European Expansion And Digital Channels Will Open Future Markets

Key Takeaways

• Expansion through acquisitions and digital platforms positions the company to diversify revenue and capture shifting consumer preferences toward e-commerce and direct sales channels.
  
• Sustained investment in sustainability, proprietary brands, and operational efficiency supports premium pricing, brand differentiation, and margin improvement over time.
  
• Heavy integration costs, geographic concentration, and shifting consumption trends threaten Viva Wine Group's margins, revenue stability, and long-term profitability following the Delta Wines acquisition.

Catalysts

Develops, markets, imports, and sells wines.

• Viva Wine Group's significant expansion into new European markets through the acquisition of Delta Wines, and continued M&A ambition, positions the company to benefit from operational leverage as they scale and diversify revenue streams, likely leading to sustained top-line growth and progressively improved earnings over time.
  
• The company's strong and expanded digital B2C platforms (Vicampo, Weinfurst, Wine in Black), now present in 11 markets, make it well-placed to capitalize on increasing consumer preference for e-commerce and direct-to-consumer channels, supporting greater customer reach and stabilizing or accelerating revenue growth.
  
• Ongoing investments in sustainability initiatives and eco-friendly packaging (with 73% of 2024 volumes sold in low-climate-impact packaging) enhance Viva's alignment with rising demand for sustainable and organic wine offerings, potentially allowing for premium pricing and higher gross margins over the medium to long term.
  
• Strengthening of proprietary brands and unique product ranges, alongside focused marketing and professionalization investments, is expected to drive brand differentiation, margin expansion, and elevation of customer lifetime value-improving net margins as these operational investments mature.
  
• Enhanced operational efficiency, targeted cost control, and anticipated realization of synergies (particularly from Delta Wines integration) should support margin recovery as one-off integration costs roll off and operational scale effects play out-positively impacting EBITDA and overall profitability.

Viva Wine Group Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Viva Wine Group's revenue will grow by 16.3% annually over the next 3 years.
• Analysts assume that profit margins will increase from 3.7% today to 4.3% in 3 years time.
• Analysts expect earnings to reach SEK 297.4 million (and earnings per share of SEK 3.34) by about September 2028, up from SEK 163.0 million today.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 17.1x on those 2028 earnings, down from 21.1x today. This future PE is lower than the current PE for the SE Beverage industry at 23.1x.
• Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Viva Wine Group Future Earnings Per Share Growth

Risks

• The acquisition of Delta Wines has lowered Viva Wine Group's overall gross margin due to Delta's structurally lower margin profile, and management guidance suggests that total group margins will continue to be suppressed as Delta gets more fully consolidated, which may limit long-term net margin and earnings growth.
  
• There is heavy reliance on a few key geographic markets, especially the Nordics and Germany, where wine consumption volumes declined year-on-year (and are threatened by ongoing shifts, such as Finland's gradual move toward supermarket wine sales), increasing exposure to regulatory and localized demand downturns and thereby reducing revenue stability.
  
• B2C sales in core markets are fragile and have displayed very soft consumer sentiment with only marginal organic growth; in the context of broader demographic shifts toward lower alcohol consumption and interest in substitutes among younger generations, this poses a risk to long-term revenue growth and market share.
  
• Increased operating expenses (OpEx), including both one-off integration costs and ongoing marketing/professionalization investments, have weighed on adjusted EBITDA, and any failure to realize anticipated operating synergies or margin improvements post-acquisition could impair medium-term profitability and net margin recovery.
  
• The company's elevated net debt-to-EBITDA ratio after the Delta Wines acquisition (even on a pro-forma basis around 3x) increases financial risk, as any future profit stagnation, rising interest rates, or unforeseen shocks could constrain Viva Wine's ability to fund growth initiatives, pay dividends, or weather industry volatility, thereby impacting long-term earnings and shareholder returns.

Valuation

• The analysts have a consensus price target of SEK50.0 for Viva Wine Group based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK7.0 billion, earnings will come to SEK297.4 million, and it would be trading on a PE ratio of 17.1x, assuming you use a discount rate of 4.9%.
  
• Given the current share price of SEK38.8, the analyst price target of SEK50.0 is 22.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.