Business

The wine boss who was glad to be sacked

  • 13 March 2017
  • From the section Business
Rowan Gormley Image copyright Guy Bell
Image caption Mr Gormley has set up and grown two separate wine firms - Virgin Wines and Naked Wines

Rowan Gormley says he had no idea that he was about to be sacked.

Back in June 2008, as the founder and boss of Virgin Wines, he was trying to lead a management buyout from its then-parent group Direct Wines.

"I got called into a meeting, I thought it was to discuss the purchase price," says Mr Gormley, now 54. "Instead, a letter was pushed across the table to me, which said I was being dismissed.

"I immediately walked out of the room and tried to use my [company] mobile phone, but it had been barred while I had been in the meeting."

Mr Gormley says he immediately decided that as buying back Virgin Wines was now impossible, he would instead set up a rival business. But he faced a race against time to get key staff to leave with him.

"I went across the road to a shop and bought another telephone as quickly as I could," he says. "I phoned the office, and the guy I spoke to said, 'oh my God, there is an army of people here trying to get us to sign bits of paper saying we are not going to talk to you, and all sorts of things.'

"So I gave him a list of 17 people and said, 'tell these 17 not to sign anything.'"

Image copyright Majestic Wine
Image caption Mr Gormley has also been the boss of Majestic since April 2015

Thankfully for Mr Gormley, the staff that he most wanted to keep decided to follow him out the door, and six months later he launched his new venture - Naked Wines.

Today he is the boss of both Naked Wines and fellow UK wine retailer Majestic Wine, which have combined annual sales of more than £300m.

"I think I was sacked because of a clash of personalities, or perhaps egos, but it was honestly the best thing that ever happened to me," says Mr Gormley. "Otherwise Naked would never have happened, nor would I have gone on to also lead Majestic."

'Dotcom mistakes'

Born and bred in South Africa, Mr Gormley says he first became interested in wine as a teenager. But before he started selling it in his late 30s, he spent almost two decades working in finance.

After going to university in Cape Town, he trained as an accountant, and moved to the UK in his mid-20s.

Mr Gormley then worked in private equity for seven years before joining Sir Richard Branson's Virgin Group.

It was Mr Gormley's idea for Sir Richard to move into offering financial services, and Virgin Money was born in 1995. Five years later Mr Gormley said he came up with the idea for Virgin Wines, saying he recognised the opportunity of selling wine via the then-still nascent internet.

"I pitched the idea to the Virgin guys but they weren't very excited about it. So I started just selling wine at nights and weekends with my brother and friend to prove that it worked," he says, "and six months later Virgin Wines was born."

But he says he and Virgin Wines immediately "made all the classic dotcom mistakes".

"We did everything wrong - we had a flash London headquarters, a huge IT office, a big advertising campaign, and absolutely nothing worked."

Image copyright George Brooks
Image caption Mr Gormley says he has worked hard to boost morale at Majestic

Ultimately, Mr Gormley says that for Virgin Wines to survive it had to cut its workforce by 90%, "retreat to Norwich with our tails between our legs", and start again from the very bottom.

In addition to cutting costs, Mr Gormley says he turned around the company by focusing on selling interesting wines from small producers instead of selling the same big brands that people could buy from the supermarkets.

By the time he and his team had managed to make Virgin Wines profitable, it was sold to larger UK firm Direct Wines in 2005, only for Mr Gormley to be sacked three years later.

Discount vouchers

At Naked, Mr Gormley's big idea was to encourage customers to become "angels", who pay a direct debit of £20 a month, in exchange for getting wine at reduced prices.

Naked then uses this money to pay independent wine producers in advance, so that they can focus all their energies on making the wine instead of worrying about being able to sell it.

Image copyright Naked Wines
Image caption Naked Wines gives winemakers money upfront

Winemakers are also profiled extensively on Naked's website (it is an online only operation), and customers are encouraged to review each wine, including saying whether they would buy it again.

To drive sales the company gave away free samples, and today it has more than 320,000 angels.

Such has been the growth of the business since it was founded in 2008 that it was bought in 2015 by wine giant Majestic for £70m.

The deal made Mr Gormley many millions, but instead of retiring to count his cash, he was given the top job at Majestic, and tasked with turning around its fortunes after three years of poor sales and weak profits at its UK stores and website.

Mr Gormley's action plan has seen him focus on raising staffing levels at Majestic's 211 UK shops to try to boost both customer service and staff morale, and allowing customers to buy just one bottle of wine rather than the previous minimum order of six.

Image copyright George Brooks
Image caption The average cost of a bottle of wine at Majestic is £8, compared with £4.60 at supermarkets

"Majestic has to offer better service, and give people the type of help and advice that they don't get in a supermarket," he says.

While the company is still struggling to make a profit, and an expansion into the US has not been successful, group sales are now rising strongly again.

Retail analyst Jonathan Pritchard of stockbrokerage Peel Hunt says he would score Mr Gormley's first two years leading Majestic as "eight out of 10".

He adds: "He is a fabulous entrepreneur, and a very good presenter - he is excellent at getting his message across - but there have been a few bumps in the road since he took over."

UK wine journalists have mixed opinions. The Daily Mail's Olly Smith says Mr Gormley is "something of a visionary and powerhouse in connecting wine directly with consumers", but Jamie Goode from the Wine Anorak blog complains that the pre-discount prices at Naked are too high.

Mr Gormley says his focus is always on selling enjoyable wines.

"I don't regard myself as having a great palate, but I consider that to be an advantage," he says. "Too many people who are really into wine see their tastes become so esoteric and refined that normal people don't like what they drink. I'm not like that at all."


Follow The Boss series editor Will Smale on Twitter @WillSmale1

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