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LONDON - The wine company's profits are plummeting as corporate and overseas sales fall off.

Predictions that consumers are now spending more time slumped in front of the television drinking, rather than out at the pub, have done little to help the performance of wine specialist Majestic Wine.

Meanwhile, corporate cutbacks on office parties and events have not just left staff and clients feeling deflated; they have also had a knock-on effect at the retailer, where profits have more than halved.

Majestic Wine reported a 55.8% fall in full-year pre-tax profits, weighed down by a £5.3m writedown in the value of its French business, Wine and Beer World. It also closed its depot in Calais after sales at its three stores in France dropped by 20% year on year, not helped by the strong performance of the euro against the pound.

This impairment charge notwithstanding, profits were still more than a fifth down on the previous year. Corporate frugality has left Majestic Wine management with a Champers-induced hangover, as the drink makes up 18% of the group's total revenue.

There is some good news. Its private customers have not been trading down on their purchases, with the value of the average bottle of wine rising from £5.98 to £6.35. The positive impact may be limited, how-ever, given its relatively small customer base in this market.

Can Majestic Wine regain its fizz? We asked Ben Stephens, managing partner at Stephens Francis Whitson, who has worked with drinks brands for 15 years, and Rory Teeling, planning director at DCH, who launched Valdivieso wine and works on Fuller's, for their views.

Ben Stephens managing partner, Stephens Francis Whitton

As an oenophile, I have watched Majestic's recent performance with interest - although no one should be too dumbfounded by its woes. After all, when a 150-chain retailer relies on three stores in France for the bulk of its profits, it has serious issues.

Now, I'm a customer of Majestic, but you wouldn't think so. It knows me nearly as well as my wife. What I drink, how much I will pay, where to stick the stuff if I'm out. And yet, week in week out, I receive emails as if I had never been into one of its stores before.

Compare that with its rivals: I take the cheap deals from Naked Wines because it makes recommendations based on what I bought last time; I go to the tastings at the Naked Grape, because it sends me enticing emails.

I punish Majestic for its failure to recognise my 'relationship' with it - and, it seems, I'm not alone. Majestic is not playing to its strengths. Its staff are great. It needs to use this asset more.

Majestic is losing its point of difference to its core audience, the private wine-buyer. We have too many alternatives and Majestic simply doesn't work hard enough to get my custom.

Remedy

• Get back to retail basics and work the catchment areas around stores. There are so many rivals doing it better.
• Use the data you have. It's not rocket science; you know what everyone buys, so why not tap into that?
• Majestic has a blog, and is on Twitter, but how about some good old offline customer service?
• Online is growing, up 16% year on year. It now accounts for 9% of sales. Seems OK, doesn't it? No! Majestic needs to work this channel harder.

Rory Teeling planning director, DCH

Majestic Wine - effervescent or hung-over? At first glance, its model looks sparkling: sector concentration, staff expertise and great value through volume-based sales. Yet even with all that, Majestic's profits are in steep decline.

Its fall from grace is due to assaults from all sides: corporate jollies have taken a real hit, the strong euro has made buying booze across the Channel as expensive as in the UK and sector competitors are creating high-value promotions that are attracting wine-lovers in their droves.

Supermarkets, too, are getting their acts together, and many are offering a wide range of low-cost plonk by the crate-load.

Majestic has not done itself any favours recently, either. The world of customer engagement is now one of closeness and belief. People have to know who you are and what you stand for, as much as what you stock and how you shift it. The main reason its offering is looking a bit flat is that consumers don't have a clear idea of what Majestic Wine stands for.

Remedy

• To avoid a continuing hangover, it's time to revisit Majestic's roots. Vintage Majestic meant single-mindedness: create an undeviating customer offering and stick to it.
• Communicate more. Use integrated activity to let consumers know more, not just about products and prices, but the brand's benefits. People need to understand what's in it for them if they do decide to have a relationship with you.
• Invest in relevant consumer promotions with a focus on loyalty, to attract greater online and offline custom.