B2B booze marketplace Kaddy acquired by WineDepot in $34 million deal

B2B alcohol marketplace Kaddy has been acquired by ASX-listed Digital Wine Ventures, parent company of wholesale wine marketplace and shipping company WineDepot, for a total consideration of $34.25 million.

Kaddy was founded in 2019 by school friends Rich Coombes, who is also the co-founder of Batlow Cider, Capital Brewing and Will & Co Coffee, and Mike Abbott, former head of operations at Uber ANZ.

The startup is designed to streamline B2B transactions between alcohol suppliers and their trade customers, including bottle shops, bars and pubs, helping business owners manage their invoices more easily.

In June 2020, in the midst of the COVID-19 lockdowns, the startup raised $3.5 million.

At that time, it had about 50 suppliers and 100 customers using the platform. Today that’s more like 800 suppliers and 1500 venues, Coombes tells SmartCompany.

Kaddy’s annualised gross marketplace value is now about $18 million, he adds.

“That’s against the backdrop of a really challenging environment.”

As COVID-19 restrictions have seen hospitality venues close, reopen and close again, the startup has focused on serving bottle shops, which are fielding demand for craft and boutique brands.

However the pandemic also led to tech adoption in hospitality, and Kaddy has seen an uptick in bars and pubs signing up, even if they haven’t been able to use the product yet.

The acquisition is made up of $6.75 million in cash and 484 million standard Digital Wine Ventures shares, totalling a value of $34.25 million.

Why the acquisition works

Founded at around the same time as Kaddy, WineDepot initially focused on logistics and delivery, before launching its own marketplace earlier this year.

The acquisition allows both businesses to expand their offerings. Currently Kaddy facilitates discovery, ordering and payments, but doesn’t deal in logistics, Coombes explains.

The two businesses will also combine their supplier bases, giving Kaddy customers access to an additional 600-or-so suppliers.

As the name suggests, WineDepot is focused on wine, while Kaddy offers more craft beer and cider brands, boutique spirits and seltzers.

Perhaps more importantly, the two brands were aligned in their missions, Coombes says. They both created tech to simplify and streamline wholesale trading.

And this challenge is not unique to Australian businesses; both brands also have global ambitions.

While the two businesses could have gone head to head, Coombes believes they have a much better chance of accelerating growth if they work together.

“The timing is perfect,” he says.

“We’ve both had a really strong first two years.”

Kaddy is “just getting started”

Personally, Coombes is “absolutely pumped” to have closed the acquisition.

The deal sets aside more than $5 million for investment into Kaddy’s technology, meaning the team can continue to invest in the platform, the team and the customer experience.

Coombes and the team wanted to “change the game” in the wholesale alcohol sales sector, he says. This gets them a little closer to that goal.

There are more than 50,000 licensed venues in Australia, and while the founder says he has never been hung up on a valuation, he always knew the opportunity was huge.

The value of this acquisition reflects that opportunity, he adds.

“We’re just getting started.”