Winemaker no longer “screwed” by middleman

Naked WinesMarketing director of Naked Wines Australia, Greg Banbury, a speaker at the Online Retailer New Zealand convention held in Auckland on Thursday, began his presentation by pointing out that Naked Wines believes that great wine should be an everyday pleasure as opposed to a privilege.

To ensure this everyday pleasure, it provides talented and independent NZ and Australian winemakers the freedom to make inspiring wines for a community of passionate wine drinkers.

“Everyone is better off and the result is the best damn wines you’ve ever tasted,” exclaimed Banbury.

Traditional wine retail sees the purchase of the finished product from the supplier for sale to the consumer in a price-driven model where the supplier is seen but not heard, and ideally not even seen.

According to Banbury, Naked Wines’ retail model, in comparison, does all the “boring middleman” work while bringing winemakers to the forefront by connecting them to their customers.

This model currently has 40,000 subscribers or “angels” and another 4,500 on a waiting list, 37 liberated winemakers, $40 million invested in NZ and Australian winemakers, over 500 000 customer ratings and over 800 000 customer/winemaker interactions.

Banbury pointed to Naked Wines’ virtuous circle via its supply of a superior wine to the consumer without “screwing” the winemaker.

The model requires subscribers to invest $40 a month into a Naked Wines’ piggy bank that they can spend at their discretion on exclusive wines at discounted angel prices of between 25 and 50 per cent.

The company uses crowdfunding to get a better price for customers and a better deal for winemakers.

Banbury recounted the story of winemaker Sam Plunkett of Victoria who used to produce 30 000 cases of wine per year, with selling cost of over $1 million. However, after losing his family winery to his business partner he almost quit winemaking but was saved by the angels who came together to fund him.

“Now he makes his wine just for the angels, who bear the selling costs,” said Banbury.

“The social magic is that winemakers and customers interact directly in a model that ensures faster and cheaper delivery (free next day delivery to metro) accompanied by smart technology that caters to customer wants and ensures the right wine gets to the right people in a way that makes the winemaker’s life easier.

“And what the customer wants is paramount; just okay is not okay as five-star service is key. We get to the customer before they come to us by having agents track delivery status via email, SMS or app updates, call customers in the event of delays or problems, and work closely with logistics partners on performance, especially in peak periods.”

Banbury recounted how the company ran out of “fizz” in December 2013 as a result of too many subscribers. It made the decision to look after its subscribers at the expense of new subscribers and to use a waiting list to gauge demand for new winemakers.

However, Banbury was quick to point out that the wine industry is not just smooth sailing as 77 per cent of the market is controlled by a duopoly, there is a race to the bottomline on price, and producers contend with being squeezed out while consumers contend with less choice in an environment where loyalty is ever changing.

In this environment, he advised having an enemy, especially when it is a corporate giant.

When in doubt, the company’s default is to let the customer decide as its “tripod comprises customers, winemakers and staff” in a model that is not focused on critics or awards.

Of interest is that according to latest Rabobank Global Wine Quarterly report, growth of online wine sales are increasing and outpacing growth of sales in the traditional retail market. The main driver is the demand from millennials, or Generation Y.

Rabobank analyst Stephen Rannekleiv said online retailing was important in many markets because of the interest it generated from millennials. “And it so happens that precisely this group forms an increasingly critical wine-drinking demographic.”

The report said the move highlighted the growing opportunity that online sales presented to wine marketers around the world, but also reflected the rapid pace of change occurring in online platforms across different markets.

Rannekleiv said although e-commerce channels continued to gain importance for wine marketing, they faced various challenges in key markets.

“The rising number of e-commerce platforms increases opportunities for wine marketers, but it also increases the difficulty of truly standing out in the market,” he added.

“Online retailers are seeing a rapid increase in the number of competitors. To remain competitive, they’re being forced to expand their offerings of products and services. Wine marketers need to engage with online customers and integrate the brand’s social media platforms into the overall online experience.

“Consumers shopping online will also be referencing the brand in either positive or negative ways on social media. Brand owners can use social media to be part of those conversations to build their brands, and important tools are evolving to support this process.

“While most wineries recognise the growing potential, the complexity of effectively growing online sales while minimising conflict with traditional channels can be daunting.

“Few wine marketers seemed confident that they were making the most of this opportunity.

“Developing e-commerce know-how can be a struggle for wineries, but those that invest early in building these skills will be better-positioned for long-term growth.”

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