Naked Wines is an online-only wine specialist with a mission to disrupt the wine industry for the benefit of customers and winemakers.
Its customers - referred to as angels - commit to a fixed prepayment each month, which is applied towards their next purchase. Naked, in turn, funds the production costs for winemakers, generating savings that are passed back to its customers.
The business was founded by Rowan Gormley in 2008 and acquired by Majestic Wine Group in 2015, with Gormley becoming CEO of the larger group. This included fine wine specialist Lay & Wheeler as well as bricks-and-mortar specialist Majestic Wines.
The three entities separated in December 2019, however, with Majestic being sold off to US investment group Fortress in a £95m deal and Naked using the funds to eliminate debt and invest in its online services to support it as a now online-only and direct-to-consumer business.
Naked had been performing robustly since separation. At £350.3m in the year to end-March 2022 (FY2021), total revenues were 73% ahead of pre-pandemic level, with all three of its markets - the US and Australia in addition to the UK - having grown strongly on a two-year basis.
Ongoing investment for growth - including customer acquisition, subscriber engagement and fulfilment capacity - has put pressure on the bottom line, however, with the retailer just moving into the black at both the operating and pre-tax levels for the first time in FY2021.
And with customer retention rates plummeting in the wake of the pandemic, Naked is “taking steps to reset our cost base and unwind inventory levels” from October 2022 as it warned that revenues are expected to fall by between 4 and 9% during the current financial year. Admitting it had “made mistakes” while pursuing “rapid growth”, the retailer has announced a shake up of the business in a bid to cut costs.
Naked uses customer data to determine which winemakers it should invest in to produce exclusive products for its ecommerce platform. As such, the retailer likens itself to Netflix as a producer, rather than reseller, of content and products.
Innovation rating: 3