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Brewers expect a tough year

PUBLISHED: 14:33 29 April 2008 | UPDATED: 20:16 05 July 2010

Brewers face a “challenging and uncertain” 2008 because of dwindling consumer confidence and hikes in duty on alcohol, Southwold-based Adnams warned last night.

Brewers face a “challenging and uncertain” 2008 because of dwindling consumer confidence and hikes in duty on alcohol, Southwold-based Adnams warned last night.

The company gave an upbeat assessment of its performance in 2007 at its annual general meeting yesterday, but warned of tougher times ahead.

Adnams saw sales, profits and its share of the market rise last year, despite the introduction of the smoking ban, the poor summer weather and the rising cost of raw materials.

Turnover in 2007 stood at £47.3m, an increase of 2.8pc on the year before. Operating profit rose to £4.2m, up 2.6pc on 2006.

Jonathan Adnams, executive chair-man, told shareholders the company aimed to double its operating profit over the next five years.

“During the year we had to deal with the smoking ban, introduced in July, summer floods and poor weather, increasing costs of raw materials and declining consumer confidence since the autumn,” Mr Adnams said.

“In this difficult environment our robust performance is a testament to the strength of our brand, the quality of our people, our ability to innovate, and our track record of investing in the business to support future growth.”

Mr Adnams added that the firm was well-placed to capitalise on the growing consumer preference for environmentally friendly and ethical brands and goods.

“Adnams has credibility and a strong reputation in this market, not only for the innovative nature of our infrastructure renewal but also because of our products,” he said.

“Last week we were proud to launch East Green, the UK's first carbon neutral beer in 500-plus Tesco stores.

“Our wine portfolio is also something about which we are very proud with around 20pc of the range being either organic or biodynamic.”

Mr Adnams said that the company began 2008 “in a stronger position than ever” but the operating environment was now “more challenging”.

“Our brewing and brands business is holding volumes and growing market share, but the beer trade is being hit hard by declining consumer confidence made worse by the recent penal increase in duty rates,” he said.

Whitbread, the owner of the Beefeater, Costa Coffee and Premier Inn chains posted better-than- expected pre-tax profits yesterday as it said it was confident of growing the business through a consumer downturn. Whitbread's surplus of £210m from continuing operations for the year to February 28 represented a 26.3pc gain on a year earlier. It also said trading since the year end had been “encouraging”.

Chief executive Alan Parker said the Premier Inn budget hotel chain enjoyed a record year, ahead of plans to grow the business by 50pc to 55,000 rooms in the next five years.

The UK's biggest brewer, Scottish & Newcastle, will fall into foreign hands today after its £7.8bn takeover by rivals Heineken and Carlsberg.

Shares in the Foster's, John Smith's and Kronenbourg 1664 maker will be delisted after shareholders called time on more than 250 years of history by approving the deal in March.

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