Wine co works without big retailers

14 May, 2015 08:26 AM
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The funding model ensured the power was handed back to the winemaker

THE chief executive of the Australian arm of crowdfunding-driven Naked Wines, Luke Jecks, who has just been elevated to the role of head of the US and British operations after a $137 million buyout of the parent last month, says one of the best byproducts of the company's business model is being able to bypass the market dominance of Woolworths and Coles.

Mr Jecks, who will still be at the helm of the company's Australian operations, says he will be spending about 60 per cent of his time overseas in his new role as CEO of Naked Wines International.

The Australian business was included in a sale of the entire Naked Wines business to the largest independent wine retailer in Britain, Majestic Wine, for £70 million ($137.6 million) last month.

Majestic is mainly a bricks-and-mortar retailer which wanted to aggressively expand its online presence, and as part of the deal it has shifted Rowan Gormley, the global founder of Naked Wines, into the role of CEO of Majestic.

Crowdfunding success

Mr Jecks said the Naked Wines operations in Australia were sold for between $25 million and $30 million as part of the broader deal. He founded that business in Australia in mid-2012 when crowdfunding was in its infancy, and had a shareholding in it.

He claims he wasn't just following a trend: "We came to crowdfunding because it was the solution that empowered what we wanted to achieve."

Although it wasn't the main driver, one of the neat byproducts has been that the business model completely bypasses the influence of Woolworths and Coles, which dominate the liquor retailing market through the chains Dan Murphy's and BWS, owned by Woolworths, and Vintage Cellars and Liquorland, run by Wesfarmers-owned Coles.

"Australia has allowed the retail environment to become really consolidated with the whole Woolies and Coles thing," Mr Jecks said.

He said Naked Wines' Australian business has about 36,000 people on its books who contribute $40 a month into a pool, which funds winemakers who make wines from scratch from a particular grape harvest.

Mr Jecks was reluctant to divulge a list of winemakers who had participated, but said products made by Adrian and Rebecca Santolin, winemakers from Victoria's Yarra Valley, had been particularly popular.

Fine tuning

He said there was still some fine-tuning to do with the business model, because people were sometimes frustrated when a great wine disappeared fast and there wasn't any more to go around.

"We don't have any slow-moving goods," he said. "The problem is we sell through everything."

Mr Jecks said there were 2000 people on the Naked Wines waiting list in Australia wanting to be part of the next round of crowdfunding.

He said the funding model ensured the power was handed back to the winemaker, in a similar vein to the way customers flocked to restaurants where the chef was producing good food, and if they are satisfied they make a return visit and continue to spend money there.

Naked Wines International was founded by Mr Gormley, a British businessman who was the founder of Virgin Money and co-founder of Orgasmic Wines, which transformed into Virgin Wines after Richard Branson acquired it.

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