Majestic Wine has acquired Naked Wines today for around £70 million. On the surface it is a straightforward but interesting business deal giving each a new injection of energy. Underlying this, however, is an interesting story of conquests and empires that are a lot less regal than they are imperial.
The key is that Rowan Gormley, the entrepreneur behind Naked Wines, but also Virgin Wines and before that Virgin Money, has been appointed CEO of the acquiring business. What ‘assets’ were the real target in this exchange?
A lot more will be revealed in the days ahead of the strategy for the separate businesses and whether, and how, they might be combined, but as this unfolds, I think it would be instructive to look up the life story of one Julius Caesar.
“Caesar is considered by many to be one of the greatest military commanders in history.”
Rome too was once ruled by kings, but the military exploits of generals in the field became the route to power and these ‘imperators’ took over the Empire. No more ‘majestic’ rule, it was time for the new ‘imperial’ one. All subsequent leaders not only became known as Emperors, they even adopted the ‘title’ Caesar.
Maybe the newly combined business should change branding, not to Majestically Naked, but to Imperial Wines instead?
I just received the latest email marketing campaign from Naked Wines (the UK office – now that they have a presence in the US and Australia this probably needs to be stated), and I’m a little disappointed.
I’ve always thought highly of their marketing savvy. The move to rate wines not by stars or points, but simply by whether you would buy the wine again, was genius.
No matter what you thought of the actual wine range, they managed to connect with the audience they were targeting, and speak to them in a positive way, involve them in the business, and create a strong user community. It fitted the honest, or ‘naked’, approach they claimed to favour.
What rankled in the latest email – “Become a wine genius in about 52 seconds” – was that they sent a quiz (I’m a sucker for a wine related quiz, and I had 5 minutes with a cup of tea, and they promised it would take only 52 seconds, so …) to see if I was a “Wine Genius” but instead of a quiz, I got a lecture.
It really surprised me.
There are 6 questions, most of which are slap-in-the-face obvious marketing statements, such as:
Tricky one this one
“Well, let me see … now, I think I remember studying that at school, just a minute …”
However, two things really surprised me. It wasn’t just the questions, but the approach taken to the answers.
The first question was:
Define your terms, please
Now, I would argue this point. I know what they are getting at, but since they do not define “costs to make” but one could certainly argue that the true cost of hand-picked grapes, made in small quantities, aged for years in cellars and carefully prepared and presented to the customer could cost more than £10 if the winemaker wanted to survive, invest in the winery (and pay off debts), stand out from the crowd, and also pay others fairly too.
The next question was a false choice between traditionally packaged wines and screwcap bottles:
No corks allowed, sorry
Ignoring the biased “delicious vs average” aspect, there may be plenty good reasons for preferring the traditional packaging (for example, I might like to keep the wine for some years then use my Coravin), but apparently I MUST conform to their packaging mantra, or else!
And this was the second, and major point. Apparently, I’M WRONG.
We hear a lot about making wine more accessible, less frightening and stressful for consumers. I believed Naked Wines agreed. However, it seems that if I suggest that I might like a cork, or that it actually might be possible to believe that wine costs over £10 to make, it is not a valid opinion, and I am simply wrong. Like this:
Naked Wines customers are deeper than that! (oh, and that “small fortune” can’t be that much since they’ve told me that it still has to come under £10 all in!)
The good news, is that despite disagreeing with all their statements questions, and being consistently wrong, I am apparently still a Genius and worthy of my £20 discount (you might be a genius too – try the “What’s your Wine IQ?” quiz)
I’m left with the impression of a marketing misstep from the team at Naked Wines
This is a brilliant video by a most talented individual, talking about art, content and money.
Jack Conte and his impressive beard
I have been a fan of Jack Conte, and Nataly Dawn (individually and as Pomplamoose), for many years. However, my respect for him grew enormously when he also created a most amazing site called Patreon. In this video from XOXO Festival 2013 Jack tells us about his background as an artist, and how Patreon came about. He explains how YouTube monetisation worked for him, what killed it, and how he came to realise that there was another way.
“(creating great content) is just half my job….The other half is this … I have to take something I’ve made and put it in an equation, and out comes money. I can’t forget about that. … If we just want to make good stuff once, then you don’t have to worry about this. But if you want to keep doing it you have to make good stuff and convert it into money.” – Jack Conte (jump to 13:30)
In the past, YouTube services (their platform reach), plus quality content, COULD generate money for the artist. This is now rarely the case. It is an advertising model that relies on getting not just lots of viewers, but a large percentage of viewers on that platform. As the audience for the media channel grows, similar total viewing figures become less and less relevant (“views, as a currency, have been devalued“), and so individuals are displaced by big brands.
My favourite quote, at around 17:00, is when he is talking of why maybe 400,000 YouTube views converts to only about $25 revenue:
“It isn’t a “hit”, it is “a person”, … and the reason that it ends up not working is that advertisers don’t care how much you like the content you are about to watch, … (but) that really matters to a creator.”
Artists, and many niche content creators, ARE individuals and care about the individuals in their audience, so how can they benefit? Jack summarised his solution as:
Patreon(music) = money
… in other words, the Patreon platform is the “function” you apply to deliver quality music content, to result in revenue for the artist. It is true (I am a patron of Jack’s, Nataly’s and others including the brilliant “Postmodern Jukebox“). But I would also like to generalise it further and add one element that Jack maybe takes a bit for granted in his explanation, and say that the formula is:
Platform(content) + Love = money
Creating quality content is wonderful, but you must also work at gaining the love and respect of an audience and do this on an appropriate platform, in order to monetise your content.
What might this mean for wine? Well, we are creating content, but are we choosing the right platforms to deliver that content widely, and are we working hard enough to target a unique, specific audience for that content that truly care about our content? If we don’t, then how can we expect to generate “money” at the end of the day?
Building an audience, getting their respect and “love” is our personal task, but one thing that we can work on together is the issue of platforms. Patreon and YouTube are about bringing content creators together so they can be found. We must do more of this in the wine business so that we can make great content more easily found, and supported. This has begun, with platforms such as PalatePress, but these also need to develop means to encourage true fans to be able to transfer value, whether that is pay-per-view, subscriptions, donations, or the chance to buy merchandise.
It is also true for wineries. These too need new platforms for creating audiences for their wines. A growing option is direct sales but this relies on building a loyal audience as well as creating great wines. In the next few weeks we shall look at some wineries doing this, and how they are going about it.
In the interim, please enjoy some of Pomplamoose’s great work:
The WBIS, Wine Business Innovation Summit, returns with a new location this year, and Vrazon will be taking part again. The WBIS is a welcome addition to the wine landscape and a perfect complement to the Digital Wine Communications Conference held each autumn. Both events are working to make sure the online sphere of wine is taken seriously and that the people behind it are rewarded for their work.
The first edition of #WBIS was held on 19th January at the Les Ateliers des Tanneurs in the Marolles quarter of Brussels. Organised by Marc Roisin (CEO and founder of Vinogusto.com) and Faye Cardwell (freelance organizer of international wine events) the duo were supported by Jens De Maere (founder of Belgianwines.com) and a team of highly enthusiastic members of the Belgian wine scene.
I was there that year as a speaker talking about how to improve the “press trip”. Being a one-day event it was a good chance for me to meet new people I hadn’t met before, many just getting started in the wine world as well as many long time veterans. Mark and his team had created a spark of energy and while I think there were questions about the viability of the event going forward, one of which was whether wine geeks could endure another cold winter event, overall people left with a bit of a ‘spring’ in their step.