Q&A: Daniel Gibney and Mitch Fowler of Ferovinum
Db talks to Daniel Gibney and Mitchel Fowler of Ferovinum, an exciting new platform helping wine producers, wholesalers and retailers release capital and unlock huge growth
Can you explain what Ferovinum is and how it works?
We created Ferovinum to resolve one of the biggest growth barriers facing the wine industry – that enormous amounts of capital are tied up in large inventories for long periods of time, instead of being used to support growth and innovation. Traditional banks or invoice financing platforms don’t sufficiently address this problem, but Ferovinum offers an innovative solution – we buy your wine stock from you and sell it back to you as and when you need it, freeing up cash for more productive use, but the stock is still available when required for onward sale.
What do you offer your customers that finance companies such as banks can’t?
Speed, flexibility and our understanding of wine and spirits as an asset class. We offer a fully tailored service for each client. We understand that some customers may be in the pre-profit growth stage, which limits access to other forms of capital, whereas we make our decisions based on the quality of the wine. We can look at smaller transactions than banks would consider, and can even buy unfinished stock from wine producers, and allow them to finish it on site – something that’s particularly exciting for the growing number of UK wine producers. We offer short- or long-term plans and customers can re-purchase the wine as soon as they like. As wine is relatively easy to buy and sell in bond, we can offer this service without disrupting our customers’ supply chains. Our method of optimising inventories compares favourably with bank finance, which is far less flexible, and can sit around costing money when it’s not required.
Why don’t we hear much about working capital solutions in the drinks industry?
Probably because they haven’t really existed in the UK wine industry until now. It’s no secret that the demand for finance and the burden of carrying inventory is proving a barrier to growth, especially for the flourishing UK sparkling wine industry. Providing a neutral platform to hold wine stock is a natural, effective and overdue solution that works for small and large companies.
Are we seeing a change to the way traditional financing in the wine industry works?
New ideas and technology such as crowdfunding and peer-to-peer lending are opening up funding options and fuelling innovation in the wider economy, yet the wine industry seems to be missing out. Traditional finance has not adapted to the specific challenges and opportunities of the wine industry. For example, distributors typically have to buy six months’ or a year’s worth of stock in a single producer allocation and sell it over the course of a year, often offering credit terms to their customers on top of that. That ties up cash for a long time compared with many other industries. Similarly, wine producers hold their wine for years before sale as it goes through the finishing and ageing process. And the more companies grow, the bigger the capital challenges become.
While companies might be able to access some bank or invoice finance, very little credit is given for these companies’ greatest asset – the wine itself. Being able to accelerate cash flows from wine stock offers a substantial competitive advantage whether you’re a start-up or an established firm, and that’s what’s at the heart of our proposition.
Has demand for your service increased on the back of Brexit preparations?
Yes – our customers’ businesses depend upon being able to service their own customers’ needs come what may, and in the face of Brexit uncertainty, the most prudent course of action is to build up stock to ensure continuity. This is very well suited for our service as we can work with our customers to support such purchases in a short time frame.
Do you only offer this service for wine?
We are adapting our service to look at certain spirits. It is suited to a number of spirits, particularly for ones that have a longer ageing or maturation process.