Majestic raises a glass to upturn in results

The wine-seller puts the revival in fortunes down to its new six-bottle minimum strategy...

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Last Updated: 06 Nov 2012

Could UK drinkers be developing a more refined palate? Majestic Wine’s results seem to indicate as much: the company saw its full-year profit more than double to £16m in the year to March, with sales hitting £233m. After a less-than-rosé showing last year, the company has adapted its business model well to attract new customers. But will that be enough to sustain growth through the rest of the year, when we've all got less money to fritter away on our favourite tipple?

Brits have never been known for a ‘less is more’ approach to drinking, so, on the face of it, Majestic's decision last year (in the wake of profits collapsing by more than half) to drop its minimum purchase from 12 bottles to six could have been risky. But as it turned out, it's proved to be a great way of attracting new customers (i.e. casual wine-drinkers who might baulk at the idea of buying a full case) without having to shift down-market. Since the change, Majestic says it's gained 54,000 additional punters, with the average spend dropping by 4% to £129. Sales over the internet were also up by 10%; they now account for almost a fifth of the company’s total sales.

The other bit of good news for Majestic was a big rise in the sale of fine wines: sales of bottles worth over £20 were up by 23% (evidence that the UK's taste buds might be getting more refined?). Across the board, New Zealand sauvignon blanc, Argentinean malbec and prosecco were the biggest sellers, while South African wines also sold well – although the company put that down to a weak rand, rather than football fans wishing to explore the World Cup host nation’s wine heritage.

Dropping the minimum purchase may have paid off, but according to chief executive Steve Lewis, maintaining the same level of growth in 2010 is going to be a ‘tough ask’ - particularly if the UK slips back into recession. Lewis, who took the top job a few weeks before the 2008 financial collapse, says growth since Christmas has been consistently strong – but plans by the coalition government to introduce minimum pricing rules on alcohol could put the brakes on that. And our appetite for fine wines might be slightly diminished if we're all shelling out more money on taxes and mortgages.

That said, we suspect Majestic will hang on in there. All this austerity stuff is unlikely to be much fun, so we'll need something to drown our sorrows...


In today's bulletin:

Osborne primed after watchdog slashes growth forecast
BP under pressure to suspend divi as Obama demands more
Majestic raises a glass to upturn in results
Russia to get the rebranding treatment
MT Expert's Ten Top Tips: Make a million before lunch

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