The grape escape: Christmas drinkers help bring Naked Wines back from brink

Despite the economic doom and gloom, the British are still splurging on wine this Christmas.

That’s the verdict of Naked Wines boss Nick Devlin, who says customers are increasingly turning to drinks from the ‘Old World’ – France, Italy and Spain – in times of uncertainty.

“It seems clear that Britons are planning to treat themselves this Christmas – with our average bottle price up 64 pence from last year,” Devlin tells the Mail. “We’ve seen our customers treat themselves to some classic wines from great independent winemakers, with six of our top ten sellers from France or Italy.”

Customers’ willingness to spend couldn’t come at a better time for online wine retailer Naked, which has typically focused on finding lesser-known producers in “New World” regions like the US and Australia. But the past 12 months have been tough.

Sales soared during the lockdowns, as families started drinking at home. As pubs and bars reopened and Naked customers returned to their local drinkers, that roaring growth suddenly subsided into a whisper.

The problem was that Naked had already stocked up on wine, assuming a much brighter future.

When it released its results over the summer for the year ended March 28, Naked revealed that its auditors had warned of a “material uncertainty” about its ability to continue.

Days later, the chief financial officer left. Just a few months later, one of Naked’s directors, who also happened to be one of its largest investors, mysteriously resigned after only three weeks on the job.

Naked’s overzealous expansion also left it struggling with the terms of a loan, which could only be accessed if the company hit certain growth metrics.

“Going back to early 2021, we still saw a record number of new members joining the company,” says Devlin.

“We were trying to make a decision about what the future was likely to look like. And the opinion we had at the time was that it would probably become easier rather than more difficult to recruit new members in the future.’

But by October things were looking bleak for Naked.

Devlin, 37, was forced to rely on his background as a strategy consultant in the city when he formulated a shakeup, renegotiated the terms of the loan, slashed the marketing budget and cut 6 percent of the workforce.

“We didn’t mention the level of inflation, and that has quite an impact when you move a large bulky commodity around the world and sell it to customers,” he says.

Not many saw inflation reach a 41-year high of 11.1 percent when it peaked in October.

“I still think if I went back today, with the information we had on the table, it’s very likely we would have come to the same decision,” says Devlin. But in 2022, costs shot up across the board.

While the price of the actual wine remained relatively flat, fuel, distribution, storage and glass bottles soared.

The cost of a shipping container that might have cost $2,000 (£1,660) before the pandemic suddenly rose to $15,000 (£12,460), says Devlin.

‘Ultimately, if it costs £5 more to ship a box to a customer, that’s £5 more expensive for every customer you attract.

“It continually makes each customer a little bit less valuable to the company. And you have to respond to that and adapt to it.’

The staff cut, which Devlin describes as a “tough decision,” was one such adjustment.

Naked has also cut spending on expensive forms of advertising such as Facebook and Instagram, which charge a premium to target ads to more likely buyers.

As Apple has changed the rules about what data it shares with those platforms, Devlin says advertising through those routes has become less effective.

“We’re not going to throw money away,” he says.

The instability at Naked in 2022 led some to focus on the terms of the so-called Angel accounts, which allow customers to pay a monthly fee and build up a balance that they can use to buy wine in the future.

Naked is using this pot – last drawn in March for a whopping £72 million – to help fund the company, meaning the money would probably be gone if it went bankrupt.

But Devlin claims clients are aware of this and are willing to take the risk in helping 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 started when he started traveling through the Rhone Valley with a friend at the age of 22.

Years later, when he was asked to advise on the partnership between Naked and Majestic Wine in 2015, he befriended Naked founder Rowan Gormley.

He quickly became the company’s chief operating officer, instilling a sense of business acumen in his single mother, who ran the UK division of a party balloon company, and took over at Naked when Gormley retired in early 2020.

As the company enters its busiest time of the year, Devlin hopes things will be quieter next year.

He’s back in London for Christmas with his wife and two young children to visit family – the Devlins moved to California to help spearhead the company’s push into the US. Returning to the UK, Devlin has realized the cost of living scale.

“It is clear that the next 12 months, particularly in the UK, could be very tough,” he says. But for now, Naked customer behavior hasn’t changed too much — and Devlin is hopeful it will be one of the luxuries families won’t want to give up.

“I think one thing is for sure, one way or another Britons will need a drink for the next 12 months,” he says.