Interview Transcript

How would you describe the typical angel, in terms of demographics and customer type or segment?

It changed, over time. It grew out so that it became modellable demographics. In the early days, those demographics were 40 to 60. I know that sounds old and that surprises you, but in the wine curve of consumption, for wine drinkers – and I did this analysis way back – people don’t really start drinking wine, because of wine, until they are 30. Before 30, they will drink it, but it’s not necessarily because it’s wine. At 30, they start drinking wine because wine is something that you have with dinner, you have with friends. From the age of 30 to 40, the wine consumption doubles, per person. From the age of 40 to 50, it doubles again and from the age of 50 to 60, it doubles again. Then it starts to drop off because of health reasons.

The people who drink enough wine are, typically, in the age group of 40 to 60. What most wine clubs were doing was that they had databases of people aged 55 to 70. What Naked had was databases of people aged 40 to 60. What we realized was that a lot of people on that database either owned their own business or were in senior management or entrepreneurs themselves. What they really appreciated was the intelligence the underpinned the model that made them feel good about it.

From a wine concept, we had people who knew nothing about wine, through to people that were wine experts. The reason we could do that was because our wine makers became the educational conversation point for all of these people. A wine nerd could buy from Naked and say, I can actually talk to Sam Plunkett through the message system and Sam Plunkett could converse with that person. Another person, who had never understood wine, would write to Sam Plunkett and say, I like your wine; I don’t know why. He would write back and say, the reason you like it is because I made it in this way and what you are liking about it is this, this and this. They would think that was amazing.

I think that Naked talks to that whole range of consumer but, typically, it was in that age group. There is one other thing. At the time, wine was being sold predominantly to a male audience. I think the split was a 60/40 audience. Naked changed that to 50/50, straight out, from day one.

Did it differ by region much, in Australia, the US, the UK?

Australia and the UK were very, very similar; almost identical markets. Both markets are dominated by retailers trying to play a price war. The difference between the UK and Australia is because Australia is a producing company but consumers in both markets are very, very similar. The US market is a very different beast altogether. It’s almost the complete opposite to these two countries. In Australia and the UK, you have this market consolidation, at the retail end, where the big powerful players are. As a result, the producers have no power and it’s difficult. In the US, it’s the complete opposite. It’s all consolidated at the producer end and that’s because of the three-tier system and the retail end is completely fragmented. Nobody owns the retail end; they all own the producer end.

For the same reason, wine makers are getting a bad deal. When you get a mismatch of power at either end, wine makers and customers get a bad deal. Naked works in both countries, but it just took us a while to work out what we thought worked in the UK and Australia, wasn’t going to work in the US. The big thing is, in the UK and Australia, we no longer determine the quality of the wine, based on its price, because we live in markets where price is used to win market wars. We know that we can go out and get an amazing deal on a wine and it doesn’t mean that the wine is bad; it just means it is an amazing deal.

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