Naked Wines - Disrupting the Wine Industry via Crowdfunding

With its tangled web of regulations tethering wine producers to "traditional" sales and marketing practices, wine is an industry seemingly ripe for disruption. Naked Wines, which connects the consumer and the winemaker via crowdfunding, may well be the disruptive force that (finally) shakes up the wine industry by giving consumers access to the artisan winemakers not typically found on the shelves of the local wine store or grocer, which are often dominated by wine conglomerates. I caught up with Naked Wines COO Benoit Vialle to discuss their unique business model.

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Naked Wines is a customer funded winemaking concept, where customers -you call them angels- fund winemakers to produce artisan wines. How does this work?

Angels put aside $40 each month towards their next wine purchase. In exchange for this advance payment, they have preferred access to exclusive wines, and pay 40 to 60% off the retail price. The cash that our 225k angels contribute each month allows us to fund winemaking projects around the world, attracting the biggest winemaker names. 

For more than 25 years, The California Wine Club founders Bruce and Pam Boring have explored all corners of California’s wine country to find award-winning, handcrafted wine to share with the world. Each month, the club features a different small family winery and hand selects two of their best wines for members.

What is the value proposition for the angel? That is, what do they get out of it?

At the most elementary level, angels get a great deal on some very high quality wines, benefiting from our direct to customer model that eliminates the wine distribution middlemen. Beyond that, consumers can enjoy two critical aspects of our crowdfunding model: they get the rich social interaction with other angels, with whom they form a tight community that exchange millions of ratings and comments on the wines, and they get the very unique direct connection with the winemakers themselves, with whom they can ask questions and provide feedback. Angels are essentially becoming the ultimate wine insiders, which is a very distinct feeling in an industry that has traditionally kept consumers very removed from the producers.

What degree of involvement or commitment do you have to make to be an angel?

Angels contribute $40 a month in their NakedWines.com piggybank, as advance payments towards their next purchase (of the wine they choose, when they want). It is worth noting that at any time angels can cancel their membership and retrieve their money, and that there is no fee or penalty associated with cancelling – furthermore, we will refund any wine that the angels don’t like, no question asked, encouraging angels to explore new tastes and new wines all the time.

Describe the typical angel:

Angels tend to be relatively young (40s), affluent, internet savvy, really care about wine quality without necessarily being absolute experts (who we call wine snobs), and like the idea of paying a price that is related to what is in the bottle (as opposed to the over-inflated retail price for good wines)

Why is buying wine via Naked Wines any better than just going to the local wine shop or grocery store?  

Price is certainly a big factor – particularly for the wines that we consider our “sweet spot” wines, that typically cost angels between $12 and $15 per bottle. But the big difference is really having direct access to the crowd and the winemaker wisdom   – a store cannot put you directly in touch with the winemaker like we systematically do, and the store attendants can’t compete with the crowd knowledge of tens of thousands of fellow angels who have rated and commented on all the wines.

How does Naked Wines decide who gets to be the winemakers?

Our Chief Winemaker, Matt Parish, who was Head of Winemaking for Treasury Wine Estates, has the distinct honor to build our range of wines, scouting the best talents around the world and offering angels a broad selection of high quality wines (we currently have about 130 winemakers who we collaborate with). Angels can also tell us which winemaker they would love to see work with NakedWines, and can vote on their favorite winemakers on what we call our Bounty List. 

Describe your typical winemaker: 

There is really no typical profile – some of our winemakers are rising stars (like Carmen Stevens in South Africa), and some have had a long and very successful career like Daryl Groom (who made Penfold’s Grange) or Ken Deis. 

Great wine starts with great fruit. Who determines the source vineyards? 

That's a crucial role of the winemakers who put their names on the wine. Some of them own their own vineyards, others source fruit meticulously. And when they pitch their projects to Matt Parish, our chief wine guy, where the fruit comes from is an integral part of the decision. As you say, the kinds of truly great wines we want to fund have to start with truly great fruit.

How well is this concept working so far? 

The concept is working brilliantly – we have the chance to learn from our UK predecessors (NakedWines.com UK started 6 years ago) who are now profitable, while at the same time pursuing a massive growth opportunity in the US. 2013 was a very impressive growth year, and we are already in 2014 ahead of where we were at this point in 2013. The success has been such that in order to balance supply and demand, we have just put in place a waiting list for customers who want to become angels – this allows us to ensure that we always have an adequate volume and variety of wines for our angels. 

Lastly, what's the inspiration behind the name Naked Wines?

Besides the founding team being an unconventional, witty, and partly British crowd, the name reflects our ambition to offer wines that are authentic and fairly priced – in contrast to the regular practice of wine companies who deploy treasures of sales and marketing tricks to convince customers to buy their bottle among many other alternatives on the retail shelves. At NakedWines.com, you buy wine for what it truly is, based on unfiltered ratings and comments from fellow angels, and you pay a naked price that’s based on what it really costs to make this particular wine. It is common sense, but a really disruptive revolution in the wine world!