Q&A: Rowan Gormley, Naked Wines

What have you cut out of the usual grower-to-consumer process?

Selling, financing and risk. Because we buy the wines in advance, the winemaker can invest their passion and energy making the wine taste better, rather than wasting their time and money selling. And because we pay in advance, they have no storage costs, finance costs or bad debt risks. The result is better wines at lower prices.

How has the wine industry reacted to what you're doing?

A combination of raucous cheering and sour grapes!

Tell us about leaving Virgin Wines, which you founded in 2000, with a 17-strong band of merry men and women to all start Naked Wines together.

Let's just say that it is a wonderful thing to have the opportunity to set up a new business, with a hand-picked team you know and trust, and no legacy!

What did old Dicky Branson think of that?

Richard was completely cool. We had sold the business to Laithwaites, so I am not sure that they were!

How could you be so sure Naked Wines would work?

Because once you get the idea it is so simple, you have to wonder why nobody else has done it before!

Even though you weren't a wine expert? (Before setting up Virgin Wines, Rowan was heading up Virgin Money)

Best qualification! Experts can lose track of what real people want to drink!

How did you fund the business?

We all own shares in the business and we raised finance from a German family company to get going.

What were the hardest parts in the early days?

Like any start up we worked our b*****cks off to get going...I think the hardest thing was getting winemakers to take us seriously (not helped by Laithwaites threatening suppliers!).

When did you break even and what kind of money are you making now?

We are still 'investing in growth', as they say in the dotcom business!

Is treating your growers fairly a commercial choice or an ethical one?

Both. Being ethical makes commercial sense

Have you had to take hits to your profit margins to maintain your pro-small-business stance?

Yes, but more than compensated for by volume. Obviously the more cost we can take out of the chain, the further we can reduce prices, the higher our volumes, the easier it is to reduce costs.

How did and do you drive traffic to the site?

We work with partners (like Jamie Oliver, BBC Good Food, First Direct) who have their own communities and are into wine.

Your customers have formed a very active community on the site, commenting on and rating wines regularly. How do you encourage that?

It is a self-fulfilling prophecy... the more people comment/rate/etc, the more we know about their wine habits, the better we can make our recommendations.

How else do you get customers' attention in such a competitive marketplace?

Three: things

1. You don't need to guess which wines are good or not...you can see what thousands of other people thought about them first.

2. Once we know what you like (and don't like) we make sure you only buy wines you like, by putting a big red cross on the ones you won't.

3. We deliver next day for £4.99...our competitors deliver 'in about a week' for £6.99.

How do you manage your cashflow when you often make such big up-front payments to your growers?

We have 27,000 angels who are investing £6m a year with us.

Explain your cashback scheme and why you introduced it.

Customers pay £20 a month, which they can use to buy what they like, when they like, and they get 33% CashBack. We introduced it to get the cash to invest in the winemakers.

What drives you?

Proving sceptics wrong.

What are your proudest achievements to date?

Phew... When we launched Virgin Money, the industry said it would never work... it did. When we launched the Virgin One Account, ditto. When we launched Virgin Wines...ditto. And when we launched Naked Wines...you get the picture.

And your plans for the future: sell or dwell?

Dwell. I am working with a great bunch of people, we have a business model that works, and my entrepreneurial instincts are satisfied by working with the winemakers. Oh, and I get to spend my time in lovely places drinking wine!

I could not think of a better job.

Bottoms up! Find out more about Naked Wines.

 

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