Majestic Wine sales ‘worthy of a raised glass’, says analyst

Growing numbers of wine drinkers willing to spend more than £20-a-bottle have helped independent retailer Majestic to insulate itself from a supermarket price war in the UK.

Majestic reported sales of fine wine up by 20% in the year to the end of March, to £18.7m. It puts a minimum price of £20-a-bottle on fine wine, although a six-bottle minimum purchase rule applies.

The retailer benefited from refocusing its fine wine portfolio on classic regions such as Bordeaux and Burgundy, aimed at consumers looking to treat themselves at home.

That strategy helped it ‘hold its own’ in a UK grocery market that has witnessed intense price battles – including on wine – between the major supermarkets since the beginning 2014.

Majestic’s total sales crept up by 1.4% versus the previous year, to £278.2m, although like-for-like sales flatlined.

The retailer was forced to issue a profits warning in March. But, net profits still rose by 1.6% for the 12 months, to £17.6m.

‘The headline numbers from Majestic may not set Champagne corks popping but in the context of a highly competitive market they are certainly worthy of a raised glass, or two,’ said Neil Saunders, managing director of Conlumino financial analyst group.

But, he added, ‘It was disappointing that Majestic only managed to attain 5.8% growth in online sales across the year. In our view, this should be a great deal higher.’

Majestic declared itself pleased with its online sales performance. It also outlined plans to increase its number of physical UK stores from the current 206 to 330, although it provided no timeframe.

The retailer also claimed to account for nearly half the sales of all Provence rose wine in the UK by value, having seen its own sales of Provence rose jump by 84% for the year.

Written by Chris Mercer