If you could create a trading model that is perfect for lockdown we are all living through, then Naked Wines would be a pretty good platform to come up with. It’s online for a start. But it also has a corporate philosophy that is very much in keeping with the times. Doing what it can to help its customers support the winemakers they choose to buy wine from. Eamon FitzGerald, its global wine director, talks to Richard Siddle about how it is responding to the challenge of Covid-19.
Naked Wines has announced it is spend $5m buying wine from independent winemakers that have been impacted by Covid-19. Eamon FitzGerald explains how it is one part of its ongoing trading strategy at this time.
What’s been abundantly clear from virtually day one of the national, and international, lockdowns that have been put in place in a bid to control the spread of Covid-19, is it has polarised the drinks industry down the middle.
On the one hand, the way the cookie’s crumbled, has made it an ideal trading platform for online players and certain high street retailers, noticeably the major grocers and specialists retailers such as independent wine merchants.
For whilst the on-trade has come to an abrupt halt, pushing thousands of retailers, bars, pubs and all the dedicated suppliers that work with them, into some sort of no man’s land, the retail and ecommerce sectors have been booming.
Naked Wines, with its global database of half a million online customers, was very much on the right hand side of the fence. So much so it even had to close down its site in the UK for a few days for new customers, as the demand for business was just too much.
It now predicts it will see its full-year 2020 revenues to surpass £200 million following the Covid-19 lockdown and the resulting increased demand.
Not that all the sales have just walked through their online doors. It is also working behind the scenes to make things happen and expects to spend £20m to £25m this year in online search tools to help attract new customers.
Not seen anything like it
Eamon FitzGerald, global wine director for Naked Wines, and one of the founding members of the company, told The Buyer this week: “I have never seen anything like it before.”
He said sales have continued to be similar to what they would normally expect to take during the festive period. What’s more there is no sign, as yet, that the pace is going to slow. Particularly as it now is such a global business with Australia and, in particular, the US, driving new business on a daily basis.
What is particularly pleasing for FitzGerald and the Naked team is that sales are being driven by both new and repeat loyal customers.”We are seeing demand for new customers that is also on a par with Christmas,” he added.
Yes, part of that is Naked going out and using the digital acquisition techniques to find new customers, but Fitzgerald says the cost of doing so has dropped during the lockdown period. “We are having to work much less for our new customers,” he said. “We have also seen a big jump in our Angel referrals as well as they have looked to bring new people into the business.”
The big question now is whether those new customers are here to stay or are taking the advantage of going online and using home delivery to stock up on their wine during this period.
Shift in behaviour
Fitzgerald is hopeful that not only will they be able to retain much of the new customers they have acquired, but that this also marks a fundamental shift towards how consumers regard online and that ecommerce and delivery are now going to be central to all our shopping lives.
“More and more people are seeing how much more convenient it is to buy online, also how much safer it is, and what better value you can get for good quality wine.”
For Naked that is particularly good news as it is so well placed not just in the UK, but particularly in the US where its chief executive, Nick Devlin, has claimed it is the “largest direct to consumer player” for wine.
Online wine sites that are particularly driven and focused on providing good content and background stories about their winemakers are also particularly well placed to do well, added Fitzgerald. “We have all got more time on our hands to go online. Quality time as well.”
Big shift for winemakers
Fitzgerald is also confident part of our changing behaviour during lockdown is the need to really turn to digital and online just to do business. Like winemakers.
Naked’s model, he explained, has always been about the role it can play in helping winemakers to sell their wine. After all, he said, the hard part is not just making the wine, it is then having the time, and the skills to go out and sell it.
Rather than travel the world trying to do that, Naked has provided a platform to do exactly that for winemakers. That allows them to tell their stories, engage regularly, daily, weekly, with their customers through the Naked Wines interactive website, he added. As it says in its advertising: “Naked Wines gives wine drinkers direct access to over 200 of the world’s best independent winemakers making over 1,000 quality wines in 17 different countries.
“We believe this [Covid-19]will also see a shift in the way winemakers work as well in the future,” said Fitzgerald. “We are here to offer them a direct a route to market.”
$5m winemaker fund
It’s why it’s responding to this global crisis by offering those independent winemakers that have been caught up in the Covid-19 a new opportunity to sell their wines, and tell their story.
Naked Wines is looking to switch resources and “purchase stock” from independent winemakers “that was previously destined for channels such as restaurants, tasting rooms and traditional retail stores”. It will then make the wines part of the overall wider range it sells to its half million customers – its Angels – in each of its markets in the US, UK and Australia.
If the wines do well then there is a chance they could be kept on the Naked list down the line. What’s more FitzGerald told The Buyer that the initial $5m spend could be expanded if the demand from its Angels is there. “We felt that was the appropriate number to start with. If there is more demand from our customers, and it is a no brainer to invest in more winemakers, then we could do.”
Any winemaker looking to take part in the scheme must meet the following criteria:
- Be an independent wine producer or winemaker
- Have a proven track record of quality.
- Show evidence that their business has been directly impact by Covid-19.
- Have cleared any importer/agent exclusivity arrangements.
If they fit the bill then they can apply by going to www.nakedwines.com/covidsupport
FitzGerald said it was in the position to offer this multi-million dollar fund because it has been performing so well thought the crisis and it was a good opportunity to “give something back”.
The scheme is also open to existing Naked Wines’ winemaker as well as new ones. It has also been designed to help small and large producers.
“We are looking for anything from a pallet to a cellar full, to anything in between.” He added: “I’ve already heard from countless winemakers about the struggles ahead. I’d encourage all independent winemakers looking for either long-term relationships or one-off cash deals to apply.”
The carrot of being taken on full time is also there for any new winemaker taking part in the scheme.
The wines selected will then be ear marked for each of its different markets, in the UK, US and Australia, depending on where the winemakers are and what is likely to sell the best.
Naked Wines is also running other initiatives to help support essential workers and those on the front line of the crisis. It has donated £115,000 to help provide meals for the NHS and has set up a ‘Thank a Key Worker’ initiative on its site where Angels can nominate people they know who they think deserve a free case of wine. It has already had close to 5,500 nominations.
It has also started a series of online tastings every week with Ray O’Connor, its UK wine director, running what he calls his “Thirsty Toosday” sessions at 8pm. The approach, says FitzGerald, is very much a relaxed format and an excuse to wind down and chat online with winemakers and its Angels and is already attracting over 400 customers to take part.
FitzGerald is not alone in knowing how all this is really going to shake out when things start to open up again. But he is confident that some of the changes we have already made in our lives will stick long term and that online shopping has to be one of them. “I do believe a chunk of the wine market will go online and stay online.”
So far the delivery supply chain is keeping the industry going and wine moving. Supported by a global logistics network that is also keeping everyone, who can, sell wine. FitzGerald admits at one point he was concerned it simply would not have the wine being shipped to keep up with demand, but other than South Africa that has not been an issue.
“We are also well practised after our preparations for a No Deal Brexit last year.”
Brexit? Oh yes…that’s another story…for another day.