Thanks. It is not easy to open up but I am hoping my readers will be more cautious and exercise their own diligence when reading up my write up. I hope more of us could share mistakes so that we could learn and grow together. Cheers.
Nice write up, I like reading about mistakes more than big wins. I think I learn more from them. I'm curious to hear more about what went wrong with the business. I took a very fast look and it looks like other than a big dip in 2019, revenues are holding somewhat steady. What happened that they're now losing money? Was the 40% markup too low? Wine companies are outside of my circle of competence too.
Do you think the issue with the business was knowable before you made the investment?
It has always been loss making but it was due to the assumption that they are reinvesting all their profit such as marketing to retain and attract their customers just like Amazon. The unit economic per bottle sold is profitable. The issue for them is that they overcommit after the Covid boom (assuming that they can continue to grow and overstock). As a result, when covid-19 finally over, they couldn't sell fast enough and got into going concern. My biggest mistakes were to assume the share scale of economy works in all kind of business. If could technically work but it seems to be hard. Elliot turner wrote a very good deep dive in them. If you interested, you could read it.
My short answer to your last question is that i should stick to my circle of competence. I might not invest in them despite good write up and employ more thinking further.
Good write-up TQI, thank you for sharing your honest post mortem.
Thanks. It is not easy to open up but I am hoping my readers will be more cautious and exercise their own diligence when reading up my write up. I hope more of us could share mistakes so that we could learn and grow together. Cheers.
Nice write up, I like reading about mistakes more than big wins. I think I learn more from them. I'm curious to hear more about what went wrong with the business. I took a very fast look and it looks like other than a big dip in 2019, revenues are holding somewhat steady. What happened that they're now losing money? Was the 40% markup too low? Wine companies are outside of my circle of competence too.
Do you think the issue with the business was knowable before you made the investment?
It has always been loss making but it was due to the assumption that they are reinvesting all their profit such as marketing to retain and attract their customers just like Amazon. The unit economic per bottle sold is profitable. The issue for them is that they overcommit after the Covid boom (assuming that they can continue to grow and overstock). As a result, when covid-19 finally over, they couldn't sell fast enough and got into going concern. My biggest mistakes were to assume the share scale of economy works in all kind of business. If could technically work but it seems to be hard. Elliot turner wrote a very good deep dive in them. If you interested, you could read it.
My short answer to your last question is that i should stick to my circle of competence. I might not invest in them despite good write up and employ more thinking further.