Wine's Budget beating
Majestic Wine's remarkable resurgence is a fine example of the industry's innovation and drive - so why is the trade still being punished by government? Plus: what I've been drinking this week
The British wine industry is still smarting from the beating it received in last week’s Budget. The Chancellor remains committed to bringing in Rishi Sunak’s mad, ludicrously bureaucratic changes to alcohol duty in February, and she announced that for good measure, duty on wine and spirits will also rise by the Retail Price Index (currently 2.7 per cent, forecast to be 3.65 per cent early next year). Miles Beale, Chief Executive of the Wine and Spirit Trade Association, described the hike as “a real kick in the teeth for both businesses and consumers”.
One of the ironies of this treatment is that the British drinks industry is the kind of innovative, outward-looking business sector that ministers profess to love. Nowhere is this clearer than in the resurgence of the UK’s largest specialist wine retailer, Majestic.
Majestic has grown its online sales – now more than 20 per cent of its total – at the same time as opening more bricks-and-mortar stores. Earlier this year it committed to opening one new store per month over the next few years. In April this year it moved into wine bars by acquiring Vagabond Wines, with the aim of targeting a younger demographic: the self-pour chain currently operates nine bars. It also has an on-trade arm, Majestic Commercial, with 3,000 gastropubs, bars, restaurants, hotels and events venues as customers. And last week it announced a partnership with app-based delivery network Just Eat: initially at 43 of its stores, customers will able to order on-demand deliveries of wine within 30 minutes.
But what’s interesting amid such innovations is the continued importance for a majority of customers of physical, in-store wine purchases. Overall, only 4.5 per cent of UK wine sales by value are made online, down slightly from an upward blip during the pandemic. That’s far behind both clothing and household goods, where more than a quarter of UK sales are now online, and less even than food (nine per cent online). Majestic CEO John Colley sounds comfortable declaring that “experiential, bricks-and-mortar retailing is at the heart of what we do.”
This is what Majestic started out doing, and indeed some of my happy first experiences in buying wine by the case were at its Greenwich store in the late 1990s. This was the era when, among other things, Majestic pulled a neat trick in managing to buy up a load of mature claret from the Swedish Systembolaget booze monopoly, giving cash-strapped younger drinkers like me an affordable introduction to proper Bordeaux.
It's also remarkable that Majestic should today find itself in this robust position (pre-tax profit in 2022/23: £13.7 million) after a near-death experience in the past decade as it tried and failed to transform its online strategy.
In 2015, the company merged with much smaller web retailer Naked, with the rationale of improving its online offer. Majestic’s then-chairman Phil Wrigley gushed at the time that “this acquisition will significantly accelerate the planned development of Majestic’s online capabilities.” It didn’t work out that way: Majestic effectively allowed itself to be taken over by the smaller company.
Naked’s CEO Rowan Gormley persuaded Majestic to pay £70 million for his company, which had made a £3.3 million loss in the previous financial year; he then personally trousered Majestic shares worth almost £13 million over three years under the terms of the deal. He took over as CEO, with Naked’s Finance Director James Crawford likewise replacing Majestic’s CFO. Majestic’s range deteriorated rapidly. Gormley then proceeded to asset-strip the company, announcing in 2019 that stores would be sold off and that it would be concentrating on online sales via Naked.
It's hard to see how Majestic could have been quite so naïve. South African Gormley had a track record of rubbish online ventures. He was a protégé of 90s British capitalism’s shyster-in-chief, Richard Branson, founding Virgin Direct – later Virgin Money – in 1995. Gormley then started Orgasmic Wines, which in 2000 became Virgin Wines when it was bought into by his old boss; he and other Virgin Wines employees left to form Naked in 2008. And Naked’s business model has always rested on a marketing gimmick: customers pay £25 a month to become “Angels” supposedly helping small producers, in exchange for “wholesale” (actually average retail) prices for mostly pretty average wines.
Fortunately Majestic was saved when private equity firm Fortress Investment Group bought the bricks-and-mortar business in December 2019; its online operations have since been rebuilt too. Meanwhile Naked, of whom Gormley is still Chairman, is in deep trouble. Its sales tumbled nearly 20 per cent last year, contributing to pre-tax losses of £16.3 million for the 12 months to April 1 2024.
This example of the survival of Britain’s biggest chain of physical wine shops offers proof of the enduring popularity for wine consumers of being able to discuss their purchases in person. I’ve written before about the role of the personal advice factor in the fortunes of small independent stores. Majestic doesn’t offer quite the same experience: for a start, although its range is big, it inevitably can’t stock many of the wines produced in tiny quantities by smaller producers that forward-looking independents specialise in.
Majestic does, however, have a long record of investing in its staff’s wine education - indeed it has trained a whole generation or two in the UK drinks retailing industry who came in as graduates. All staff are educated to at least Wine and Spirit Education Trust Level 2, and most managers hold a Level 3 or a Diploma. Staff sat more than 500 WSET exams in 2023/24. This helps them offer a very different experience to the supermarkets. There is a tasting counter in every store, with a rotating line-up of wines, as well as paid-for tasting events and bespoke tastings for events such as weddings.
Majestic has also benefitted simply from its staying power in a brutal high-street retailing environment. “There is a ‘last man standing’ aspect,” says industry commentator Robert Joseph. “Majestic is the only national retailer with a broad range, good delivery, [free] ice and glasses.” All the national off-licence chains have gone now, the rump of the last, Oddbins, finally going bust last November. Richard Siddle, editor of industry publication The Buyer, adds: “Majestic is capitalising on its monopoly as the UK’s only multiple specialist drinks retailer.” But he warns, “It would be wise not to take its eye off its online offer, which needs constant additional investment and resources if it is to fulfil its position as a multi-channel operator.”
Which brings us back to the immediate challenges presented by last week’s Budget. Majestic has said the cost of the new red-tape-clogged duty system, based on half-per-cent alcohol increments, will be an initial six-figure investment to create the new systems required to track products and changes in ABV. It says the ongoing cost of the additional administrative work will then stretch to six figures annually.
With Conservative wheezes like this unchanged, and the Treasury’s ongoing treatment of the drinks industry as a cash cow – never mind last week’s National Insurance hike for employers – you can forgive the wine trade for wondering if they have any friends in politics at all. We will have to hope that the trade’s ingenuity and passion for wine – from Majestic to small independents – somehow wins out.
Some current Majestic wines worth trying:
Reynecke Vinehugger Chenin Blanc 2022, Western Cape - bright, expressive fruit with nice texture and weight from one of South Africa’s leading Chenin producers. Amazing value when bought as one of six bottles (£11.99; £7.99 mixed six.)
Definition by Majestic “Viña Majestica” Rioja Reserva 2018 - all of the wines I’ve tasted from Majestic’s Definition range are decent but the Rioja, made revered traditional producer La Rioja Alta, is excellent: rich, spicy fruit and a bit of age. Good value (£14.99; £12.99 mixed six.)
Domaine des Tourelles Cuvée Pierre Brun 2020, Bekaa Valley - Faouzi Issa’s wines from Lebanon’s Bekaa Valley are a joy: sweet, spicy fruit with beautiful balance and structure (£14.99; £11.99 mixed six.)
Definition by Majestic Sauternes 2014 - a very classy sweet wine made by one of Sauternes’s best non-classed producers, Château Haut-Bergeron. Classic, luscious, complex Sauternes with lovely acidity and balance. Good value for one with this much bottle age (half bottle, £12.99; £10.99 mixed six.)
What I’ve been drinking this week
Tetramythos “Kyrenia” 2023, PGI Achaia - Tetramythos is one of the Peloponnese’s most exciting producers. This is made from Roditis, one of the most common white grapes in the western Peloponnese and Ionian islands, but from two organic plots at 840 metres. Perfumed yet herby and savoury and wonderfully fresh (Cork and Cask, Clapton Craft, from £18.95; Cellarhand Wine Shop, reduced to £14.75.)
Vinos del Viento Garnacha Old Vines 2021, Campo de Borja - I’ve written elsewhere about Californian Michael Cooper’s amazing high-altitude, old-vine Garnachas - they’re really worth seeking out. This is Garnacha in a fresher, lighter style than is traditional in this Aragón denominación and in many other Garnacha strongholds, yet it’s complex and long too (Oxford Wine Company, Wall2Wall Wines, £14.50.)
Domaine Duclaux Châteauneuf-du-Pape 2017 - this mature Châteauneuf is good value on offer from Roberson: rich, spicy fruit, powerful, deep and long (Roberson Wine, currently £24.31, reduced from £37.)
Transparency declaration: two of the Majestic wines I mention were free samples.