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Wine suppliers face pressure on margins while sales rise

The new figures show that average sales revenue for small wine suppliers rose from just under £1.3m in 2023 to almost £1.5m in 2024. 

However, these businesses only generated an average of £2.61 for every pound spent on inventory last year, compared to £5.61 in 2023 – a drop of nearly 54%.

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The figures were published by inventory management software provider Unleashed as part of its report on the performance of the UK’s food and drinks industry. The data from suppliers in seven grocery categories showed that average total sales jumped almost £2.1m in 2024. This represented a 17% uplift on the previous year, driven by a spike in sales in Q3. Drinks companies on their own also recorded impressive results, with average sales up 76%, from £708,000 to £1.25m. 

However, the research also suggests that manufacturers, wholesalers and retailers are still feeling the squeeze on margins, even after the high inflation of 2022/23 subsided. 

They generated an average of £2.07 for every pound spent on inventory last year, compared to £2.61 in 2023. 

Joe Llewellyn, general manager of ERP Small Business at The Access Group, the parent company of Unleashed, said: “The strong sales performance seen last year across all categories is a sign that the UK’s small drinks manufacturers are adept at tapping into the public’s appetite for new food experiences. 

“This was evident in the wine industry, which enjoyed an uplift of more than 14%. However, the squeeze on margins could be a cause for concern. This year margins will be front of mind for many, and our analysis showed that lead times have crept up, which supply chain managers will no doubt be eyeing carefully. 

“In this environment, tight inventory control will be a big help in ensuring small firms have the cash flow to stay ahead in a competitive market – by investing in product innovation, marketing and sales.”

Category performance: How does Wine compare?

Of the six drinks categories analysed, four recorded positive sales performance across 2023/24, including wine (see table 1).

Spirits led the way, with an increase of 171% – the equivalent of £1.559m in sales.

When it comes to average annual return on inventory (table 2) however, wine fared the worst with a drop of more than 53%.

Table 1: Average annual sales per category 

Table 2: Average annual return on inventory (GMROI)

Dan Pope, host of Hungry, a podcast aimed at challenger food and drink founders, highlighted challenges facing the sector.

“It’s the tension between cost-of-living and brand survival. Consumers have less to spend and will switch to own-label for some items. Brands are becoming more expensive as they’re having to put through price increases to stay in the green and retailers aren’t wanting to accept cost price increases. It’s the perfect storm,” he said.

• margins
• wine sales
• Revenue
• wine suppliers
• spirits sales