Subscriber login Close [x]
remember me
You are not logged in.

New Horizons Q&A: Nick Devlin, Naked Wines

Published:  05 January, 2021

With an end game in sight with the vaccine in 2021, we speak to members of the trade about their forecasts and plans for the year ahead.

We continue our series with Nick Devlin, group chief executive, Naked Wines

Given this year’s struggles, from Covid to Brexit, what are your three predictions for the next 12 months?

  1. The consumer move to online is here to stay. Whilst consumers may have moved online due to Covid when they have done so they have found a richer and more connected experience than the grocery channel is offering in wine today. Combine that with access to great value, the convenience of ever-improving delivery networks and the habits formed through 2020 and we’ve seen a permanent acceleration in online penetration in wine. This is especially notable for our US business where the pandemic has been a watershed moment in expanding awareness and perceived legitimacy of online models.

  1. Building a brand via the on-trade will be difficult in the coming years – and direct to consumer relationships are more important than ever.  Brits will return to restaurants in 2021 but the pandemic will have a lasting impact on both the restaurant trade, and on the on-trade focussed importers. As a result volumes will be down, terms of business will be squeezed and building sustainable and attractive growth via an on-premise led UK strategy will be harder than ever for quality wine brands. By contrast direct to consumer models will become increasingly important, with more established brands working to develop a direct to consumer strategy.

  1. Expect increased consumer expectations. In tough times there will be marked share changes as consumers raise the bar on what they expect from a retailer. The winners will be businesses that go above and beyond, clearly establish themselves as being on the consumer’s side through a challenging environment and who recognise that consumers want more than just a transactional experience. Winners will create a sense of community and content that engages alongside consistent excellence in retail basics.

Businesses face uncertain futures. When you and your team sit around the table, what conversations are you having?

At Naked we are focussed on how we can best support talented independent winemakers through a period of intense change. The traditional routes to market for independent producers have been hit the hardest by Covid-19, with sales at tasting rooms and cellar doors drying up and the restaurant trade decimated. On the flipside, big wine companies distributed via the multiples have done fairly well. Our focus is on building out our business to offer a credible alternative route to market for the best independents, that lets them go direct to the consumer and build their brand in partnership with a business that is passionate about winemakers instead of through a grocery channel that is solely focussed on using wine to drive footfall.

What is your biggest concern regarding Brexit?

We are pleased to see a negotiated outcome that should ensure tariff free access for our customers to wines from the EU. Like all businesses mindful of the potential disruption to our inbound supply chain from port delays as new rules go into place, but have made provision in stock levels to mitigate this. As we digest the details in weeks to come we, in common with most participants in the industry, would prefer for paperwork to remain as simple as possible. However, I am confident that the preparations we have taken through the final quarter of 2020 will minimise any impact for our customers. Ultimately as a team we are looking forward to a 2021 that doesn’t require a Brexit stock plan!

How do you think the trading environment will play out post-Brexit?

I think the impact of the pandemic on consumer behaviour will be a much bigger factor in 2021. To date, the pandemic and the impact of measures taken to control it has exacerbated existing trends in the UK. Generally wealthier consumers have done well, cutting travel costs, saving on holidays and services expenditure whilst able to work from home and seeing home values increase. At the same time lower income workers have faced the brunt of job losses and an eroding safety net. Moving into 2021 I see the continuation of the ‘K’ shaped recovery leading to different parts of the drinks industry experiencing very different trading environments.  

What areas of your business has Covid had the biggest impact on?

Everything! In the past year alone we have more than doubled warehouse and delivery capacity, whilst introducing new social distancing and safety measures. Our customer happiness team, that deals with our members’ questions has nearly doubled in size whilst moving to a 100% remote working model. In addition, the rapid growth we have seen has impacted every part of what we do. I think though the most enduring impact will be the way in which changing buying behaviour and the habits formed this year will serve to accelerate the rate of migration of wine sales towards online channels.

Anecdotally, Brits have been drinking more during the pandemic – do your sales reflect that?

From the data we have seen the rate of growth in off-trade has not been enough to replace sales lost in the on-trade, which in 2019 accounted for nearly half of alcohol consumed in the UK.

What we have seen is consumers rebalancing spend and drinking occasions away from the on-trade; and into at home occasions, as well as moving spend towards online players like Naked. In that context I’m delighted with the 76% growth in sales we posted for the six months to September 2020. 

What have you done to take advantage of the rise in off-trade sales during lockdowns?

Our ethos as a company has always been to support winemakers and the industry more broadly. The closure of bars and restaurants across the globe has had a huge knock-on impact on the independent winemakers who supply them. Small winemakers without connections to the big supermarkets, are the ones who suffered the most. So in May we made $5m immediately available to help struggling wineries to survive and come out the other side of this crisis, by buying wines that were previously destined for channels such as restaurants, tasting rooms and traditional retail stores. This included a very successful ‘restaurant rescue’ campaign this summer where we channelled excess stock that was destined for restaurants that had been forced to close and showcased those brands to our Angel members. It was an example of us getting creative to respond to our rapid growth, but also played a big part in helping out some of the importers and winemakers we worked with.

If you had to pick the next big thing in wine what would it be?

I think 2021 could be the year that packaging innovation really comes to the mainstream in wine. With an increasing premium being placed on sustainability and consumers having developed new daily wine occasions I think a premium take on ideas like boxed wine could become much more prevalent in 2021. Indeed, we’ve recently launched our first 2.25L bag-in-box wines and have been amazed at the consumer feedback. 

If you could change one thing about the wine industry, what would it be?

I’d love to see more people focus on stripping away some of the pretence and mystique and helping customers feel comfortable learning about wine. There is way too much jargon, complexity and insider knowledge in much of the industry. We should seek to connect customers to talented winemakers; focus more on the human stories and the passion behind amazing wines and please never talk to me about clonal variations! 


Quickfire questions:

  • New versus Old World?

Old world!

  • Red, white or rose?

Red.

  • Screw top or cork?

  (Diam) Cork.

  • Bottle versus box?

  Bottle.

  • Still versus sparkling?

Still.






Keywords: