Majestic Wine says the fizz has gone out of the champagne market as business customers cut back.
Half-year pre-tax profits fell 25.5% to £5.6m ($8.79m), with champagne sales down 6.4% on the same period last year.
Chief executive Steve Lewis said when times were tough "people don't want to be seen drinking champagne as much".
However, Majestic said total sales rose by 3.4% to £94.1m, with sales of fine wines to private customers up by 2.9% compared with last year.
The firm said that in the past five weeks, like-for-like sales, which strip out sales from new stores, were down 4.7%. It said it expected Christmas trading to be "challenging".
Mr Lewis said: "I think that customers have not had a lot to celebrate over the past six months, and business customers have not been doing as much entertaining."
The weaker pound, strong euro, and rising fuel costs also led to a sharp decline in sales and profit in Majestic's operations in France.
One bright area was online sales, which were up by 11.5% on the year before.
Majestic Wine's shares were down 8.7% after the results - its shares have lost half of their value this year.
The retailer said it had introduced 60 new products in the run up to Christmas, including an increased number of sparkling wines.
It said it would be focusing on wines from Chile, New Zealand and Bordeaux over the holiday period.