Adnams aims to double turnover on spirits as it ramps up production

By Arabella Mileham

Published: 26 March, 2015

Suffolk brewer and distiller Adnams is aiming to grow its spirits business to around £7m in the next three years as it more than doubles production.

Yesterday the company released strong sales figures that saw a 37% increase in its spirits business, with overall operating profits up 14.1% and turnover up 9.1%.

Speaking to harpers.co.uk, chairman Jonathan Adnams said the £500k distillery expansion announced at the annual results will mark a large step up in production. The original copper distillery was built in 2010, and although running at maximum production, is struggling to keep up with demand, he said. It is adding two new still that will more than double production from 120k L to around 300k L per annum.

The spirits business currently contribute only £2.5m to the company's overall £66m turnover, but Adnams said it was a fast-growth area of the business. "The craft spirits market is developing very fast and we don't want to constrain ourselves at 120k L mark. We can see it as a much bigger opportunity for Adnams", he said. "If I can get it to £7m in the next three years, it would be a great add-on to the brewery business."

The Southwold-based company will concentrate on ramping up production of its existing lines, but is likely to release a 5-year old whisky before Christmas and 5-year old rye whisky during 2016. "There are more products coming down the line, but it is mainly about doing more of what we have already been doing," he added.

Spirits sales had been strong across retail, up 37%, with the company's Cellar and Kitchen retail shops providing the "baseload" for spirit sales over the last few years.

"The shops have been a great channel for spirits," he said. "They were accounting for around 50% of volume sales, but that is now growing to a wider base."

Adnams' Cellar & Kitchen store in Southwold is helping boost the retail side of the business, where sales grew 6% in 2013.

The company is intending to open two Cellar and Kitchen store in the next year to bring the total to 14, but Adnams said it was crucial to find locations that "ticked all the boxes".

"One thing we have learnt is that you have to take the time to find the right site.'That will do' is not the right answer," he added.

The company also announced yesterday it was investing around £7 in a new distillery. Although there will be some increase in production, the primary aim is to boost the company's flexibility and bring filtering and kegging in-house, with the installation of a new kegging line, bright tanks, filtration and centrifuge systems.

"At the moment we can only fill casks, the rest is sent elsewhere to be filtered and bottled, so this will enable us to fill kegs of craft beer, in returnable stainless steel, plastic and mini kegs," Adnams said. "It will enable us to be quicker in response to the market - when you are with a third party packer you are always in a chain with their other customers. But being in charge of your own destiny is great as it enable us to innovate more and produce things the market wants, and get to market quicker, as well as cutting costs."

In October, Adnams announced its operations director Karen Hester would join the executive board of directors from April.

Adnams has been brewing from its base at Southwold on the Suffolk coast for more than 140 years and produces a range of cask and bottled beers, which are available in pubs and supermarkets nationwide, in addition to its new spirits portfolio. It has a 12-strong chain of Cellar & Kitchen stores, as well as an estate of 70 pubs throughout East Anglia, a pub in London and two hotels.

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