Majestic Wine is to stockpile more than 1m extra bottles of wine from France, Spain and Italy as part of its emergency planning in case there is no Brexit deal by March.
The retailer said it would increase stock levels in UK warehouses by £5m-£8m early next year “in order to mitigate any potential supply chain Brexit disruption in March 2019”. This equates to 1m-1.5m extra bottles of wine from EU countries.
The company normally holds £100m of wine and sees the increase as a precaution to ensure it can keep selling European wines if border checks cause lengthy transport delays following the UK’s departure from the EU. Majestic said it has enough warehouse space to accommodate the extra bottles.
Rowan Gormley, the Majestic chief executive, said: “We feel highly confident that no one will miss their Sunday lunch tipple as a result of Brexit.”
Drugmakers, food and car manufacturers have started stockpiling goods in response to Brexit uncertainty. AstraZeneca, Sanofi and MSD are building up extra supplies of medicines, while Aston Martin and Bentley are stockpiling car components. Aston Martin has said it will fly parts in if needed.
Britain is running out of food warehousing space, as businesses build up emergency stocks. The owner of Cadbury’s, Mondelēz International, is stockpiling ingredients, chocolates and biscuits in case of a no-deal Brexit. Premier Foods, which owns Bisto, Oxo and Mr Kipling, and Ornua, the Irish company behind Kerrygold butter and many cheddar cheese brands, have also unveiled plans for stockpiling. Premier Foods expects to spend £10m on Brexit preparations.
Majestic, which owns the Naked Wines website, warned of a tough market, with consumers under pressure from the rising cost of food, fuel and other essentials. Like other retailers, the company is also being affected by a fall in the value of the pound, uncertainty around Brexit and higher business rates.
Majestic has been selling more Hungarian, Bulgarian, Slovenian and Portuguese wines to customers looking for cheaper alternatives to French and Italian varieties after a 6% rise in prices in recent years.
Gormley said that sales of English sparkling wines were up 35% but German Riesling was also selling well this year as buyers were willing to be “slightly more adventurous”.
The company made a pre-tax loss of £200,000 in the six months to 1 October, compared with a profit of £3.1m a year earlier. The worsening financial position was partly caused by increased investment in marketing and the Naked Wines website. Revenue rose 5.4% to £229m.
Gormley said: “We were planning for tough times and we’re investing through tough times because we know that’s the route to a more profitable future. As a result, we now have a business that is almost 45% online and over 20% international.”
He said the long warm summer had boosted sales of beer and rosé but this had been offset by a shift away from heavy red wines so that Majestic had not enjoyed a boost from the weather in the same way as some pubs.
