Virgin Wines blames government for inflationary cost pressures
Virgin Wines has said most of its cost pressures this year have been driven by government policy, including an alcohol duty revamp and a bottle tax.
The online wine seller told markets that profit before tax dipped by five per cent to £1.6m in the 2025 financial year, despite flat revenue.
CEO Jay Wright pointed to “a challenging consumer backdrop and significant cost pressures” as reasons for the profit dip, with a complete revamp of the alcohol duty regime and a new sustainability tax called Extended Producer Responsibility both piling pressure on Virgin.
“The significant cost pressures facing the industry remained over the course of the year, most of which were driven by government policy,” Wright said.
Since February 2025, wines have been subject to a rising scale of tax for every additional 0.1 per cent of alcohol, rather than the flat rate previously charged. The result is that the “vast majority” of wines now incur a higher level of alcohol duty, Virgin said.
Similarly, the sustainability tax has added a cost of around 10p a bottle, while an increase in the National Living Wage and increased National Insurance contributions have upped Labour costs.
Gross product margin declined from 37.6 per cent in 2024 to 35.6 per cent in 2025, Virgin said.
The company said the “subdued consumer environment” has “made it difficult to pass on these inflationary cost pressures to customers through price increases”.
Its share price rose by just over two per cent in early trades.
Inflation concerns rise
Inflation has been on an upward trend over the last year when inflation, rising from 2.3 per cent in the month of Rachel Reeves’ first Budget to 3.6 per cent over summer.
Businesses like Virgin have been vocal about the toll higher Labour taxes have taken, with hard-hit industries like retail and hospitality showing a decline in investment and a drop in hiring.
Consumer confidence, too, has been faltering, with Brits even planning to cut down over the all-important Golden Quarter, which includes Black Friday, Christmas and Boxing Day.
Nearly nine in ten Brits now report concerns, according to the latest Consumer Sentiment Survey from PwC.
Over four fifths of respondents to PwC’s survey said the rising cost of everyday things is a concern, up slightly from the summer and higher across every demographic group since the start of the year.
Fears that the late-November budget will add yet more pressure to businesses and consumers are also beginning to dominate headlines, with economists split on which taxes Reeves will look to as she tries to plug a £25bn gap in the country’s finances.