Wine Planet To Seek Sales Boost In The Offline World

Sydney Morning Herald

Thursday November 16, 2000

Katrina Nicholas

Online liquor retailer Wine Planet yesterday defended its decision to rein in cash burn by cutting staff and told shareholders that, having ``won" the online space, it would ramp up sales efforts in the offline world.

With the e-tailer's shares languishing near their lows, Wine Planet managing director Mr Mark Mezrani pledged to develop all other possible businesses to ``get to the magic $40 million figure" the sales number needed to turn cash flow positive.

For the year to June 30, Wine Planet recorded revenue of $15.24 million, with about $12 million generated from online sales and the remainder from offline activities. Other businesses include developing a Wine Planet concept store in Campbelltown, implementing direct selling channels for customers without Internet access, and ramping up the corporate division, which allows companies to order wine for corporate events via fax or phone.

``We're clearly operating in a different market environment than we were six months ago and six months ago the company was carrying extra capacity because growth was so ferocious," Mr Mezrani told the annual general meeting.

``But we've just come off a major hump of work and the market is screaming for profitability and clearly now we need to find the right level for the company, the right level of excess capital in relation to sales."

Mr Mezrani also said Wine Planet, having spent the money early on to become Australia's ``number one online wine brand", was, with $27.9 million in cash reserves as at September 30, in an enviable position.

``Now, the question is: how much do we have to do to preserve our advantage at the most economical rate we can?"

Mr Mezrani said the jury was still out on sales for the December quarter, historically liquor retailers' boom period.

Last quarter Wine Planet's sales went backwards for the first time, slumping 24 per cent from $4 million in the June quarter to $3.03 million.