The wrong trousers
David Thomas’s transgender diary
Istill don’t know which wines go well with Mexican food. That’s despite having shared an enormous meal of fish tacos, pork tamales and chile rellenos with Rowan Gormley, the chief executive of Naked Wines, and Daryl Groom, a globally renowned winemaker. Call it a failure of journalistic responsibility. In fairness, neither man has much time for that kind of chat. ‘I remember a person suggesting a pairing that has stuck in my mind,’ says Gormley. ‘He sniffed the wine and said, “I think this will go really well with quail stuffed with gooseberries.” And I’m like, “Oh brilliant, that’s my Thursday-night go-to recipe.” I mean, please.’
Groom is wearing a T-shirt from a ‘Pigs and Pinot’ evening, at which pulled pork was washed down with high-end Californian pinot noir. This, they both agree, is how most people drink wine – with steaks, burgers and pizzas, not haute cuisine. We’re gathered round a trestle table groaning under the weight of multiple dishes outside a restaurant that is little more than a shack deep in the heart of Californian wine country. ‘The truth is, we’re sitting here in the sun, enjoying great food and having a nice chat,’ says Gormley. ‘We could be drinking just about anything and it would still taste delicious.’
This is exactly the kind of comment that gets right up the wine industry’s hypersensitive nose. Gormley’s decision to sell off the Majestic Wines stores over the summer and change the company’s name back to Naked, the outfit he founded that was bought by Majestic four years ago, has prompted a number of wine writers to vent their feelings about the South African.
The main accusation appears to be that he is a businessman at heart with no real understanding or love of wine. Exhibit A for the prosecution is Gormley’s answer when asked his favourite wine: whatever is in front of him. No proper wine person, the critics argue, would come up with an answer like that. A similar charge is levelled at Naked Wines: the business model is smart and the customer service is slick but the wines themselves can be a bit hit and miss.
Gormley takes the personal brickbats on the chin. ‘I don’t have a great palate; I’m not a wine expert by any measure,’ he concedes. ‘But I am passionate about this industry. The thing that excites me about wine is getting other people excited about wine. It’s not [at this point he swills his glass ostentatiously and sniffs]: “I’ve got notes of damson berries and bicycle saddles.” I find all that stuff pompous, pretentious and tedious.’ He argues that Naked’s wines are continually getting better as the company expands. The most important ingredient in any bottle, Gormley likes to say, is the winemaker, and he points to Groom – who started out at Penfolds in Australia making its famed Grange wine before moving to California to run the multi-award-winning Geyser Peak winery – as an example of the talent Naked can attract.
Gormley believes the animosity directed at him stems from some ‘unfortunate’ comments he made about whether anyone really needs critics if you have customer data that can tell you which wines people will enjoy. ‘Unfortunate’ or not, he’s definitely not backing down. Gormley describes wine critics as a ‘nest of vipers’ who have become obsessed with their own internal squabbles as they fade into irrelevance. ‘One of the things that I learnt quite early in the business is that the wines that critics get frothy at the mouth about don’t interest consumers. [The criticism] used to worry me until one of the famous wine critics wrote a positive piece about us. And sales of those wines did not budge an inch. Sadly, the public are not paying attention to wine critics. Whereas James Martin on Saturday Kitchen …he shifts a lot of wine.’
It is clear that the internet has marginalised the traditional arbiters of taste. Most of us now rely on Spotify to suggest the next song we will listen to, Netflix to help choose our next film and Amazon to pick our next book. Gormley wants Naked to pick our next bottle of wine. It will do so in the same way that those other companies work – by finding out what we like and knowing what other people who enjoy that have also given the thumbs up to. The trouble is that few consumer goods are more daunting than wine. Most of us don’t know our pinotage from our pinot noir and plump for the second cheapest bottle on restaurant wine lists. And we worry that our ignorance will be used against us – not least by our own brains. A study conducted by the University of Bonn a couple of years ago found that people
‘I don’t have a great palate; I’m not a wine expert. But I am passionate’
enjoyed the same wine more if it had a higher price tag.
Gormley believes that nothing cuts through this anxiety better than customer ratings – provided they’re set up properly. For a while, Naked had a five-star rating system. But it found that the correlation was not between the rating and sales but between ratings and price. ‘People were rating the wine based on what we were charging them,’ says Gormley. ‘So we changed it to a simple: would you buy this wine again – yes or no? Suddenly the ratings perfectly reflected whether the customers actually liked the wine or not.’
Groom says winemakers like him appreciate Naked’s readymade customer base and the fact they don’t have to spend their time courting distributors and restaurants. ‘We are like a publisher is to an author,’ says Gormley. ‘Imagine if the book industry required the author to not just write the book, but also edit it, print it, finance the printing, do the sales and distribution and collect the money. That’s the publisher’s job. That’s what we do – all the boring crap.’
He might be an outsider in the wine industry but the 57-year-old Gormley is certainly not a standard-issue chief executive either. Dressed in shorts and flip-flops, he looks more like an ageing roadie than a buttoned-up denizen of the boardroom – a hangover, perhaps, from his days as a beach bum growing up on South Africa’s east coast. The entrepreneurial bug first bit him when he got a part-time job fitting burglar alarms while at university in Cape Town. He quickly realised two things. One was that he was working all day for a pittance while the owner of the company made all the money. The other was that most people didn’t want to spend loads on a burglar alarm, they just wanted to be able to put up a sign saying their house was fitted with one. He quit his job, got a whole load of signs made up and went from door to door flogging enough ‘to fund a university-level beer habit’. He is not afraid of making bold moves – even in his private life. He met his Kenyan wife Jenny on a blind date in 1987. They hit it off but she had bought a oneway ticket to London, so he ditched the accountancy job he hated and followed her to the UK. They were engaged six weeks later. Gormley’s big break came when the private equity firm he was working for in London teamed up with Virgin on a project. The deal never happened but he got to meet Richard Branson, who spotted something in the young Gormley and made him a very nebulous job offer. Gormley was intrigued enough to accept.
‘The first week, there was this lunch with all the Virgin big wigs and Branson about where we were going to take the Virgin brand,’ says Gormley. ‘All the talk was about boutique hotels, nightclubs and game reserves. And I said, “How about financial services?” Everyone laughed – apart from Richard. He asked why. I said, “Because no one trusts banks but they do trust Virgin.” He said, “OK, great, let’s do it.”’ This exchange eventually spawned Virgin Direct, which later morphed into Virgin Money and was sold to the Clydesdale and Yorkshire Banking Group for £1.7 billion last year.
Like all entrepreneurs, Gormley had his eye out for the next big thing. At the end of the 1990s that was the internet. He was quick to spot that the appeal of companies like Amazon was not just their wide range and low prices but their ability to make recommendations. He tried to think of areas in which Amazon didn’t yet compete and came up with wine, which he had grown up around in South Africa. The upshot was Orgasmic Wines (risqué company names were one of the things he learnt from Branson), which he set up with the help of his brother and a business partner and was rebranded as Virgin Wines when his mentor took a stake.
Talking to Gormley about Naked, you are struck by the extent to which he freely admits that the current business is built on past errors, wrong turns and blind luck. He says that Orgasmic Wines made ‘every dotcom mistake in the book’ and burnt through about £20 million in less than a year. It focused on the big wine brands and struggled to convince customers to make repeat purchases. In the end, the business was sold on to Laithwaite’s Wine. Gormley was attempting to fix its flaws and buy back the company when he was abruptly fired in 2008.
He decided to start from scratch. Lehman Brothers had just gone bust. This inauspicious backdrop forced him to come up with a business model that – almost accidentally, as he tells it – solved the issues with which Orgasmic had struggled. ‘In 2008 winemakers were in trouble because the banks were suddenly calling their loans back in,’ says Gormley. ‘This was before crowdfunding was even a thing. But I thought that we could build a business where our customers financed winemakers and, instead of dividends or interest, got preferential prices on the wine.’
He’s made a fortune, lost it and made another one. By the time he left Virgin, Gormley was worth £5 million (and had
‘We are like a publisher is to an author… That’s what we do – all the boring crap’
sustained a back injury in a trampolining accident on Branson’s Necker Island – don’t ask) but he blew the lot on Orgasmic Wines. His stake in Naked Wines is worth around £9.5 million at today’s prices. Majestic Wine’s annual report notes that he keeps refusing pay rises (despite getting about half what his predecessor earned) and excludes himself from the bonus scheme so that there’s more to go round the rest of the staff. The Gormleys own Mettingham Castle on the Suffolk-norfolk border, which was built by Sir John de Norwich in 1342, and regularly host parties for staff at their home. The pair have a son, Luke, the eldest, and two daughters, Phoebe and Hannah. It seems there may be an entrepreneurial gene: Phoebe dropped out of university to set up Gormley & Gamble, the first women-only tailor on Savile Row (the ‘Gamble’ in the name refers not to a business partner but the punt she took in spending her final-year tuition fees of £9,000 on starting her business), and has won a number of business awards.
The wine industry might call Gormley a numbers man; he’s not so sure. A more significant gift appears to be his ability to recover from missteps and listen when customers tell him he’s gone wrong. Talking to Naked’s boss over several hours I occasionally get the impression that my views are being reflected back at me. At one point, he says, ‘This obsession with buying, storing and cellaring wine – I just don’t get it.’ But when I confess to having bought some wine to lay down, he turns on a dime and says, ‘There is something lovely about putting wine away and pulling it out in the future. You can’t buy age.’
These opinions are fairly contradictory and yet they’re both delivered with equal conviction. There’s a thin line between inconsistency and adaptability. But you could certainly argue that this is, as they say in the tech world, a feature not a flaw: responding smartly to feedback might be the single most important skill of a modern online retailer.
We are eating lunch in the Sonoma Valley because of Gormley’s latest pivot. A year ago, he was extolling the virtues of operating both the Majestic and Naked brands under one roof, explaining how the traditional bricks-and-mortar retailer could learn from the online upstart and, indeed, vice versa. But this summer the company sold off all 200 of Majestic’s stores for £100 million and changed its name to Naked Wines.
Gormley argues that Majestic is still a good business, although it, like most retailers in the UK, faces headwinds. He also thinks that a full integration of Naked and Majestic was possible. The trouble was it would have taken up all of the management team’s time just as a more enticing opportunity was presenting itself – Naked was making real headway in the US. America represents only around 12 per cent of the world’s wine market by volume but is responsible for 62 per cent of the industry’s global gross profit. That’s because the byzantine structure of America’s booze industry results in the average bottle of wine costing, Gormley says, £7.15 compared, for example, to just £2.28 in Germany. Home-delivered wine in the US is also, he adds, ‘the last big consumer goods market that hasn’t had the marrow sucked out of it by Amazon’.
Lots of British companies have tried and failed to crack the US. Those that have succeeded have, broadly speaking, done so by turning themselves American. At the end of the meal, Gormley gathers up the Amazon packages he has with him and climbs into the Uber he’s hailed for the ride back to San Francisco. He looks very comfortable in the borderland between wine country and Silicon Valley. Both he and Naked’s new chairman, who by no coincidence is American, have floated the idea of listing the company’s shares on Nasdaq. The US stock exchange is home to lots of tech companies, like Amazon and Uber, that eschew profits in the pursuit of growth – the same strategy Naked is employing. Its share price over recent months suggests the current crop of investors remains unconvinced. It may be that Naked’s future lies in appealing not only to US consumers but also US investors.
In my hotel room later that night I eat the remains of the Mexican food that I’ve brought back with me in a doggy bag and finish off a bottle of Groom’s Russian River pinot noir. I think they go well together. But, if I’ve learnt one thing about wine from Rowan Gormley, it’s that you shouldn’t take my word for it.
‘Wine is the last market that hasn’t had the marrow sucked out of it by Amazon’
THE WINE WORLD according to Gormley
Gormley celebrating Naked’s success with his team
From top: renowned winemaker Daryl Groom; Gormley (right) with Richard Branson in 1997