Businesses are leaving champagne on the shelf and opting for cheaper sparkling wines that are more in keeping with the austere economic times, according to Britain’s biggest wine warehouse.

Majestic Wine said yesterday that a plunge in champagne sales had cut a quarter from first-half profits. The decline was led by companies, as champagne bottles remain firmly sealed across corporate Britain in the wake of the credit crunch.

Steve Lewis, the chief executive of Majestic, said: “Customers have not had a lot to celebrate over the past six months and business customers have not been doing as much entertaining. In these straitened times, companies need not only to look after costs, but to be seen looking after costs.”

Sales of champagne fell by 6.4 per cent, a factor in cutting pretax profits for the six months to September 30 by 25 per cent to £5.6 million. Other sparkling wine, meanwhile, was 16 per cent up. Spending on prime bubbly plummeted farther in the five weeks to November 3, as consumer confidence ebbed away.

Majestic said that it expected Christmas to be challenging. Many companies, including big investment banks, have scaled back or cancelled their Christmas parties. The number of private companies that are not providing a Christmas party for staff has increased by about 50 per cent this year, according to the Chartered Institute of Personnel and Development.

Majestic was saved from the downturn last year by a surge in sales of fine wines. Following last year’s increase in top-end wines, sales of bottles priced at more than £20 increased by 10.7 per cent. The chain plans to open a dedicated fine-wine section in 53 of its 144 stores in Britain.

However, wine drinkers’ increasingly sophisticated palates did not save Majestic from a 2.1 per cent decline in overall like-for-like sales, even though the total, which includes new stores, rose by 3.7 per ent to £94.1 million. The average price of a bottle of wine increased from £5.85 to £6.19 and average spend increased from £128 to £135.

Majestic believes that, because many of its customers are aficionados, it will be insulated from customers’ trading down when shopping at the general retailers.

Shares in Majestic Wine closed down 10¼p, or 7 per cent, at 137¾p.

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