Last week we launched the first session in our new webinar series exploring specific challenges that different players across the global drinks industry face. Fero's Olly Lawson sat down with guest speaker Robert Joseph, a wine connoisseur, co-create of wine brand Le Grand Noir, writer, consultant and co-founder of the International Wine Challenge and Mitch Fowler, co-founder and CEO of Fero, to discuss cash flow challenges drinks business face and the discussion quickly zeroed in on wine in particular. As Joseph said at one point, are we seeing “Darwin in real time” in wine?
The conversation was prompted by Robert's recent piece on his Wine Thinking Substack, “Shortage of cash: the wine industry's biggest problem. And how to solve it," which argues that cash, more than grapes, brands, or marketing is the real constraint holding the drinks industry back, with the wine trade taking the strongest hit.
Watch the Full Session
Wine cash flow traps
The subsequent discussion between Fowler and Joseph revealed key challenges that wine businesses face currently with lessons learned both from examples within wine and how other industries have tackled these issues.
Key topics covered include:
- Does the agricultural nature of wine create a structural, not cyclical issue?
- Is appellation- and varietal-based pricing just a capital argument in disguise?
- Why is cash flow such a problem now? Hint: Did land value used to paper over the cracks?
- Can private equity help? And what to watch out for.
- How to get cash today? Spirits and beer have the advantage of speed. The real fix is generating cash today, not waiting for the vintage to sell.
Fowler, drawing on his background in large-scale commodity markets before co-founding Fero, discussed how drinks could approach this like other commodity industries have. His observation: mature commodity markets have solved for capital efficiency and route-to-market separately, letting each player in the chain focus on where they actually create value, which is something the drinks trade has struggled to do.
