Covid-19: Naked Wines CEO predicts inflection point for online growth

The Covid-19 coronavirus crisis could serve as an “inflection point” for the growth rate of the online wine category, according to one industry boss.

Nick Devlin, group CEO of direct to consumer business Naked Wines, said today (9 April) that, in the US especially, there is a chance of a more permanent switch in consumer buying behaviour as a result of the current restrictions on movement.

“In the short term, the introduction of social distancing has accelerated the shift in consumer buying behaviour towards online, leading to increased demand from both new and existing customers across all our markets,” Devlin explained.

“As the largest direct to consumer player in the US market we are well positioned as customers move online.”

The Naked boss, who assumed the leadership role at the subscription-led business following the retirement of Rowan Gormley earlier this year in the wake of the demerger with Majestic Wine, acknowledged the current health crisis creates uncertainty. But he said Naked has an “advantaged consumer proposition and strong balance sheet”, and is well placed to perform in this changing consumer environment.

“During this unprecedented time, our absolute priority is the safety and wellbeing of our staff, customers, suppliers and winemakers and we have implemented necessary safeguarding measures in line with government advice in each of our markets,” he said.

“I am deeply proud of the way our teams have responded to the challenge of adapting to a new way of working in light of Covid-19 and their commitment to serving our customers.”

In each of the markets Naked operates, the UK, the US, and Australia, its office staff have been working remotely since 17 March 2020. Devlin also said that because winemakers are considered agricultural, the grape harvest and wine production processes driving the Naked business have been able to continue “largely unaffected”.

Naked also said its distribution network is “robust and continues to operate in all markets”, and although carriers are prioritising grocery and health supplies, they remain operational and functional and have been able to meet Naked’s needs.

The retailer has experienced higher levels of demand from both new and repeat customers in all its markets, particularly in the US, over the last month, and as a result it is finishing the year with “good momentum” and expects annual revenue to be in excess of £200 million, which is slightly ahead of current consensus.

Total investment by Naked for the current financial year is expected to be towards the middle of the £20 million to £25 million range it indicated during its interim results. As of 30 March 2020, the group had over £50 million of cash and no debt, and has not seen any material change in patterns of customer funds withdrawals.