Virgin Wines has stated that the majority of its cost pressures this year have stemmed from government policy, including an alcohol duty overhaul and a bottle tax.
The online wine retailer informed markets that profit before tax fell by five per cent to £1.6m in the 2025 financial year, despite revenue remaining flat, as reported by .
Chief Executive Jay Wright highlighted "a challenging consumer backdrop and significant cost pressures" as factors behind the profit decline, with a comprehensive restructuring of the alcohol duty system and a new sustainability levy called Extended Producer Responsibility both mounting pressure on Virgin.
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"The significant cost pressures facing the industry remained over the course of the year, most of which were driven by government policy," Wright said.
From February 2025, wines have been subjected to an escalating tax scale for every additional 0.1 per cent of alcohol, replacing the previous flat rate system.
The outcome is that the "vast majority" of wines now face a higher level of alcohol duty, Virgin said.
Likewise, the sustainability levy has imposed a cost of approximately 10p per bottle, whilst an increase in the National Living Wage and higher National Insurance contributions have elevated labour costs.
Gross product margin dropped from 37.6 per cent in 2024 to 35.6 per cent in 2025, Virgin said.
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The company said the "subdued consumer environment" has "made it difficult to pass on these inflationary cost pressures to customers through price increases". Its share price experienced a slight increase of just over two per cent in early trading.
Inflation concerns rise
Inflation has been on a steady rise over the past year, escalating from 2.3 per cent during the month of Rachel Reeves' inaugural Budget to 3.6 per cent over the summer.
Companies such as Virgin have openly expressed their concerns about the impact of increased Labour taxes, with sectors like retail and hospitality witnessing a decrease in investment and a slump in recruitment.
Consumer confidence is also wavering, with Britons even contemplating reductions during the crucial Golden Quarter, encompassing Black Friday, Christmas and Boxing Day.
According to PwC's latest Consumer Sentiment Survey, nearly nine out of ten Brits are now expressing concerns.
Over four fifths of respondents to PwC's survey indicated that the rising cost of everyday items is a worry, a slight increase from the summer and higher across all demographic groups since the beginning of the year.
Concerns that the late-November budget will exert additional pressure on businesses and consumers are starting to dominate news headlines, with economists divided over which taxes Reeves will target as she attempts to bridge a £25bn shortfall in the nation's finances.