Are wine clubs to your taste or a load of plonk?

Clearly Naked Wines provokes a lot of emotional debate here! I’ve never bought from them because I don’t like the “lack of transparency” in their marketing. I find all these “wine clubs” want to sell you mediocre wines and tie you up to regular payments. So I simply buy my wines from an independent online wine merchant who imports quality wines direct from the wineries and retails them at affordable prices. I still get the saving as there’s no middlemen, and I only order when I want, and I don’t get bombarded with “too good to be true offers” all the time. You don’t need to go to these big companies to get a good deal, there are quite a few independent retailers importing and selling good wines, and they all have websites these days. Why do people get sucked in by these high profile discounts and membership clubs?

The Wine Society also offers some good wines and at decent prices although they have too much emphasis on France for me and not enough choice of new world wines. But at least they don’t bombard you with these phoney offers and make it difficult to cancel your membership – I cancelled mine and it was straight forward.

To explain my objection to Naked Wines, they really push their claim that they are different because they “invest in winemakers” who then make wines just for them (and they make a big point of claiming that their Angel’s money is safe “held in a separate company’s trust account”).

They tell their Angels’ that they use their money to finance winemakers…BUT they only hold a tiny fraction of this money in the separate company, the majority of it is used by these Angels to buy wine…from Naked Wines of course. So this money (or the vast majority at least) isn’t invested at all but generates £20 million of sales for NW! Classic marketing ploy!! And well done to NW for coming up with it! But it’s not really any different to any of the Laithwaites/Virgin/Direct Wines Ltd outfits – no surprise when you consider NW was created by 17 ex Virgin Wines employees!

But are these Angels investing their money aware that Naked Wines makes a massive loss? In fact they have never made a profit and since their inception have accumulated losses of about £5.5 million! It’s no wonder they bend over backwards to recruit “Angels” because if you took away the regular £20 a month income from their alleged 100,000 Angels their predicament would be potentially precarious! Even though they are basically owned by the wealthy Pieroth family from Germany.

The question is how long can this be sustained? This all looks like another Fare Pak to me!

Hi Rowan
My apologies for focusing too much on this Angels money. I too, like your Angels, put too much belief in your high profile catchphrase “we invest in winemakers”. Hearing you now have 100,000 Angels investing £20 per month I naively thought that meant you had £24 million to look after.

Whereas the reality is the vast majority of this money isn’t held or invested in winemakers, it’s simply spent on Naked Wines products as your Angels use this money to buy their wine. Although you don’t seem to advertise that side of the business so much for some reason. You’d rather give the impression to NW’s customers that virtually all this money goes toward getting you wines at serious discounts from producers! Any thoughts on this? Why not have a dedicated page on your website explaining all the good work you’re doing with the exact amounts invested and where? And on what exactly – is it just spent on their stock, or is it actually buying shares in their businesses? If you’re investing anything like the image you’re portraying this would be great publicity wouldn’t it? It’d certainly silence the “trolls” for you.

So according to your company accounts you only hold about £1.5 million in this trust company with about half of this spent on NW’s products each month – is that about right? I also appreciate the funds are held in a separate company although with the same principle shareholders and director (yourself), there’s a strong chance HMRC would class the two as associated companies and come after those assets if necessary (NW has settled that big tax bill now I believe?). But that’s unlikely and only if NW runs into financial difficulty, so this Angel money is nowhere near the risk I thought it was (when I thought you were investing £24 million in wineries!).

On your personal blog where we first conversed I said that consumers weren’t stupid. However your clever marketing has achieved some remarkable results so maybe I’m wrong again, although stupid is far too harsh a word – susceptible to clever marketing would be a better description. NW has just sold 200+ plus cases of Taymente Malbec (a fairly standard malbec on sale in the USA for about $10) in 48 hours. You got £9.75 for it which isn’t unfair but certainly isn’t “cheap”, given that similar wines like Susana Balbo Crios Malbec sell on the same USA websites for more but retail in the UK for around £8.50 to £9. But the remarkable thing is you sold all this without even buying or shipping it, without the 200 customers even tasting it, and they have to wait 4 months for it to arrive! That is pure genius!

It’s presumably around US$40 a case ex cellars so you’ll make around 45%, paid upfront with no waste – with skills like this how can NW still not make any money?

I like the fact that you have a word (“troll”) for people who question NW’s methods, to try to find answers for the general public who are targeted by your marketing department. This implies that clearly there must be plenty of people asking questions then? Trying to project a negative image onto anybody who questions your methods! That could make some people think you had some methods you would rather keep out of the public eye.

I used to work in the wine trade, and I like to keep an eye on developments. Watching the rise of a brand new concept – Naked Wines – has been fascinating. You have captured a brand new market, the Twitter and Facebook generation of wine drinkers. Their wine knowledge is limited but they clearly want something different to the standard array of Direct Wines Ltd wine clubs. You’ve given them something which has a lot of similarities although has a very different but convincing appearance. You’re still selling the same level of wines, just marketing them with a different angle that this market sector are swallowing.

Shaking up the traditional set up is not necessarily a bad thing though, and I certainly think the market has room for an operation like NW. As a member of an older generation and as a genuine wine enthusiast, I prefer a straight talking, open approach to wine retailing, although I also realise that doesn’t always pay the bills!

Good luck and I look forward to watching developments with interest (I’m still not investing though!)
By the way, if “troll” is your name for people posting questions about NW what is your name for your army of employees who keep anonymously posting good reviews for you?