Drop in profits for Direct Wines

By Harpers Editorial team

Published: 05 April, 2013

Direct Wines has reported a slump in profits as it invested in overseas expansion and software while domestic sales dipped.

Sales in the UK fell by 2.4% to £244.7 million in the year to June 29 2012, while overseas sales grew 15.8% to £107.9 million and now account for 30% of Direct Wines' turnover. Pre-tax profits fell 43.1% to £6.6 million.

In the US sales grew by 18% and the company enjoyed strong support from business partners the Wall Street Journal and Zagat, while Virgin Wines continued to grow steadily.

Sales in Asia-Pacific grew by 21% as its partnership with The Australian performed well, Virgin Wines became established and core brand Laithwaite's Wine People grew substantially, said founder and chairman Tony Laithwaite in the company's annual report published at Companies House.

Direct Wines also entered the Indian wine market by acquiring a minority interest in the Wine Society of India.

"We did marginally better than our forecast but of course would rather profits had not dipped this year. However, we had to face the fact that if we are to continue our successful overseas expansion it was essential we keep abreast of all the remarkable recent developments in online marketing techniques and systems," he said.

"This big investment in and focus on software was needed to bring our basic model bang up to date and an equally large investment in pushing our overseas businesses into earlier profitability stretched our resources a little this year," he said.

The software investment led to the launch of Laithwaite's Recommends, which lets customers add and remove wines from their wine plans. It also recently launched an iPad app.

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