Virgin Wines FY profits dip 5% to £1.6m amid cost pressures
Customer acquisition rose 28% during the year with only a 6% increase in marketing spend, achieving conversion rates above 40% and strong long-term returns
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Virgin Wines UK has reported a 5% fall in profits before tax to £1.6m in the year ended 28 June, as cost pressures linked to government policy weighed on margins.
According to the wine retailer, most of its cost increases stemmed from a rise in alcohol duty and a new environmental packaging tax on glass bottles. Revenue for the year was unchanged at £59m, compared with the previous year, while adjusted EBITDA fell to £2.3m, down from £2.8m.
Gross product margins narrowed to 35.6% from 37.6%, reflecting higher input costs and inflationary pressures across logistics and packaging. Despite this, Virgin Wines said profitability remained ahead of expectations and the business continued to generate cash, ending the year debt free with £9.3m in net cash.
2025 also marked both the company’s 25th anniversary and the launch of its medium-term growth plan.
Virgin Wines has set a target of £100m in annual revenue at a 7% EBITDA margin over the medium term. Customer acquisition rose 28% during the year with only a 6% increase in marketing spend, achieving conversion rates above 40% and strong long-term returns.
Commercial partnerships generated revenue growth of 24%, boosted by new and extended arrangements with Ocado, Moonpig, and rail operators LNER, Avanti and GWR. The company is also developing travel retail opportunities with WH Smith locations.
Meanwhile, Warehouse Wines, its value-focused range, delivered £1.8m in sales in its first full year – a 484% increase on the previous period. Virgin Wines said the offering was helping it reach more price-conscious consumers while using its existing infrastructure.
Operational initiatives included continued efficiency gains in its warehouse and customer service teams, as well as work on a mobile app expected to launch in the second half of 2026. The company is also reviewing how artificial intelligence can improve internal systems.
Jay Wright, chief executive of Virgin Wines, said: “During the year, we delivered a resilient performance, with revenue in line with the prior year against a market that contracted and with profits being ahead of expectations, despite a challenging consumer backdrop and significant cost pressures.
“Having launched our new growth strategy, we remain confident we are well-positioned to deliver against our medium-term targets. With a resilient and loyal customer base, a growing range of appealing propositions, and exciting initiatives such as the launch of our mobile app, we remain confident in meeting market expectations for FY26.”
For the current financial year, Virgin Wines said trading remains in line with market expectations, with first-quarter customer acquisition up 29% and Warehouse Wines revenue rising 134%.
