Online wine retailer Naked Wines has made the decision to withdraw its wines from sale in the Northern Territory due to costs associated with the minimum floor price for alcohol introduced at the start of this month.
Managing Director of Naked Wines Australia, Greg Banbury, told Inside FMCG that it would require “significant investment” in their IT systems to adapt to the price changes.
“For a small company like us the costs of updating our software and customising our operation in NT was disproportionate to the tiny level of sales we have there,” Banbury said.
The minimum price for a standard unit of alcohol in the NT is now set at A$1.30 in an attempt to reduce alcohol-related harms in the region. The NT has the highest rate of risky alcohol consumption in Australia.
Banbury said that while Naked Wines is “fully in support of Australian health related policies, including the new floor pricing in the NT,” the laws would impact any retailer shipping wines under $10 into the region.
“Because of our unique funding model, some of our winemakers can produce fantastic wines in this category.”
While Banbury couldn’t comment on how other retailers are handling the new legislation he said that some “may struggle with their deep discounting or “3 for 2” offers”.
Naked Wines was launched in 2012 and is based on an online crowd-funding model, which sees customers, or “Angels” as they are known, supporting independent winemakers by giving cash upfront to produce wine. Over the last three years, Naked Wines has almost tripled sales in Australia.
Although their customer base in the NT was small, the “Angels” were disappointed to lose the wine retailer in the area.
“When we looked at how many of our 70,000 Angel customers were regularly ordering wine to the NT it was a tiny proportion,” Banbury confirmed.
The news was “fully communicated” to Angel customers who were “sad to see their wings go, but fully understood”.
Naked Wines plans to invest in growing the business across the rest of Australia with new winemakers set to come on board to make wines exclusively for Angel customers.