Naked Wines US Price Positioning

How do you get that balance, in the US, between moving up the price point, to change the consumer perception, or trying to tell your story over and over again, to try and change the consumer perception about the price and the quality?

It was a long journey to do that. We tried to do it in sprints and sprints was the wrong way to do it. So we decided to put our prices up and that was the right thing to do, but we were penduluming from, we are ridiculous value to, we’re priced like everybody else. Somewhere in the middle was the right place to be. The difference with the US is that it is such a huge market. It’s like walking into a room with a glass of water and trying to wet everybody in the room. You think people know your story in the US; they don’t.

Once we realized that, we knew we could retell the story; we could set this up properly, for the US. We can stop being arrogant English and Australians, coming into the US and going, we get this. Now we realize that the US market is different, let’s restructure this. It doesn’t mean what Naked is is different, it just means the way we present it to them is different.

Do you think there is a greater opportunity to go and offer more premium price points, with people like Jesse Katz, for example, who seems to produce more premium wine? Do you think Naked, as a brand, can move upmarket in the US?

Yes, absolutely. We have the right guy running Naked Wines, for that. Nick Devlin is a huge wine fan; he is a wine nerd. He would prefer to be drinking the more premium brands, but I think that is a good thing because he is taking Naked into those places and Naked should play in those areas. The Naked value proposition gets better as you go up through the price points. I think the real play, in the US, is to move up through the premium price points.

Because the actual price of the wine in a bottle becomes less as a percentage of a higher-valued bottle than it would be at lower prices?

Yes; that’s right. The relationship between quality and price moves up. What makes an amazing wine? Firstly, the quality of the juice. That is the number one ingredient. Even today, around the world, maybe because of crazy finance people, people are still cutting corners on the quality of the juice as a way to reduce the cost of the wine. The reason they are doing that is so they can invest in the marketing of the wine. What do you need? You need amazing juice and then you need a good wine maker and you need good wine-making techniques. If you don’t have to spend a fortune on the marketing, you don’t cut corners on any of that and you end up making incredible wine, at any point, and it gets better as the juice improves.

The alternative to that could be in the US, where you could keep your prices relatively lower, but also offer a great product which is the higher value Costco model, if you will? Do you think that is not as effective because of the consumer perception in the US?