Last month, Naked Wines (WINE) reported a trading update for the fiscal year 2022, the 12 months ending in March 2022. We’ve covered Naked Wines from various angles over the last 18 months:

We also recently hosted an IP investor dialogue to explore the update and discuss WINE’s opportunities and challenges post-covid.

There were two positive data points from the update:

  1. Sales retention was 80% vs mid-70% guidance
  2. Repeat sales increased 13% year-on-year at constant FX

In FY21, the 12 months during COVID to March 2021, WINE’s revenue grew 68%. In FY22, with 50% more subscribers and during the large, global reversal in e-commerce sales volumes, an 80% sales retention is impressive.

WINE’s philosophy is to add significant value to its subscribers and winemakers before sharing in the economics. The company aims for a 5-year LTV / CAC of only ~2x, typically much lower than other ecommerce models. However, the retention of contribution profit suggests the service adds significant value to a core group of angels.

The table below shows the contribution profit retention by cohort: on average, 78% of contribution profit is retained after 2 years and 47.5% after 5 years. Beyond 5 years, the cohorts stabilize and retention is near-100%. For example, the 2013 cohort enjoyed 95% and 97% profit retention in 2020 and 2021 respectively. The other cohorts follow a similar trajectory.

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