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:

1. IP Interview with Rowan Gormley, Naked Wine’s founder
2. IP Interview with WINE’s Current CEO
3. IP Interview with WINE’s Former International CEO
4. IP Interview with Vivino’s Chief Growth Officer
5. IP Analysis of US Alcohol Distribution
6. IP Interview with Former CEO of a large US Wine & Spirits Distributor

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.