Strong spirits performance boosts Adnams sales

By Lisa Riley

Published: 23 March, 2017

Adnams has reported a 7% jump in annual sales boosted by a particular strong distillery performance in addition to healthy brewery growth.

Spirit volumes at the Suffolk-based brewer were up a stiff 66%, with beer volumes growing 9% - record levels for both parts of the business, in the 12 months to 31 December, 2016.

Spirit volumes benefitted from investment in the distillery and the tripling of capacity that was put in place at the start of 2016, and growth had been strong across all channels, including supermarkets, pubs and the company's own shops, said the business.

Overall sales grew 7% to £70.3m, but operating profit declined 3.8% to £3.9m depressed by the depreciation of Sterling in the second half of the year, said chairman Jonathan Adnams, adding the business had "substantial" Euro and US Dollar costs relating to wine and hop purchases.

Underlying trading however was "good", with the family-owned company's shops trading well, said Adnams, adding 2016 was a "record brewing" year for Adnams with volumes passing the 100,000 barrels mark for the first time in its history.

Profit before tax at £5m was 23% ahead of 2015 driven mainly by the profit Adnams made on the sale of the UK distribution rights for Lagunitas craft beer to Dutch brewer Heineken.

Adnams said that while it remained committed to being a "major" cask ale producer, it was the sale of beer in kegs, bottles and cans that drove and increased production in the past year.

Those changes emphasised the importance of the investments in its brewery, which would be completed by the middle of this year, said Adnams.

"We will have spent about £7m on extensions and improvements that will give us beer conditioning and filtration capacity, enhanced cooling and an automated kegging line," he said.

Looking ahead, it remained to be seen what would happen following Brexit, but Adnams' focus would continue to be on the longer term, and the business was "investing accordingly", said Adnams.

On the back of the company's confidence in the underlying performance of the business and the growth it had seen, it recommended a 4.2% increase in its final dividend - an increase of 6p per 'B' share.

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