Special to The Union
Every once in a while, a new idea comes along that challenges current business practices.
Sometimes it’s a wrinkle that alters the landscape just enough to leave a dent, and sometimes, like Nakedwines.com, it’s an idea so fresh that it forges an entirely new direction.
Currently in the U.S., we have what’s called a three-tier alcohol distribution system.
It’s one of the enduring legacies from the dusty halls of our post-Prohibition era.
In the three-tier system, a winery creates the wine (tier 1) and sells it to a distributor (tier 2) who in turn sells it to a retailer (tier 3), who sells it to you.
Nakedwines.com is challenging that status quo.
Rowan Gormly created the Nakedwines.com concept in Britain in 2008.
Gormly originally worked in the financial sector and joined Richard Branson’s Virgin Empire to start Virgin Money. Gormly then went on to start Virgin Wines.
When Virgin Wines was bought out, Gormly and 11 others from the Virgin Wines team decided to start Nakedwines.com.
Adam Reiter, who manages the newly opened California branch of Nakedwines.com, explained, ”First, they looked at what everyone else was doing, and then tried to do it differently.”
They decided to focus less on winery brand names and more on the talent of the people actually making the wine.
Then they looked at the fundamental cost structure of wine and concluded that the suppliers of the wines, the wineries, were generally paid too little, while the consumers were paying too much.
The distributors and middlemen were taking the biggest slice. Distributor and retail store mark-ups can more than double the final cost of a wine.
Nakedwines.com claims that in an average $50 bottle of wine only $7 goes toward the wine, the balance goes to sales and marketing costs.
While that claim may be a little thin, it is not that far off the mark.
The Wine Spectator concluded that grapes, winemaking and packaging amounted to about 20 percent, or less than $5 in a typical $24 bottle of Napa Valley Cabernet.
The very core of Nakedwines.com strategy was to increase the amount of money spent on actual winemaking, while decreasing the retail price paid by the consumer.
And they chose to go about it in a unique way.
Anybody can go to http://www.nakedwines.com and purchase wines off their website. What they’re really interested in is having you join as an “angel.”
As a member angel, you agree to send $40 per month at Nakedwines.com. That accumulates in your account until whenever you are ready to buy wine.
You can spend it each month or let it build up and buy a whole bunch at once.
What they never do is send you wine you didn’t order.
You buy in increments of six or 12 bottles, and mix and match any bottles you like.
Spend a $100 and the shipping is free and usually arrives the next day.
In exchange for prepaying $40 a month for future wine orders, they offer significant savings, typically 40 to 60 percent of the retail price of the wine.
Don’t like the wine? Ship it back for a refund.
There is no fee to join and when you want to stop, they give you back whatever unspent money is sitting in your account.
That is already intriguing, but it’s only half the story.
There are more than 120,000 angels worldwide and collectively they pay in about five million dollars every month.
Nakedwines.com uses that money to fund winemakers.
Every winemaker is different but typically, the model they look for are veteran winemakers with years of experience who work for well-established wineries where they either can’t make their own wine, or, just don’t have the financial capability of starting their own label.
That’s where Nakedwines.com steps in. They have their own winery in Sonoma and once they have a deal with the winemaker, they fund the grapes, the barrels, the winemaking process, and the place to do it.
The winemaker never has to talk to a bank.
I wondered how that worked out for the winemakers so I contacted Jim Olsen, a veteran winemaker who is now part of the team.
Olsen has worked as a wine educator, winemaker, and consultant for numerous wineries. He currently makes wine for a Sierra Foothill winery in El Dorado County.
“Nakedwines.com is great,” Olsen said. “They are very committed and very even-handed in helping each winemaker produce the type of wine they want to make.”
His first year with them he produced 6,000 cases. Plus, it’s not exclusive. He still works for all his other clients.
It’s Nakedwines.com’s use of social media that really makes the concept sing.
They promote the winemaker rather than a winery, often putting the winemaker’s name directly on the label.
They encourage direct interaction between the winemaker and the angels through their website and tastings at the winery.
Olsen, who referred to himself as a social media dinosaur, likes it.
“Now I have direct contact and feedback with the people who are actually drinking my wine. I even have my own blog,” he said.
Nakedwines.com’s website is buzzing with customer comments and reviews. Not only do you get to read what others are saying about the wines, but they also build a profile based on your reviews and then suggest wines that you have a high likelihood of enjoying.
“In market testing,” Adam Reiter explained, “between awards from competitions, professional reviews like Robert Parker and customer reviews, the customer reviews drove the most sales.”
It’s like an Angie’s List for wine.
It’s difficult to say whether Nakedwines.com is a better deal for the consumer or the winemaker, but when you are arguing over who has the better end of a good deal it counts as a win-win for both.
Rod Byers, CWE, is a Certified Wine Educator and wine writer as well as a California State Certified Wine Judge. You can find information about his upcoming Sierra College Kaleidoscope Wine Classes at http://www.pinehillwineworks.com and he can be reached at 530-913-3703. =
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