When Tom Gearing, the runner-up on this year’s The Apprentice TV programme, left university in 2009, the financial crisis was in full swing. “There weren’t many graduate schemes on offer, and there was a lot of competition for the few places left.”
Luckily, Gearing had a fallback. His older brother had started a fine-wine broker, Cult Wines, but “wanted a career change to become an author”. So he offered his sibling the chance to take over the business. It helped clients buy wines for investment purposes.
The firm would investigate vintages with the best prospects, buy from a producer and then store the wine in bonded warehouses. The downside was it had only five clients and yearly sales of under £100,000. Gearing, just 21 years old at the time, had plenty of ideas about how to improve the business.
When he showed his initial plan to his bank, it gave him a £20,000 overdraft to help him get started. The first step was to get new clients, so Gearing paid a family friend to design a new website. “Not many of the wine merchants were using the internet to get clients, so with our well-designed website we were able to get up the search engine rankings.” He also tried cold calling, trade shows and internet marketing.
In a bid to “bridge the gap between what you are offered when you make other investments, like funds, and the service given to wine investors”, he began producing weekly reports on the wine market and monthly appraisals of clients’ investment portfolios. As sales started creeping up, Gearing travelled to Bordeaux to make contacts in the industry. “I kept going over and gradually got to know the Chateaux owners.”
After the first year, sales had risen to £1m. “To be honest, timing played a big role in our early success. Buyers from the Far East pushed up the prices of wines, which helped attract investors’ attention.” Gearing was quick to begin courting foreign investors. But the boom in wine prices also brought problems. A number of fraudsters entered the industry and took money for wine that never existed. Gearing reassured his customers by issuing certificates from bonded warehouses listing the wines held in his clients’ names.
With sales continuing to climb, he reinvested in the business. He hired a full-time accountant and a logistics officer to coordinate sales to international clients. He also developed an online trading platform that allowed his sales team to keep track of market prices and the firm’s inventory.
Last year, Cult Wines’ sales hit £3.6m across customers in 27 countries. With the business going well, Gearing decided to enter the BBC’s competition for entrepreneurs, The Apprentice. He reached the final, but Lord Sugar was unimpressed by Gearing’s plan to launch a £25m fine-wine hedge fund, calling it a potential “calamity”.
Gearing has since returned to grow Cult Wines, although prices have “turned soft” in the last year. “There’s no doubt that wine prices are affected by the situation in China.” But he remains confident that the underlying trend is up. He now plans to launch a new “customer portal” that will allow clients to check their portfolios at any time. He also aims to win more custom in the Far East via an office in Singapore or Hong Kong.
As for his wine fund, he says that, despite Lord Sugar’s misgivings, “it will launch one day”.