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Virgin Wines plans stockmarket flotation to capitalise as more wine drinkers buy online

Naked Wines says customers are continuing to buy wine online following the Covid-19 pandemic

Online wine retailer Virgin Wines today announced plans to float on the London Stock Exchange as it benefits from the growing appetite to buy online and to subscribe to food and drink deliveries.

The retailer, ranked Top500 for the first time in the 2021 edition of RXUK Top500 research, says it plans to grow the business by expanding its direct customer numbers, by building up its corporate and gift channels – and by expanding further into the craft beer and spirits market. 

The retailer aims to take more of an off-trade market that it estimates to be worth £2.4bn a year in 2020, at a time when more wine drinkers are opting both to buy online and to subscribe to food and drink products. It plans to join the AIM market on around March 2 and is reported to aim to raise about £100m. 

Virgin Wines customers can choose to subscribe to its WineBank or Wine Plan schemes, or to pay as they go. In the year ended June 30 2020, 73% of its customers opted to subscribe; by the end of 2020 it had about 169,000 active customers including 147,000 subscribers. Subscription, says the company, helps to drive high levels of repeat purchases, and it has a customer retention rate of 89% and a sales retention rate of 112%. It also works with corporate customers who use the company’s products as staff and customer rewards and sells wholesale to customers including train operators Avanti and LNER for sale on board trains – and plans to grow this area of the business in future. 

In the year to June 30 it introduced a beer and spirits range, and is developing a ‘beer box’ alongside a monthly gin subscription – and low and no-alcohol ranges. 

Virgin Wines says its open source wine buying model from a network of trusted winemakers and its ability to blend different wines to create exclusive wines mean it is able to offer premium quality wine at affordable prices. It says that it uses customer data and reviews to ensure that its wine range matches customers’ tastes. It uses both physical and digital marketing to recruit new customers and convert them into active customers. 

Virgin Wines chief executive Jay Wright says: “Virgin Wines is a distinctive, fast-growing direct-to-consumer retail business with a unique wine sourcing model and a loyal customer base. 

He adds: “We have enjoyed strong consistent growth recently resulting in the group delivering more than one million cases of wine to consumers during 2020. Underpinned by the strength of our customer proposition as well as the benefit of many positive consumer trends, we have a clear strategy to continue this growth over the coming years.”

The Norwich-based business employs about 180 people, at its headquarters and at distribution centres in Preston and Bolton. It was founded in 2000 by the Virgin Group before being bought by Direct Wines in 2005, where Jay Wright was appointed chief executive and Graeme Weir finance director in 2008. They started to focus on acquiring customers for its Wine Plan subscription scheme, turning the business from a loss-making company into a £35m turnover business in 2013. That year the two led a £15.9m management buyout, backed by Mobeus Equity Partners and Connection Capital. 

In the year to June 30 2020, the retailer turned over £56.6m and made earnings before interest, tax, and one-off costs (EBITDA) of £4.8m. In the six months to December 31, it turned over £40.6m (+55%), making EBITDA of £4.5m (+196%). 

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