Virgin Wines: rock n roll wine service

20 June, 2016

Jay Wright runs one of the UK’s most successful online wine retailers, Virgin Wines, which has more than 120 staff, a turnover of £40 million and north of 200,000 customers.

But it could all have been so different if his glam rock band, Wild Affair, had earned the recognition and multiplatinum hit-laden career it surely deserved. “I had hair down to here,” says Wright, pointing to his waist, “and out here,” indicating an impressive bouffant. “Spandex. Makeup. It was great fun, a great time.” 

After graduating from Manchester Polytechnic with a degree in politics and economics, Peru-born Wright stayed in Manchester trying to make the band as successful as the likes of T-Rex, Slade and New York Dolls. He needed a steady stream of income and became a registrar, marrying lovebirds and recording deaths. “I needed to find an employer that would hire me looking like I looked, and Manchester City Council was the obvious choice,” he laughs. “Once we realised in the band that we weren’t that good and had better call it a day, I went to work on Greenall’s graduate management programme.”

At the time Greenall’s was a FTSE 100 firm and by the age of 27, Wright had impressed company bigwigs enough with his ambition and enthusiasm to convince them to put him in charge of a new venture for the company – a mail-order wine division. “I knew nothing about wine and nothing about mail order,” he says.

But he spent three years learning the trade inside out and at 30 he set up his own business, Wine Warehouse. He sold it to Direct Wines in 2002 and stayed on to run it, joining a business that also owns Laithwaite’s and Averys. When Direct Wines bought Virgin Wines from Richard Branson in 2005, it was merged with Wine Warehouse and Wright was installed as chief executive. 

Things came full circle when Wright led a management buyout in 2013, raising capital from private equity firms Mobeus and Connection Capital to purchase Virgin Wines for £15.9 million. 

At the time the business had a turnover of £35 million and Wright told OLN he hoped to bring that up to £50 million within five years. Two-and-a-half years later turnover has hit £40 million – with a profit of £4.3 million for the year to July 31, 2015 – and Wright says he is on course to reach his goal. “It’s very much a balance in this business. It’s not about chasing vanity numbers. We want to make sure we have got a sustainable long-term business with [healthy] net profits. You can sacrifice a lot of profit for growth and you can run into a very high churn and you can get a business that has a lot of topline growth but struggles to make profit. 

“We need to get the strategy right. The investors see this as a long-term proposition. Over five to seven years I think we will see good growth.”

Star service

A core pillar of his strategy harks back to his days as lead singer of Wild Affair, as he says his 35 personal wine advisers are encouraged to give Virgin customers “rock star service”. 

“It’s about dealing with a wine specialist rather than people who are selling lots of different things,” says Wright, who lives in the Lake District with his wife and three children and commutes to Norwich during the week to run the business. “In a confusing wine aisle you can be quite intimidated. If you ask someone what that Carignan from Chile tastes like, you get: ‘I’m on bananas today, mate.’ That’s what makes us stand out. I hope that expertise done in a fun way with a lot of vigour is something customers will respond to.”

He adds: “Supermarkets are rivals. People do their normal shopping there and there is some very aggressive pricing and promotions. It’s hard to counter a spontaneous purchase when you are in the online market, unless you have strong customer loyalty. 

“It’s about relationships. If people know you and trust you they will come to you with all their wine needs. People love personal service. We have 35 wine advisers offering this. That’s a hugely different proposition to the normal UK service industry: press 1 for this, 2 for that. They get to know you and what you like. It’s like having a personal sommelier at your fingertips.”

Wright views Amazon – which has made a fair bit of noise about moving into wine retailing – as a similar proposition to supermarkets. “At Amazon wine will be one of a zillion things it does. Someone with the power and size of Amazon, you have to take them seriously. It would be arrogant to ignore anyone with the reach and customer base and data it has, but I still think that for a great case of wine you are better off at a specialist. Our people spend their lives getting the best wines from around the world, finding real gems.”

When asked if online can ever overtake bricks and mortar in terms of wine retailing in the UK, Wright says: “Without a crystal ball I can’t predict that. Online is currently around 13%-14%, so there is a long way to go. If you can gain the trust of your customers and get delivery spot on, make their life easier and offer fantastic wines, then you can grow. 

“Who wants to lug loads of wine back from the supermarket when you can get it delivered to your door?”

One of the biggest obstacles Virgin Wines has to overcome is the delivery charge – orders cost £7.99, although they are free above £150 and the firm is currently mulling over a change to its charge system, but they arrive the next day if you order by 4pm. 

“We have done a lot of research on what customers like and don’t like,” says Wright. “The biggest thing is that people don’t want to pay for delivery. Speed of delivery is also important.”

Data advantage

Where Virgin might have an advantage over traditional retailers is in the vast bank of shopper data to which it has access. “We have more empirical information than probably anyone else. We have more than a million customer comments and wine ratings we can use. 

“When the head buyer goes to the Languedoc to make a Sauvignon Blanc he will look at what customers like and make a bespoke wine for our customers’ preferences. We don’t guess, or just make something we like. That doesn’t mean we can’t experiment. We want to say, if you love X, Y and Z, you will love this.”

Wright says Virgin Wines breaks the mould of mail-order wine businesses because it appeals to younger adults, rather than the 55-plus male shoppers who form the bulk of rival businesses. 

“We do a really good job with younger customers and have a larger female bias than other mail-order wine businesses. It’s how you talk to people, the language you use. We are a dynamic, enthusiastic business. Younger people prefer that more direct, less wine bullshitty talk. Some people like to make wine complicated and shoppers find it difficult to understand. 

“We have older shoppers, but we tend to think they are younger at heart. A customer tasting at Barbican had everyone from their early 20s up to their 80s, but there was just the most incredible vibe, lots of noise and carnage. 

“Younger adults are adventurous. They are less set in their ways and will take recommendations. We have an amazing number of what you would call wacky or non-traditional labels. There are a lot of dull and safe wine labels out there, which is fine if you want a dull and safe business. We don’t. We are pushing barriers and that attracts a younger demographic.”

If only Wild Affair could have said the same thing.




Bookmark this


Site Search

COMMENT

Donald Trump: the US has much to learn from history

The reasons Donald Trump should not be left in charge of a shopping trolley, let alone the keys to the White House, are plentiful and well-documented – from his use of the word “bigly” and lamentable business legacy to his dubious post-modern feminist principles, quite astonishing lack of political acumen and, most worrying of all, his bewildering hair. 

Click for more »
Upcoming events

Polls

Is blended Scotch overshadowed by single malt in retailers?

  • Yes
  • No
  • Don't know

Facebook

Twitter