met all their needs, to the value of $2 million dollars.
Securing a competitive advantage
For Vinomofo, the trade finance facility has allowed them to do exactly what they intended. It’s also introduced a new growth tool for their business.
“We’ve been able to secure a real competitive advantage by negotiating good deals, moving faster than our competitors and securing exclusive offerings. It’s been a great tool to help expand and grow our business.”
Kieran Donovan, CFO, Vinomofo
“Flexible working capital finance can be a powerful tool, even for successful, financially healthy businesses. When unexpected opportunities arise, it can help them capture competitive deals and be a real win for their business.”
Tony Ahdore, Director of Working Capital Solutions – VIC, TAS, SA, Octet
What does the future hold?
Lockdowns are still very much part of the Australian (and global) business landscape – and tariffs from China are set to stay for at least a few more years. Vinomofo are proud to be in a position to match the consumer demand with exceptional Australian wine that may otherwise have been exported. Vinomofo may also look to grow their current facility. By having flexible working capital finance and a healthy balance sheet behind them, the Vinomofo team feels prepared to power its growth into the future.
Words of advice
If your business is experiencing rapid growth or you want to capture new opportunities, we can help. And if you’re not sure where to start, we can point you in the right direction. We work with successful Australian businesses facing these same growth challenges every day, and can help you prepare.
“If you’ve never taken on debt to fund working capital before, or have the kind of balance sheet or business model that traditional lenders tend to shy away from, you still have options. We understand that every business has a structure that works best for them. We are open to working with, and understand, different business models.”
Allan Howe, Director of Working Capital Solutions – QLD, Octet
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Disclaimer: The following comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
