Post Covid DW9, page-4

What are you talking about? DW8 (prior to the Parton's acquisition) significantly serviced off-premises businesses by doing deliveries for online orders. This is a retail business. Retail wine sales have gone absolutely nuts during COVID. It should be the best period for them. You talk to most wineries selling direct to consumers and they have never had it better.

Forwarding looking, Kaddy gives them more exposure to the on-premises (restaurant) market, but from a bit of industry research it would seem that the representation of size and the "market leading" position may not be quite so accurate.

But right now, this business is very heavily skewed towards moving boxes, which can be seen from the financials to be a very low margin business. Even at scale, Parton's was not truly profitable (or was marginal at best).

If DW8 get the logistics right and integrate it into the marketplace they can definitely improve things. But the team's experience is mostly with retailing and consumer sales, not B2B. I think you will find B2B is somewhat different. You need significant scale of supply in order to be successful on this. To date, DW8 have been telling the entire world that existing distributors are ripping people off. But you need those guys in order to build a proper B2B business, because the existing distributors control the majority of the market and you can't do it properly without them. You can't see too many distributors wanting to play nicely with DW8.

I get super nervous when a business' strategy seems to be about buying lots of different things and then trying to bring it together. It is hard to manage, and makes analysing the business hard. What are the real growth rates of revenues, versus acquired revenues making it look like there is growth?

The potential is there, but hasn't quite cracked the nut yet in terms of progress and valuation. People suggesting DW8 valuation should be 20-50x revenues are completely dreaming. You need super high growth rates and high margins to justify those kinds of valuation multiples. DW8 doesn't have either when looked at properly.

Cheers
Marv