Why we invested: Tipple
If you’re planning to sit down with a cold beer at any point this week, the chances are that more than five different companies and forty different people have been directly involved in getting it into your hand.
In an industry that still relies on pen and paper, if an alcohol brand wants to reach global consumers - they have to ship via an importer, a distributor, a retailer, with wholesalers often filling the gaps - before their drink can be enjoyed. Each of these takes 15% to 30% of margin, producers often lose over 60% of their margin, due to an antiquated system of middlemen.
In no other industry is a distributor essential to entering a market to sell a product. Lack of digitization across the value chain also means lack of data and customer insight. Combined, this makes D2C (direct-to-consumer) sales pretty much impossible for most companies. D2C currently represents less than 1% of alcohol sales.
Tipple’s digitised end-to-end infrastructure allows companies to sell either B2B (business-to-business) or D2C up to 5x cheaper and 10x faster, with true visibility on customer behaviour and with a fully consolidated logistics chain.
We’re delighted to have backed co-founders Eoin, Laura, and Jamie, as they transform a $2 trillion laggard market, redefining how alcohol brands can engage with customers across the world.
To rewire such an industry, you need a comprehensive understanding of how it works.. Co-founder and CEO Eoin is from a family that has worked in the alcohol industry for three generations. He previously founded Mor Gin - the fourth best selling gin in Ireland - and has first hand experience of the severe pain points caused by the lack of digitization.
Selling solely B2B, Mor Gin had €250k of unsellable products sitting in Singaporean docks at the start of Covid-19 lockdown. Restaurants and bars were shut, and the complexities of selling D2C overseas simply seemed impossible.
Eoin, along with co-founders Laura and Jamie, have developed complex data infrastructure before, leading teams at AWS in Ireland. What AWS did for cloud computing, Tipple will now do for tax and logistics in cross-border commerce.
A big barrier to doing this historically has been the disparate regulations on alcohol distribution in different countries. This has meant that market entry has required brands to have bonded warehouses and fiscal representation in each country of operation, regardless of sales volumes.
Tipple’s service will provide the digital back-end for fulfilment and will be a transparent service to end customers, plugged into the websites of the supplier while also providing the physical warehousing infrastructure in each market on their behalf. Consolidating tax, compliance, fulfilment, and new market entry into a single, end-to-end platform, Tipple provides a streamlined route to consumers and a fraction of the cost.
This will finally enable the alcohol industry to fully enter the era of e-commerce. E-commerce accounts for 20% of all retail sales worldwide and is expected to rise 4x by 2031, but for the alcohol industry, the figure is less than 4%, despite efforts by leading brands like Diageo to increase e-commerce to 25% of its total business.
It will unlock D2C as a viable business model. Drinking at home is already 3x more popular than drinking at a pub, restaurant or bar.
Working with Diageo - one of the world's largest alcohol companies, the team is already distributing wine and spirits across 4 northern European markets. Their waitlist has extended to nearly 100 brands, with infrastructure being established in 11 other countries.
For us, Tipple is a perfect example of a company with exceptional founder-market fit, building ‘transformative’ software, where a known technical solution is applied to fundamentally change how a vast laggard market works. Tipple is removing people from the value chain and making the service 10x better and easier than before.
Flexport, Archax and BreezeAI are examples of companies taking a similar approach, to disrupt the way old sectors work. Harry Morgan led the deal, tapping into his experience as co-founder/CTO of The Cool Can Company, which also addressed the issues of centralization and lack of digitization in the alcoholic beverage market.
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