Naked Wines Reports Strong Customer Engagement and Sales During Peak Season

Naked Wines, an online retailer founded in the UK in 2008, operates a unique club model where customers, known as Angels, fund independent winemakers in exchange for wines at wholesale prices. The company employs around 300 people, with about half based in the United States. CEO Rodrigo Maza recently discussed the company's focus on customer retention and its financial performance.

Naked Wines is publicly traded and recently shared its earnings for the peak season of October, November, and December. The company met its expectations and saw strong customer engagement across the US, UK, and Australia. Activation rates were higher than the previous year, with many customers ordering Christmas cases, magnum bottles, and tasting packs. The peak season for wine sales, known as OND, is a crucial period for the company, with sales accelerating from mid-October through Christmas. During this time, Naked Wines delivered nearly 500 cases per hour worldwide, with sparkling wine, particularly Prosecco and crémant, being especially popular.

The wine industry has faced an oversupply issue, partly due to increased production during the COVID-19 pandemic. Naked Wines has made progress in managing its inventory, with stock levels returning to normal in the UK and Australia. However, the US market remains overstocked, and the company continues to work through its surplus inventory. The challenging market conditions mean this issue won't be resolved quickly.

Customer retention is a key focus for Naked Wines. The company distinguishes between immature and mature retention. Mature customers, who have been with the company for 4.5 to 5 years, show high retention rates. Retention is crucial for Naked Wines, as it drives sustainable growth. While customer acquisition is important, having a loyal customer base is fundamental. The company aims to attract customers who truly understand and appreciate its value proposition, rather than those who join simply because of a voucher.

Naked Wines has redesigned its onboarding process to clearly communicate its unique approach and differentiate itself from competitors. This helps potential customers decide if the company is right for them. Once customers mature, they tend to stay with Naked Wines for many years, with a significant percentage remaining for over a decade.

The company emphasizes retention as the foundation for growth. A strong, engaged customer base makes acquisition easier through word of mouth and referrals. In recent years, acquisition costs have increased across many channels. Naked Wines is shifting its focus to retention, while also redefining its acquisition strategy. The company is moving away from relying heavily on vouchers and investing more in SEO, influencer content, and leveraging its community.

Naked Wines' model focuses on connecting customers with winemakers, which is a powerful aspect of its approach. Customers value the connection and engagement with winemakers, and the quality of the wine is paramount. The story behind each wine also matters to customers.

This year, Naked Wines learned that many of its customers, especially newer ones, are successful individuals who feel anxious when choosing wine. The company's mission is to make wine more approachable and fun. The word "anxiety" frequently comes up in customer feedback, reinforcing the company's commitment to simplifying the wine category.

In the UK, a tax increase prompted Naked Wines to reassess its pricing. The company decided to keep some prices stable while raising others, explaining the changes to customers. The response was largely supportive, as customers appreciated the fairness towards winemakers.

Looking ahead, Naked Wines has revamped parts of its customer experience, including the wine rating system. This allows customers to rate wines and receive credit if a wine doesn't meet their expectations. The goal is to encourage exploration and enjoyment of different wines, regions, and styles. The company is excited to see increased engagement with the rating system and aims to invest in ways that highlight its unique approach.