Virgin Wines plans expansion following management buyout

Virgin Wines plans to grow its turnover from £35m to £50m in the next five years following a management buyout completed yesterday.

It was announced yesterday morning that Mobeus Equity Partners and Connection Capital have supported a £15.9 million management buyout of the online retailer from Direct Wines, led by Virgin Wines CEO Jay Wright along with CFO Graeme Weir and marketing director Paul Adams.

Speaking to the drinks business a few hours after the news broke, Wright, who was 2013’s db Man of the Year, said he would now be able to grow the business “independently”.

“We want to grow the business at the rate that we and our investors would like, and we want to be over £50 million in the next four to five years,” he said.

Virgin Wines was founded in 2000 and acquired by Direct Wines in 2005, reputedly for just £1.

Wright, who had previously built mail order wine business Warehouse Wines, before selling it to Direct Wines in 2002, took over the management of Virgin Wines in 2008 and merged it with Warehouse Wines in 2009.

Wright told db that Virgin Wines was not making money at the start of 2008, but had been profitable since his involvement, and last year made £2.2 million on a turnover of £35m.

Jay Wright (centre) was named Man of the Year 2013 by The Drinks Business

However, he said he’d been speaking to parent company Direct Wines about making Virgin Wines independent since February this year because he wanted to invest further in the retailing brand, but Direct Wines were focused on financing other ventures.

“Direct Wines are focused in the UK on investing in its own family brand, Laithwaites, and in continuing the company’s overseas expansion, and I wanted the investment to go into Virgin,” he said.

As a consequence, Wright added, “I felt we could do a bigger and better job if we were independent.”

Meanwhile, Direct Wines agreed to a management buyout because, Wright explained, “It would raise finance to invest in their strategy.”

He also pointed out, “I started my own business and sold it to Direct Wines, so to take it back out feels like I’ve come full circle.”

He said he plans to continue to grow Virgin Wines by continuing to recruit new customers and stressed his belief in the future for online wine retailing in the UK, noting that the sector is growing 10% annually.

Aside from selling more cases of wine to an increasing number of consumers, Wright said he also hoped to expand the “gift business” for Virgin, because “no one is doing the Champagne and wine gift business really well at the moment”.

He also said he sees an opportunity for Virgin in the corporate market, pointing out that there “is a lot of business” in corporate events.

Wright assured db that there would be no change in staff at Virgin Wines, commenting that the management buyout “was a good thing for the people in the business”.

Virgin Wines currently sells over 600,000 cases of wine annually to 150,000 customers in the UK.