- Premiumisation and provenance are driving consumer demand, with Virgin Wines investing in exclusive, small-batch collections and co-created wines
- Value-conscious consumers remain a priority, as seen in the success of Warehouse Wines and smaller pack sizes
- Strategic partnerships, such as a recent deal with Ocado, and digital upgrades are crucial to secure long-term growth
The road back to profitability has proven challenging – but ultimately rewarding – for Virgin Wines, the UK’s leading direct-to-consumer online wine retailer.
After a company-wide cost-cutting programme that netted annual savings of GBP1.4m (US$1.9m), aligning with the streamlining of its operations and the launching of several new customer propositions, Virgin Wines is looking to make 2025, the company’s silver jubilee year, a memorable one.
In the company’s most recent set of results, covering the last six months of 2024, pre-tax profits rose 20% to GBP1.3m, while customer acquisition jumped by 29%. Moreover, sales during the key December Christmas trading period surged 9% year-on-year.
This solid performance follows on from pre-tax profits of GBP1.7m for the 12 months to the end of June 2024 – a notable turnaround from the GBP700,000 loss recorded in the previous financial year.
Virgin Wines CEO Jay Wright attributes the negative performance in fiscal 2023 to temporary “teething issues” implementing a new warehousing system. “Our biggest focus moving forward is achieving our five-year growth plan, which means reaching GBP100m in sales with a 7% EBITDA margin over the next five years,” he reveals.
Four pillars of progress
The company plans to achieve this target by concentrating on four strategic areas: further customer acquisition, developing more commercial partnerships, growing Warehouse Wines (the company’s budget-friendly sub-brand selling wines under GBP10), and, finally, completing the development of a new mobile app.
For Wright, one obstacle to Virgin Wines achieving these targets is the UK Government’s recent decision to alter the country’s alcohol duty regime, which has led to increased taxes on a bottle of wine of up to GBP0.54, depending on its alcohol content.
“This is a sector-wide issue,” he admits, “but we are mitigating the impact through our unique open-source buying model, as well as benefiting in the short term through pre-paying duty on stock ahead of the change, leveraging our strong balance sheet.”
Leveraging clubs
Central to Virgin Wines’ recent diversification strategy has been the launch of Warehouse Wines, which by the end of last year had already attracted 17,600 customers. In as price-sensitive a market as the UK, where inflation and faltering economic growth have sapped consumer confidence in recent years, this has proved to be a smart play.
At the other end of the price spectrum, Virgin Wines has been leaning heavily into premiumisation through its Vineyard Collection and Five O’Clock Somewhere (5OS) Wine Club. The former showcases small-batch wines made from Virgin Wines’ own vineyard plots in Australia, England, France and South Africa.
Through this move, Virgin Wines is transforming from a wine retailer into a co-creator – curating exclusive products that align with evolving consumer expectations around provenance, craftsmanship and authenticity.
“This project has been our most ambitious venture into bespoke winemaking, allowing us to create a selection of wines made from Virgin Wines’ very own vines across the globe,” says Wright. “It’s been an incredibly exciting initiative for our team, one that reflects our passion for crafting high-quality, distinctive wines that our customers can’t find anywhere else.”
The relaunched 5OS club is another initiative aimed at wealthier consumers. The offer features “renegade” small-batch wines crafted by winemaker Steve Grimley and his team in Australia’s renowned McLaren Vale winemaking region.
Wright says the response to the relaunch has been fantastic, with almost 2,000 members joining, gaining early access to each new release. “We’re continuing to expand the 5OS range, and customer feedback has been overwhelmingly positive,” says Wright.
Despite all these innovations, WineBank remains the beating heart of Virgin Wines’ business. With over 126,000 members, the retailer’s core subscription-style scheme accounts for the lion’s share of its sales. Customers earn 20% interest on their deposits and enjoy perks like free delivery – an attractive offer, especially as wine inflation continues to pinch.
Expanding reach through collaboration
If cost-cutting has got Virgin Wines back on its feet, strategic partnerships are expected to power its next phase of growth.
Chief among these is the company’s partnership with Ocado Retail, the UK’s only dedicated online supermarket, announced last October. For the first time, 55 Virgin Wines are listed as individual bottles available alongside customers’ weekly shops. Previously, Virgin Wines operated exclusively through multi-bottle case sales. The tie-up represents both a major change in format and a canny distribution move.
“Ocado’s model aligns well with our direct-to-consumer [D2C] approach, as both are built around convenience, personalisation and a strong online customer experience,” says Wright. “By partnering with Ocado, we’re able to extend our reach to a wider online audience that values quality and curated selection; core principles of our D2C offering.
Virgin Wines has also extended commercial partnerships with Moonpig, a UK e-commerce site selling personalised cards, flowers and gifts, as well as UK train operators, such as London North Eastern Railway, Avanti and Great Western Railway. These collaborations have allowed the company to expand into the gifting and travel retail sectors, channels where convenience and premiumisation often intersect.
Lighter bottle pledge
Virgin Wines is also stepping up its sustainability agenda. In 2023, the retailer joined the Sustainable Wine Roundtable (SWR) – a collaborative global platform promoting sustainable practices across the wine value chain. As part of this initiative, the group has agreed to meet the SWR’s goal of reducing 75cl bottle weight to 420g by 2026.
Virgin Wines is also making progress with sustainability in other areas of its operations. “Currently, 45.35% of our products are shipped in bulk through Greencroft Bottling, a BRC Grade AA+ facility known for its sustainable practices,” says Wright. “Across our sites, we operate strict recycling protocols, with 0% of waste going to landfill. In 2024 alone, 175 tonnes of waste were recycled or redirected to energy recovery.”
Celebrating 25 years in style
Virgin Wines is marking its 25th anniversary in 2025 with a year-long celebration. The company was founded in 2000 by UK entrepreneur Richard Branson’s Virgin Group before being acquired by Direct Wines five years later. In 2013, Wright partnered with Mobeus Equity Partners and Connection Capital to complete a management buyout.
Silver jubilee festivities include a commemorative range of 12 exclusive wines – among them, a red grape-only champagne and a premium Argentine malbec.
Despite its recent wins, Virgin Wines faces challenges moving forward. Sales in its most recent financial period were flat, and the wider global macroeconomic backdrop remains turbulent. Yet steady progress is being made. The company has recalibrated its business model, doubled down on digital infrastructure and is navigating post-pandemic consumer realities with a more nimble, curated approach.
“Over the past 25 years, the wine industry has seen major changes,” says Wright. “We’ve seen a shift toward more premium wines, lower-ABV options and the growing popularity of trends like Dry January.
“Through it all, we’ve stayed true to our unique approach; putting the consumer at the heart of everything we do.”
