Matt Smith has been buying director at Naked Wines since May 2021. He worked his way up from a Majestic store manager back in the early 00s, via stints at Waitrose, Bibendum, and Berry Bros & Rudd, to take his current role at the subscription-based ecommerce platform that is Naked Wines.
While the corporate-level public company news plays out through regulatory announcements, Smith‘s focus is the customers. We’re talking at the company’s portfolio tasting in London, where he’s keen to highlight new wines as well as good value classics.
“We did a range review about a year ago – Naked’s an interesting business because of the way it works with the winemakers – it’s quite collaborative. Winemakers have come up with wines that they think are great and we’ve bought them – that’s really cool because that gets loads of customer engagement and things can go off in random directions that you might not see in other places. But it can also make the range untidy if you’re not careful. You might find three Petit Verdots from Argentina, for example.”
Smith says Naked did some customer research and while the feedback was largely positive, drinkers said the breadth of range wasn’t as good as some of its competitors – especially when it came to Old World wines. In terms of competition, he mentions the likes of The Wine Society, Laithwaites and Waitrose Cellars.
“So, I feel like we’ve done something slightly at odds with what other retailers are doing – we’ve looked to increase our range a bit. We’ve bought in quite a few new Bordeaux wines, a new producer from Alsace, quite a few wines from Germany and Italy – including Custoza Bianca, which is slightly under the radar.”
Aside from balancing out the range, what consumer trends do these wines help Naked address?
Smith says that in order to achieve sustainable growth, Naked has to answer the needs of a broader set of consumers.
“And one of these sets would be more traditional consumers,” he explains. “I think generally consumers expecting to see more traditional appellations represented may not have been able to find them.”
Aside from introducing more traditional offerings, Smith says the company also engages its subscribers – which number around 350,000 – to ask them what kind of wines they would like to see on the site.
“The customers can talk to winemakers, they can message each other, they can set up groups together – it’s like social media. And we email them quite regularly – not with a hard sell – it could be about anything – a sustainability initiative, a charitable initiative… We asked them where we should go and explore to find new wines.
“We got a huge amount of engagement back and we were able to pick out some interesting patterns – lots of people saying they were interested in wines from Georgia, so Ray [O’Connor MW, wine director] has done quite a lot of work – he did a road trip with lots of pictures on Instagram and the website. We got loads of customer engagement through that.”
Smith tells similar stories for Germany and Greece, and he says “the beauty of it” is that customers are invested in the process because they have been a part of it.
“They follow you, they can follow the winemaker and then they are notified when the wine comes in.”
When it comes to talking about what’s falling out of favour, in terms of grape varieties or countries of origin, Smith says traditional New World, such as old-style Aussie Shiraz and “some South American wines”.
While he acknowledges there are consumers that want these wines, he says Naked isn’t looking to grow that part of the portfolio, as “it’s already covered”.
The red partner to the Custoza Bianca is a Bardolino – a light, fresh and unoaked wine at 13% abv. Smith says lowering ABV is important.
“It’s a slightly generational thing,” he says of lower abvs. “I think the older, more traditional customers are still not so worried about that kind of thing. But as younger consumers come through, they are focused on that, just as they’re focused on ingredients in their food. I think it is part of that conversation.”
It’s impossible to do an interview in the current climate without talking about both the supply chain and the cost-of-living crisis. And, unfortunately, how the two are pushing up prices.
Smith says it’s a “shaky and uncertain time”, and the “shape of things hasn’t been borne out in data yet”.
“Everyone is trying to second guess what will happen. The cost-of-living crisis coupled with large inflation in the supply chain is a double whammy for us. We’ve seen a huge amount of cost increase in shipping, fuel surcharges – just like everyone has.”
He also mentions energy surcharges at glass plants and glass availability.
“We’ve worked to support our winemakers – we’ve haven’t said ‘we agreed pricing, tough luck’. I suspect there would have been some of that pressure elsewhere in the market.”
What this means is that around 15% of the range has gone up in price this year.
“We no longer do £6.99 as a price point, just to put that into context,” he says, pointing to £7.99 as the new entry price.
For Smith and Naked, the “sweet spot” for wine is £9-12, which Smith explains represents a kind of “equilibrium” in terms of duty, VAT and the value of the liquid in a glass bottle.
“When I started, we wanted to premiumise the range. We won’t step back from the sweet spot, but we will need to reflect on the range as things progress. We’ll do it the Naked way – look at unusual places to find value.” He points over to the tasting table and a Pinot Grigio from Moldova, which “punches so above its weight” for £7.99.
“And because we engage our customers in those decisions, we get a bit more buy-in than when a supermarket might put a wine on the shelf from some unusual country. That’s our USP.”