Virgin Wines announces year-end trading update

By James Bayley

Published: 29 July, 2022

Online wine retailer Virgin Wines has maintained much of its lockdown growth thanks to a loyal customer base and subscription model.

This is according to Virgin’s year-end trading update, which sees the group outperforming the sector on several key indicators, including cost per recruit (£13.22), sales retention rate (91%) and profitability, delivering a 9.1% margin.

Despite widely documented headwinds, Virgin achieved 63% growth in revenue versus 2019 and a 136% increase in profit. This has resulted in market share growth from 6.1% in 2021 to 8.4% in 2022, according to industry benchmark IBISWorld.

READ MORE: Naked Wines profits warning sparks shares nosedive

Jay Wright, CEO at Virgin Wines, said: “The popularity of our unique consumer propositions, our low customer acquisition costs, our high levels of customer retention and the outstanding quality and value of our wines continue to give us great confidence for the future.

“Our growth, driven by a substantial pipeline of new partnerships to drive increased customer acquisition, will continue in a post-Covid world, and we continue to drive levels of profitability unseen elsewhere in our market sector whilst maintaining our gross margins despite the widely documented global cost pressures.

“Our disciplined approach to customer acquisition continues to generate strong returns on investment, and our wider strategy and business model continue to position us well to mitigate rising costs and to help us deliver against our growth plans.”

Following the exaggerated success enjoyed by online retailers during Covid-19, many businesses are prioritising subscriptions.

Last month Naked Wines announced its business had “fallen short” of its goal to convert new customers into loyal members of its ‘Angels’ subscription model.

The online wine seller benefited from an increase in wine purchases during Covid’s successive lockdowns.

Since then, however, greater economic uncertainty and volatile consumer sentiment have had a significant impact as countries emerge from lockdown and begin to feel the pinch from inflation.

Analysts have suggested that the fall is due to “poor customer acquisition” over the past 12 months, with a higher proportion of shoppers taking the introductory offer before cancelling their memberships.

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