Wine retailer offers City a refreshing sup

After an exhausting week of financial mayhem, the City probably needs a long drink. Luckily, Majestic Wine is well positioned to offer such services. The wine retailer continues to make good progress in a difficult market, with a new site opening in Oxford shortly, bringing the total estate close to 150. Management choice of location should help protect margins, as its outlets tend to be off the high street where rents are lower. But the environment is tough. Its customers have had to swallow wine prices increasing 10 per cent thanks to increased duty, supply constraints and a strong euro. Continued tough trading conditions are likely to drive supermarkets into more aggressive promotions. While UK wine consumption is expected to grow this year, shares remain fairly valued, trading on a 2009 forward price earnings multiple of 11.5 times, a 10 per cent premium to the sector.