Naked Wines plan to launch Australian vineyard

NAKED Wines, the mail-order drinks company launched by one of Sir Richard Branson’s former right-hand men, is considering opening its own vineyard in Australia following the success of its site in the United States.

Eamon Fitzgerald, founder and CEO of Naked Wines. Picture: Neil Hanna
Eamon Fitzgerald, founder and CEO of Naked Wines. Picture: Neil Hanna
Eamon Fitzgerald, founder and CEO of Naked Wines. Picture: Neil Hanna

Chief executive Rowan Gormley, who helped launch Virgin Money and Virgin Wines before setting up his own company in 2008, opened a “wine-making” studio last year in Sonoma County, one of the most-acclaimed grape-growing areas of California.

Chief operating officer Eamon FitzGerald, who has taken over the day-to-day running of the company to allow Gormley to focus on America, said the firm is now mulling the opening of its second studio – where visitors can make and learn about wine – this time in Australia.

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FitzGerald said: “We’re not just a customer-funded wine business, we’re now a customer-funded winery too.

“It’s really exciting. I was in California last week meeting the winemakers and tasting the tanks and barrels. There’s no reason why we shouldn’t do that in Australia too.”

FitzGerald has spent the past fortnight touring around ten cities, including Glasgow on Thursday and Edinburgh on Friday, introducing 5,000 customers to 40 of the company’s producers. Venues for the tour, which is now in its third year, are selected by customers, with about 800 Scottish connoisseurs turning out for the events.

Globally, Naked Wines now has more than 150,000 “angels” – customers who subscribe for £20 each month to fund small winemakers and receive discounts on their wares.

About 15,000 of the UK’s 125,000 are based in Scotland, and FitzGerald said the winemakers who came on tour with him had said its clients north of the Border were “knowledgeable and well travelled”.

Naked Wines also expanded its retail presence into Australia and the US last year but FitzGerald doesn’t expect to start selling wines in other markets soon. “We’ll concentrate on getting those two countries right first,” he said. “Part of the challenge is to recreate what we’ve done here in terms of changing the way people think about buying wines.”

In April, Naked Wines posted a maiden operating profit, swinging to a £1 million surplus for 2012 compared with a loss of £1.8m in 2011, on the back of a 57 per cent jump in turnover to £34.9m. Sales are expected to hit £50m in 2013.

The profit allowed the company to buy back shares worth £1.2m from 34 staff, including 17 who had bought stock when the company was launched, with the average pay-out standing at £35,000.

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FitzGerald, a 28-year-old Irishman who gave up a career in financial services with Accenture to join Naked Wines two years ago, said the profit would also help silence some of the company’s doubters.

“They said we would never be able to take on the supermarkets, and we have. They said we would never be able to recruit great winemakers, and we have. And they said we would never be able to make money from it, and we have.”

He said that between 40 and 60 per cent of the price of a standard bottle of wine was “untasteable” – such as money spent on marketing and fees for intermediaries.

Naked Wines removes those costs by bringing customers and winemakers together, he said, allowing the firm to sell higher-quality wine at supermarket prices.

The company invests about £36m a year in 105 winemakers across 13 countries and claims to have secured discounts worth £35m for its angels. About 50 per cent of its sales come from angels, with the remainder consisting of single case sales.

Figures released last year by wine wholesaler Bibendum revealed that only 11p from a £5 bottle of wine is spent on the grapes, with the rest going towards excise duty, logistics, packaging, the retailer’s margin and VAT. In a £10 bottle, the amount spent on the grapes rises to £2.82 – an increase of more than 25 times.