Naked Wines says it is now a “bigger, better” business after it expanded its capacity quickly in response to increased demand during the Covid-19 pandemic and lockdowns. The UK retailer, which has over the 18 months shifted from a multichannel to a pureplay business model – and from the Majestic Wine to the Naked Wines name – says the pandemic has transformed the online wine market and that it is now the largest direct-to-consumer wine business in the US.
Naked Wines says that Covid-19 has “completely reshaped demands and routes to market overnight” and that it has benefitted from the industry disruption. It now works with more than 230 independent winemakers. The retailer, which was ranked, as Majestic Wine, Top250 in this January’s RXUK Top500 research, says it has more than doubled its warehouse capacity while expanding its customer service capacity by 80%. The growth came as its active customer base grew by 37% to 757,000 after investing £22.7m – 121% more than a year earlier – in customer acquisition.
The company today reported sales of £157.1m in the half year to September 28. That’s 80% up on the same time last year. But pre-tax losses grew to £8.9m, from £6.2m a year earlier. That’s mostly because the retailer now does not expect to receive a final £4m payment for the Majestic Calais stores that was contingent on the impact of Brexit. From January 1 travellers are set to be able to bring back significantly less duty-free alcohol when they return from the EU.
Naked Wines says that until Covid-19, many customers did not know they could order wine online for home delivery until the pandemic prompted them to look. This effect has been most significant in the US, where online sales have grown from 5% of the off-premise market to 20% by April this year. As a result, the retailer saw its US sales grow by 95% in the first half to represent 49% of group sales. Sales grew by 76% in the UK, and by 48% in Australia.
Naked Wines chief executive Nick Devlin said: “Naked Wines is a bigger, better business than it was 12 months ago. The last six months have been a critical period in the development of the company. We have delivered exceptional growth and a permanent step change in scale and efficiency for the organisation. We have a business today that is not only larger, but structurally improved and ideally positioned to delivery sustained growth in the coming years.
“Ultimately the most significant impact of of Covid-19 on Naked Wines is not found in these interim results, but in the way it has accelerated the growth of the online wine category and increased consumer willingness to trial a new and better way to buy wine.
“Delivering transformative growth, against a backdrop of new working conditions required by Covid-19, has required us to rapidly solve a series of operational challenges. We have done this whilst maintaining high levels of customer satisfaction.”