"I'm always interested in alternative ways of doing things," says Randall Grahm, winemaker behind the often irreverent Bonny Doon Winery label, a fervent Rhone Ranger, and author of Been Doon So Long. The latest alternative way of doing things for him is joining Naked Wines, a crowdfunded virtual winery.
Randall started making wine for Naked when Naked launched in the U.S. about 18 months ago. Naked had already been up and running in England for five years. Randall's already got an established wine business and name, so what does he get out of going Naked? "It's an opportunity to play around a little bit, an opportunity to make some odd ball wines," he says. Wines like Mutiny on the Bonny Grenache Blanc and the (G)renache Spot, all under the Randall Grahm label, not the Bonny Doon label.
The other thing he gets out of Naked, Randall says, is having a direct dialogue with his customers. "To me the most extraordinary thing about what they're doing is creating a virtual community around these wines and having individuals talk to one another about the wines and providing input to the winemakers," he says. "I think it creates a deeper bond between the customer and the producer."
"I was rather baffled that the famous Randall Grahm who has one of the biggest profiles of any winemaker around wanted to join us" says Naked Wines founder Rowan Gormley. "I would have though Randall is a master salesman. But he said at the time the funny thing about a big reputation is that it doesn't necessarily mean a conversion to dollars and that's very true."
The way the crowd, or customer funding, as Naked likes to call it, works is this. For $40 a month you, the customer can become an Angel, a play on an angel investor. You choose how to spend your 40 bucks -- all at once, or save it for as long as you like, and watch your account grow by $40 per month. You can deposit more, but you can't deposit less. As an Angel you get to buy wines at 40 to 60 percent off retail.
Unlike a wine club, you get to choose the wines, what you want when you want. You don't get a regular shipment that you have to pay for even if you don't want the wines. You can also cancel at any time, and if you have money in your account, you get it all back. Seems pretty risk free.
If you don't want to become an Angel, you can buy the wine at retail. Randall's Mutiny on the Bonny is $24.99 retail and $11.99 for Angels. There are also some wines that only Angels can purchase for limited time, like Randall's The Sisters, an unusual but interesting blend of Albariño and Riesling, released in March and available only to Angels for the month. Beginning today, anyone can go on to the Naked Wines site and purchase a bottle.
What does the crowd funding do for the winemakers? Randall says once he proposes a wine and Naked approves it then Naked "covers the production cost of the grapes. Then there's a consulting fee or winemaking fee paid on top of that." While he's got immediate feedback and interaction with people who buy his wines, it's not quite direct to consumer. "The margins aren't quite as good as doing it yourself," he says. "But you also don't have the issues of fulfillment and you don't need as much infrastructure to make it work."
How does it work? Rowan says there are 200,000 angels who invest $40 a month. "That goes into a separate trust account and when we want to back someone like Randall we've got several million dollars," he says. "We can go to him and say we'll fund the grapes we'll fund the winemaking, we'll fund you we'll do the sales and marketing we'll do all the distribution. We'll take care of all the regulations so all you have to do is make wine." Money from wine sales is reinvested. Some of the recipients of that investment are lesser known names than Randall's.
Carmen Stevens, the first black woman winemaker in South Africa, is an example Rowan points to. "10 years after apartheid she couldn't get credit from the banks to bottle her wine," he says. "We brought it to our customers and said if we can get 2000 people to each put in 75 bucks we can set her up in business by herself. We did that and today she makes 300,000 bottles of wine for us. Now she's an award winning winemaker with her own business employing other people."
Besides getting wine at deep discount -- nearly wholesale prices according to Naked -- Angels can talk directly to winemakers and they can talk to each other. Nothing too revolutionary here. But Angels also get the satisfaction of knowing their funds are helping winemakers start up operations or create those odd ball wines they've always wanted to make.
Randall says some of the wines he's proposed to Naked get green lighted, but not all. "I put on my Doon's cap, sit in the corner and think and think and then propose x, y and z wines to them," he says. "Some of my ideas i think might be a little too out there for them i think they're they want unusual wines but i don't think they want wines that are totally crazy i think that sort of freaks their customers out a little bit."
Will this model, crowd funded wines by angel investors be a viable business long term or will it go the way of wine flash sales? So far Naked Wines has raised $67 million from its legion of angels. As for Randall, he plans to continue crafting interesting wines for the Naked Wines portfolio.