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Cost price inflation drives Off-Piste Wines turnover growth
UK wine supplier and brand owner Off-Piste Wines saw turnover grow by around 24% in 2023, largely driven by cost price inflation and the sales price increase, while operating profit fell.
According to accounts filed at Companies House, turnover grew to £60.1m in the year to 31 March 2023, up from £48.3m last year, however the company said this feat was due to the increase in sales prices due to ongoing cost price inflation across the supply chain. This was evident from the rise of gross profit of only 9.2% to £8.978 million, up from £8.223 million the previous year, while gross profit margin fell by 2.8% year-on-year.
Meanwhile operating profits also grew from £3.608 million last year, up 17% to £4.240 million, driven by organic growth and part repayments of customer debts, the company statement said, as well as lower exchange rate losses.
The director’s statement noted that although it had delivered growth, “there have still been elements of our strategy that we have had to pause of slow this year, but which we hope to move forward in FY24″.
Headwinds that it cited included the new alcohol excise duty regime that came into effect in August 2023, which was “likely to be damaging for wine” it said. Not only will duty go up on wines with an ABV higher than 11.5%, but the duty rise is compounded by the inflation- linked duty increase. Meanwhile, pricing across the supply chain had been impacted by the ongoing conflict in Ukraine, while low growth and high inflation in the UK had reduced consumer spending power. Furthermore shipping was still operating with lower reliability than in pre-pandemic times, but higher costs.
On the bright side, there was a “significant” increase in international sales, after the company pivoted to new markets in the wake of the Ukraine invasion and its decision to close its Russian market. Turnover in the UK rose by nearly £10million, up from £43.948 million to £53.876 million, while European sales grew from £4.048 million to £5.245 million, while rest of the world also more than trebled, from £340,000 to £1.030 million.