Cult Wines lays off staff in face of market ‘downturn’
Fine wine investment company Cult Wines has made significant redundancies across its international teams due to market conditions being “more challenging than we anticipated”, according to the company CEO, db can exclusively reveal.
Tom Gearing, founder and CEO of Cult Wines, spoke to the drinks business about redundancies in the company.
Gearing did not reveal the number of staff members who had been made redundant, but did clarify that “today we’ve got over 60 members of staff globally”.
“I don’t need to specify exact numbers of people that have left the organisation,” he told the drinks business, but explained that “we’ve decided to reduce the team in the areas that we felt reflected the performance of the business and I think give ourselves a strong position to move forward with”.
He noted that the move to “right size the organisation” was made “in line with current market conditions, but also in line with the investments we’ve made”.
“We’ve looked at where we are as a business and where we think revenues are going to be for the rest of this year and for 2024, and have made the decision to implement some organisational changes including headcount reductions as part of a strategic realignment to streamline operations, reallocate resources and optimise our performance.”
When asked about redundancies within the Cult Wines digital team, Gearing said that “now that certain projects and platforms have come online, we don’t need to have 25 people working in products and technology, we can have a team that’s much smaller than that”.
He explained that the company has worked with both “full-time employees” and “contractors” to build its new investment platform, which launched in the last four weeks to clients globally.
“During a six month build, where you’re building a brand new platform from scratch, there are certain skills that you need in terms of engineering capabilities and talent that you’re not necessarily going to need once it’s launched,” he said. “Our ability to scale up and scale down as the requirements of the business change has been a tactical decision by us,” he added, in reference to the company’s product and digital teams.
However, with regards to the company at large, redundancies were not planned, and have come about in response to a “downturn” in the wine market, Gearing said.
“On 1 January 2023 when we did our budget for the year, did we plan to reduce our staff numbers in August? The answer is no.”
At the outset of the year “you’re always in a positive mindset”, Gearing said, adding that “in terms of the organisation for this year, I think that the market has been more challenging than we anticipated”.
Cult Wines has been forced to “scale back in some areas”, “lower expectations” and “deprioritise some projects that were built for a medium to long term return on investment” in the face of these challenges.
The company’s leadership team meets on both a quarterly and half-yearly basis, the CEO said, to reevaluate the business’s budget, revenues and forecasts. “As a team, we’re always keeping a close eye on where we are in terms of revenues and forecasts and growth expectations. If halfway through the year we’re behind on our expectations, or where we thought we might be, and we think the conditions aren’t necessarily going to magically change overnight because of the macroeconomic environment, then I think we have to make the right decisions for the organisation, which is to look at areas of the business that maybe aren’t number one priorities for us.”
Staff redundancies were also influenced by “underperforming areas of the business”, Gearing said. “If we have areas of our business that have high levels of staff that have been underperforming, and therefore we think we can support that part of the business with less people, we will do.”
He argued that the lay offs were the “right step to make” given current trading conditions, and denied being “over ambitious” in terms of the company’s growth plans. “It’s unfortunate that we haven’t managed to execute as well as we wanted to,” he said.
“I genuinely think that this year has been a unique set of circumstances that a lot of people in the world haven’t faced before, and we haven’t necessarily been able to fully anticipate the ramifications of the macroeconomic environment,” he added.
Gearing does not expect the challenges of the current trading environment to “change overnight”, but believes that the company will be better suited to respond following the lay offs.
In six months the company will be “much stronger position to be able to deal with different economic changes”, he said.
When asked whether Cult Wines employees can expect further redundancies, Gearing said “absolutely not”.
He added: “We’re in a super strong position going forward. I think we’ve made the right changes to enable us to be more agile and be able to deal with the macro environment.”