Wine entrepreneurs Andre Eikmeier, Justin Dry and Leigh Morgan are back out on their own after convincing majority shareholder CatchOfTheDay to sell out of their Vinomofo business in July.
The trio launched Vinomofo in April 2011 and sold 70% of the business to James Packer-backed deals group CatchOfTheDay in March 2012, when they needed more resources to meet their growth targets.
Eikmeier told Business Insider that Vinomofo turned over about $2.5 million a year when Catch bought in, quadrupled its revenue to $10 million in 2012-13, and had grown 30% month on month since buying out Catch on 30 June.
“There’s definitely renewed vigour and focus when you’re the majority shareholder,” he said. “We’ve got a brand new bank account; everything seems more real.
“We have 12 people working at Vinomofo. We had to reassure them [on leaving Catch] but we’re a pretty tight unit and pretty transparent as a team. They’re all pretty excited now.”
Splitting from Catch
While the split sparked rumours about Vinomofo and CatchOfTheDay’s profitability, Eikmeier said both parties remained on good terms.
For Vinomofo’s founders, buying out of Catch was a chance to regain a majority stake in a company they believed would eventually compete with Woolworths and Coles.
The deal was backed by a small group of Adelaide investors, including corporate advisory Fortis Ago, which represented the founding trio in their original deal with Catch.
Fortis Ago’s Marcus Bailey told Adelaide Now that his firm was able to raise the capital to buy back the Catch of the Day stake in about three hours.
Meanwhile, Catch described selling Vinomofo as the first successful investment in its new start-up incubator program, Sketchbook Ventures. It has yet to name any start-ups in the program.
“We learned a lot [from Catch],” Eikmeier said. “Throughout that time, we were still getting a lot of interest from people inside and outside the wine industries, but we were ignoring offers.
“A year and a half later, we were at that point where we achieved our targets and thought it could be an interesting new phase of the business.
“There was always an understanding that [the buyout] had to be an arrangement that worked for everybody. We sat down [with Catch] and had a chat about what would happen and what all parties would need to be happy.”
When Vinomofo split off from Catch, Eikmeier said the three founders set themselves a target of turning over $20 million this financial year.
He said the business was “comfortably profitable”, but had big plans to expand to overseas markets and new product lines.
Eikmeier did not completely rule out future capital raising, but said the business was “pretty comfortably self-funded at the moment”.
“If we suddenly stopped growing, we’d still be profitable,” he told Business Insider. “But that’s not enough for us.
“One of our learnings from Catch was to look at not just revenue but sustainable and profitable growth. Get your model profitable early, and grow profitably.”
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