Virgin Wines latest UK firm to announce LSE IPO

The company is likely to have been boosted by a shift in consumer behaviour as people shopped online during Covid

Virgin Wines is the latest startup to announce plans to float on the London Stock Exchange (LSE). It plans to go public around 2 March, reportedly valuing it at £100m ($140m).

The company sells “award-winning and largely exclusive premium wines” through its WineBank and Wine Plan subscription schemes as well as on a PAYG basis.

Chief executive Jay Wright said: We have enjoyed strong, consistent growth recently resulting in the group delivering more than 1 million cases of wine to consumers during 2020. We have a clear strategy to continue this growth over the coming years.

The company is likely to have been boosted by a shift in consumer behaviour as people shopped online during the pandemic.

Virgin Wines operates two main subscription schemes, which together accounted for approximately 73% of its core wine revenue for the year ended 30 June 2020.

Virgin Wines had approximately 169,000 active customers as of 31 December 2020, out of which around 147,000 were subscription members.

Its subscription schemes help drive high levels of repeat purchases, it explained, "demonstrated by a customer retention rate of 89% and a sales retention rate of 112% in the year ended 30 June 2020."

The current total “addressable, off-trade market” for wine specialists such as Virgin Wines was estimated to be approximately £2.4bn per annum in 2020, it said.

This market “is anticipated to be buoyed by consumer trends that include an increasing shift toward premiumisation in the alcoholic beverage market, consumers increasingly purchasing alcohol online, and increasing consumer spend on 'Food & Drink' based subscriptions,” it added.

Liberum Capital Limited is acting as nominated adviser and sole broker for the company's IPO.

Virgin Wine's IPO "is a clear indicator of the ecommerce market's ongoing growth, particularly in the food & drinks sector, with Deliveroo also gearing up to float next month," noted Charles Bond, partner at Gowling WLG law firm.

We are seeing an encouraging increase in new enquiries for floats in London, both from domestic and international businesses, and it seems investors are now ready to engage fully with the capital markets again, he added.