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Profits fall despite booming wine sales

Published:  23 July, 2008

Britain's retail and wholesale wine merchants have seen profits and margins fall since 1999 despite a boom in sales, claims a report released last week. Over the last three full accounting years, growth in sales, improving efficiency and a reduction in debt have been combined with declining profitability,' states the Business Ratio Wine and Spirits report. Research undertaken by industry analysts reveals compound growth of 8% for the industry as a whole (wholesale, retail and importers) for the three-year period 1999-2002. Mulberry Wines, Ringadrink and Beverage Brands reported the highest sales increases (97%, 72% and 66% respectively) of the 148 companies surveyed. However, the average pre-tax profit margin fell from 4.5% in 1999/2000 to 3.3% in 2000/2001, although it rallied in 2001/2002 to reach 4.1%. Bottom of the pile came the struggling retail chain Unwins, which recorded a margin of -0.6%, despite sales rising 9% in the period. The Thresher Group's turnaround was also recorded, with pre-tax profits for last year put at 31.5 million, compared with multi-million pound losses in the previous years. However, due to the restructuring of the group and the increased emphasis on the premium market, sales dropped by 9%, to 1.1 billion. Diageo headed up the profit margin table with a 16.8% pre-tax margin for 2001/2002, although sales growth dropped by 2%. Leading the field when it comes to compound sales growth were Bacardi-Martini and Berry Bros & Rudd (29% and 13% respectively). For a copy of the report (275), contact the Prospect Shop on 020 8481 8720.