** Please note that the company is planning to raise a maximum of £450,000 for 45% equity. It is anticipated this will be made up of a combination of investment on Seedrs and high net worth individuals, investing directly in the company, all with the same pre-money valuation and share price. **
Eighteen years ago I took the first steps on my journey into the world of wine, when a burgeoning passion for all things vinous led me to seek my first job in the trade. My ambition was always to start my own company, and in 2006 I left my secure employment and invested all the capital I had, in Yarnell Vintners. My plan was to develop a wholesale fine wine business, specialising in Bordeaux, which we would market directly to selected importers, merchants and private buyers around the world. In February 2007 we made our first sale.
Yarnell Vintners is now well established and our total sales to date have reached almost £5 million. Our passion to make the company we have built a continued success remains undimmed, and our research into market conditions forecast for the next few years, has convinced us that now is the perfect time to implement a development strategy to grow our business - to do this we need your help.
Aspects of our development plan have already been implemented, including a company rebrand and launch of our new website. Over the last 6 months we have also marketed our wines to a broader range of customers through Wine-Searcher - a global online wine promotion platform used by 2.9 million active trade and private wine buyers around the world, every month. Results have been very positive, with sales for the first 10 weeks of 2015 up 121%* on last year, and based on the increase in customer numbers so far, we estimate Wine-Searcher alone could bring in 1,000 new customers over the next 4 years.
Our key development aim is to broaden our stock range and increase our stock volumes. This would enable us to compete with larger merchants on the global market, increase order frequency and size, and attract a broader range of customers. Over the last few years demand has increased globally for wines from a broader range of regions and countries, and we intend to exploit these new commercial opportunities. Our stockholding would continue to increase after investment, through a process of continual reinvestment of trading revenue back into stock, providing sustainable and ongoing growth. We believe that combined with an aggressive pricing strategy and proactive marketing, this has the potential to deliver a significant increase in market share across all sectors.
We plan to recruit an experienced Private Client Sales Manager to enhance the service we offer our customers, with the right candidate expected to bring in substantial numbers of new customers. This would be followed by the recruitment of an Administrative Assistant to deal with the extra operational activity. Both appointments would be funded entirely from trading revenue. To add further experience to the team we are also keen to recruit another Non-Executive Director.
*Source: unaudited management accounts
Substantial accomplishments to date
- Total sales of just under £5 million
- A management team with 46 years combined wine industry expertise, plus experience of selling a successful company
- Valuable long-term trading partnerships with key suppliers and service providers
- A diverse customer base - comprising merchants, retailers, importers, wine funds and private clients
- Export sales, over the last twelve months to customers in - France, Hong Kong, Singapore, Thailand and the US
- EIS Advance Assurance received
We feel we have developed a disciplined approach to trading based on experience and in-depth product and market knowledge. We aim to maximise capital return through; close working relationships with suppliers to source wines at low prices, and market knowledge gained from day-to-day contact with customers to sell at high prices.
Fine wine prices rose by almost 15% per annum over the 20 years to 2011, therefore increasing our stockholding would allow us to benefit from any uplift in market prices to maximise revenue. Continual analysis of prices across a large range of wines might allow us to predict where future price increases may occur.
We also look to increase commercial opportunities by broking stock for suppliers, clients and other merchants. Depending on order size and payment terms we plan to generate a margin of around 10%, as the associated costs of this type of sale are anticipated to be low and capital commitment short.
As a consequence of their longevity most fine wines are traded many times prior to consumption - this secondary market is estimated to represent around half of annual trade.
Currently we make regular, targeted offers to selected UK fine wine merchants, brokers and wine investment companies and our average UK trade order over the last three years is £5,873*.
Our extensive export customer database includes Asian, European and US importers and merchants and our average order size over the last three years is £7,228*.
Following investment we anticipate increased stock levels would facilitate multiple offers each week with the potential to increase order frequency and revenue.
We have a database of fine wine collectors and wine investment clients, with an average order size over the last three years of £5,285*.
*Source: unaudited management accounts
Use of proceeds
All the capital we raise would be used to purchase stock.
We intend to offer shareholders an annual performance dividend as and when appropriate based on the performance of the company. This dividend would be distributed in proportion to shareholding. Shareholders would also be given priority access to limited availability wines, special offers and invites to tastings and events.
The global fine wine market grew by 400% between 2004 and 2011, to an estimated size of US$4 billion per annum. Around the world spending on wine is increasing, having risen 43% between 2009 and 2013, with a further 13% increase forecast by 2018.
Increasing global wealth, particularly in Asia, North and South America and Africa has led to an increase in wine consumption in these markets. Despite becoming the world's largest wine consumer in 2011 the US wine market is still growing and consumption is predicted to increase a further 14% from 2014 to 2019. US consumption per capita figures are currently much lower than in Europe, leaving huge potential for further growth.
China is by far the most important market to emerge in recent years. The Hong Kong and Chinese wine market grew so rapidly, that in 2013 it became the world's largest consumer of red wine, increasing consumption by 136% in just 5 years. In 2014 it was estimated that there were 38 million wine consumers in China drinking imported wines (an increase of 100% in 3 years), and this is expected to grow to 70-80 million by 2020.
Wine consumption in other parts of Asia is also increasing, with the wine market in Singapore forecast to grow by 40% in the decade to 2017 - 4.6 times faster than the world average. The Vietnamese wine market also grew by 10% in 2012, with imports totaling €63 million.
Bordeaux wines account for around 80% of the fine wine market, and in 2012 the world's top importers of Bordeaux (by value) were:
1–United Kingdom, 2–China, 3–Hong Kong, 4–United States, 5–Switzerland, 6–Belgium, 7-Germany, 8-Japan, 9-Canada, 10–Netherlands
Characteristics of target market
Fine wine, is a consumable, collectible, luxury product whose prestige and desirability increases with its value. Each wine is unique and limited, and as it is consumed it cannot be replaced. This inherent scarcity continually drives up prices and fuels demand.
By its very nature fine wine appeals to individuals with high levels of disposable income. We believe the predicted 40% growth in global wealth by 2018, will invariably lead to an increase in spending on fine wine.
The world's super-rich are regular buyers of fine wine, spending an average of US$8bn on wines and spirits each year, and we expect their spending to increase as their numbers are predicted to rise by 28% to 215,113 by 2023.
Wine consumers in Europe are becoming increasingly sophisticated, spending more per bottle. Nearly 40% of regular wine drinkers in the UK now say they will spend over £8 per bottle, up from 29% a year ago.
REACHING NEW CUSTOMERS
Wine-Searcher is our main marketing tool to generate sales from new customers, giving us access to active wine buyers around the world. Customers looking for wines we are listing, click through from Wine-Searcher to our website. Based on previous results, we have estimated the level of annual traffic this would generate, based on our projected product listings:
1st year - 12,000 visits
2nd year - 12,800 visits
3rd year - 15,050 visits
4th year - 21,450 visits
Following funding we intend to increase our product range and introduce an on-line e-commerce facility, which we believe will allow us to convert a higher proportion of Wine-Searcher referrals (web visits) into orders. We also intend to develop our website to include more features to encourage customer return including - articles, films, wine news and tasting notes. We have also created links to Facebook and Twitter to broaden our reach and promote offers.
MAXIMISING EXISTING CUSTOMER SALES
With more wines to sell we could increase our direct selling activity to existing trade and private customer base, via e-mail, phone, website and social media, employing a differentiated marketing strategy to maximise margins in each sector.
Tastings would be organised to promote wines to new customers and engage with existing customers. These would be advertised through our website, social media and local press. Wine makers and chateau owners would be invited to host tutored tastings and dinners.
Presentations would be arranged through Wealth Managers and Investment Consultants to attract potential wine investment customers.
We intend to start using wine trading platforms such as Liv-ex and Cavex to sell larger parcels of stock, and increase broking through larger merchants giving us access to their customers.
There are thousands of wine merchants in the UK, but the specialist fine wine trade represents a small part of this market, dominated by a small group of large merchants.
While we are not able to compete with the size and prestige of these companies, our small, efficiently run business allows us to regularly undercut them on price. We think that these companies require a large workforce and most operate out of expensive central London offices, generating large overheads which are likely to eat into their margins. We intend to keep our operation lean and efficient to keep overheads low, and use our competitive pricing policy to take market share from other merchants.
At present Yarnell Vintners is one of many small companies operating on a small amount of capital in a very competitive market sector. Following investment we will be in an advantageous position and we believe our development plan will enable us to grow rapidly, to become one of the UK's larger fine wine merchants within four years.