Virgin wines looks to Gen-Z wine-lovers for growth after suffering loss
Online retailer Virgin Wines turned a loss but remains confident a surge of Gen-Z drinkers who no longer view wine as “elitist” will push the firm into the black.
The wine seller made a £400k pre-tax loss in the first half of the year, down from a £1.3m profit last year, but saw revenue grow two per cent to £35m.
This means the retailer is outperforming the market, Virgin Wines claims, as the broader sector saw revenue fall 11 per cent during the same period.
Virgin Wines’ share price was down 2.6 per cent on Tuesday, to 55 pence per share.
Chief executive Jay Wright told Morning Wire: “There’s an increasing amount of professionals and younger people who enjoy a glass of wine on an evening at home and hopefully we can capture that market.”
While wine-drinking may have been seen as “elitist” by younger generations in previous decades, Gen-Z are turning to wine as they opt to stay in more and go out less, Wright said.
The company has developed an app in a bid to grow engagement with younger drinkers, which will be launched later this month, and has a commercial partnership with online gift platform Moonpig.
He said: “For people who enjoy meeting with their friends, staying in and doing that at home is a more cost effective option.
“It’s quite hard to buy a bottle of wine of any standard for less than £20-£25 when you go out to eat or drink, and quite often it’s substantially more than that.”
Virgin Wines’s pre-tax loss followed a £900k spend in reaching new customers through marketing and new interfaces like the app.
The firm acquired 75,000 new customers in this six-month period, 40 per cent more than the same time the year before.
Festive sales boost growth
A five per cent increase in revenue over the Christmas period was a boost for the company, it said.
Last year Wright struck out at hikes to alcohol duty and a sustainability tax on glass bottles but this year said his company’s growth plans are enough to weather growing costs – with the alcohol levy having been raised again at last year’s Budget.
“Our job is to try to make sure our customers continue to get the best value they possibly can and the best quality wines and all I’m really focused on is delivering the very best value and the best service to our customers,” he said.
Wright said the company was well-positioned to weather any incoming cost pressures caused by the war in Iran, due to the firm’s low energy usage and its lack of reliance on shipping in the Middle East region.
Virgin Wines was established under Richard Branson’s Virgin Group banner in 2000, but kept the name when it became a subsidiary of Direct Wines in 2005.
The retailer floated on the London Stock Exchange’s AIM market in 2021, raising £110m at a 197p share price and the stock is currently valued at 55p.