Majestic buy Naked Wines despite loss

The wine trade is very close knit as you may know, demonstrated so well this week with the news that Rowan Gormley who founded Naked Wines in 2008 will be the new CEO of Majestic Wine. This followed the news from last week that Majestic had bought Naked Wines the online wine retailer for £70m. The deal went ahead, despite the fact that while sales increased by 40% to £74m at Naked Wines last year, they made a loss of £3.3m. The major factor is believed to be the cost of delivering the wines. The Majestic connection will enable a click and collect in store mentality thus cutting delivery costs. And Naked Wines will give Majestic access to new international markets that Naked operate in such as the US and Australia.

The UK online wine market is worth over £720m and Tim Wilson of The Wilson report, predicts that the online wine sales market is strategically very important for any wine retailer as the market is expected to grow over the next 3 years.