Toasting recovery: Naked Wines boss Nick Devlin
Britons are still splashing out on wine this Christmas despite the economic doom and gloom.
That is the verdict of Nick Devlin, boss of Naked Wines, who says customers are increasingly turning towards tipples from the ‘Old World’ – France, Italy and Spain – in times of uncertainty.
‘It seems clear that Brits are intent on treating themselves this Christmas – with our average bottle price up by 64p on last year,’ Devlin tells the Mail. ‘We’ve seen our customers treating themselves to some classic wines from amazing independent wine makers, with six of our top ten sellers from either France or Italy.’
Customers’ willingness to spend couldn’t have come at a better time for online wine retailer Naked, which has typically focused on finding lesser-known producers in ‘New World’ regions such as the US and Australia. But the past 12 months have been tough.
Sales surged during lockdowns, as families turned to drinking at home. When pubs and bars reopened, and Naked’s customers returned to their local boozers, that roaring growth suddenly dropped to a whisper.
The problem was Naked had already bought in stocks of wine, assuming a much rosier future.
As it released its results during the summer for the year ending March 28, Naked revealed that its accountants had warned of a ‘material uncertainty’ over its ability to keep going.
Days later, the chief financial officer left. Just a few months down the line, one of Naked’s directors, who also happened to be one of its largest investors, mysteriously resigned after just three weeks in the job.
Naked’s over-zealous expansion also left it battling with the terms of a loan, which could only be accessed if the company hit certain growth metrics.
‘Going back to early 2021, we were still seeing record numbers of new members join the business,’ Devlin says.
‘We were trying to make a determination about what the future was most likely to look like. And the view we took at the time was that it was probably going to be easier, rather than harder, to acquire new members going forward.’
Classic taste: Naked Wines boss Nick Devlin, says customers are turning towards tipples from the ‘Old World’
But by October, things were looking bleak for Naked.
Devlin, 37, was forced to call on his background as a strategy consultant in the City as he formulated a shake-up, renegotiating the terms of the loan, slashing the marketing budget and axing 6 per cent of the workforce.
‘We didn’t call the level of inflation, and that has quite an impact when you’re moving a big bulky good around the world and selling it to customers,’ he says.
Not many people did see inflation hitting a 41-year high of 11.1 per cent as it peaked in October.
‘I think still if I went back today, with the information we had on the table, I think it’s highly likely we’d have got to the same decision,’ Devlin says. But in 2022, costs shot up across the board.
While the price of the actual wine remained relatively flat, fuel, distribution, warehousing and glass bottles were soaring.
Nick Devlin, 37
- From: Hertfordshire
- Family: Married with two young children
- Favourite film: Heat, ‘a Robert De Niro classic’
- Hobbies: Running and cycling
- Drives: A 13-year-old Mini which once belonged to Rowan Gormley’s daughter, and ‘a very sensible family VW Tiguan, used for taking the kids around’
The cost of a shipping container which may have travelled for $2,000 (£1,660) before the pandemic suddenly ballooned to $15,000, (£12,460) Devlin says.
‘Ultimately, if it costs five quid more to ship a box to a customer, that’s £5 more expensive for every customer you acquire.
‘It makes each customer on an ongoing basis a little bit less valuable to the business. And you need to respond and adjust to that.’
The staff cuts, which Devlin describes as a ‘tough decision’, were one such adjustment.
Naked has also pulled back spending as much on expensive forms of advertising, such as Facebook and Instagram, which charge a premium to target adverts at more likely buyers.
As Apple has changed the rules over what data it shares with those platforms, Devlin says that advertising through those routes has become less effective.
‘We’re not going to throw money away,’ he says.
The instability at Naked during 2022 led some to focus on the terms of its so-called Angel accounts, which allow customers to pay a monthly sum and build up a balance to be used in future to buy wine.
Naked uses this pot – last recorded in March at a whopping £72million – to help fund the business, meaning the money would probably be gone if it did go bust.
But Devlin claims customers are aware of this, and are willing to take the risk to help Naked pursue its goal of funding smaller, undiscovered wineries.
This hands-on side of the business is where Devlin’s heart lies. His passion for wine began after he went travelling around the Rhone Valley with a friend at the age of 22.
Best sellers: Naked Wine has typically focused on finding lesser-known producers in ‘New World’ regions such as the US and Australia
When, as a consultant years later, he was asked to advise on the tie-up between Naked and Majestic Wine in 2015, he became firm friends with Naked’s founder Rowan Gormley.
He soon became the company’s chief operating officer, crediting his single mother, who ran the British division of a party balloon company, with instilling in him a sense of business acumen, and took the helm at Naked when Gormley retired at the start of 2020.
Now, as the company enters its busiest time of year, Devlin is hopeful that next year will be calmer.
He’s back in London for Christmas with his wife and two young children to visit family – the Devlins relocated to California to help lead the company’s push into the US. Returning to the UK, Devlin has realised the scale of the cost of living crunch.
‘It’s clear that the next 12 months in the UK, in particular, could be could be really tough,’ he says. But, currently, Naked’s customer behaviour hasn’t changed too much – and Devlin is hopeful that it will be one of the luxuries which families won’t want to give up.
‘I think one thing’s for certain: one way or another Brits are going to need a drink for the next 12 months,’ he says.