Majestic Wines toasts fine profit record

By Anita Awbi

- Last updated on GMT

Related tags Marketing Alcoholic beverage

The UK's largest wine warehouse Majestic Wines has announced a
solid pre-tax profit rise of 18 per cent, as continued consumer
demand for fine wine and champagne defies the British retail
slowdown.

Majestic, which has 124 shops throughout England and three in Northern France, announced first-half profits of £5.9 million before tax and amortisation, and excluding exceptional items.

Fine wine sales boomed, with a 43 per cent rise in demand for bottles costing £20 and above, reflecting a shift in the mature British alcohol market as premiumisation continues to drive growth.

Rising disposable incomes and higher aspirations have encouraged consumers to drink less but spend more on better quality beverages, according to market research company Mintel.

Datamonitor's beverage analyst John Band told FoodandDrinkEurope.com​: "From our figures it is clear to see that people in Britain are willing to splash out on premium brands - quality wines are definitely driving growth in the market."

"People can get cheap good wine from supermarkets, and as a result the higher priced mass market wine is suffering. Premium brands are stepping in to fill that demand for high quality high-priced product,"​ he added.

But overall Majestic like-for-like sales rose 5.5 per cent compared with a 7.5 per cent rise in the same period last year - suggesting the London-based company will need to work hard to maintain it's position in the current retail climate.

And although 2005 first-half sales rose to £80.8m, analysts believe the merchant must focus on premium wine sales and in-store promotions to maintain growth levels.

But Majestic is well aware of the value of premium wines. A spokesperson said: "The fine wines area is proving hugely popular as people's tastes are becoming more sophisticated and this is definitely something the company will focus on to maintain steady growth."

Majestic's first push into the fine wine market came in 2003 with the opening of the temperature-controlled Fine Wine Centre at a key London branch. It has now installed new fine-wine display areas in three stores, with 10 more planned for next year.

Its premium range now takes in more than 200 fine wines retailing at £20 and over, and is available mail order, at some regional Majestic branches, and online through a dedicated fine wine website.

A study by UK consultancy IWSR indicated the largest retail growth-area will be for wine selling at more than €5 a bottle - representing a quarter of total wine consumption by 2008.

Related topics Retail & Shopper Insights

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