Adnams reports dip in turnover for first half of 2019

Adnams has reported half year losses to June 30 rose to £783,000 from £557,000 in the previous year, but beer volumes grew for the first six months of 2019. 

The Suffolk-based brewer and retailer said turnover dipped to £34.7 million from £35.5 million for the same period.

Jonathan Adnams, chairman, said: “The last few years have seen substantial change and considerable investment in the Adnams business as we have positioned ourselves in crowded and rapidly changing markets. The last, and vital, plank of this investment has been renewal of our core systems, the previous system having been in place for towards thirty years.

“Against this backdrop turnover was slightly lower than in 2018 and the half year operating loss rose from £557,000 to £783,000 as we needed to increase costs to deal with the business change.

“Our new system went live at the end of March and has unarguably been a major distraction during the past half year. However, the process of change is easing, and we are starting to be able to remove the additional costs required to facilitate and embed our new processes.

“For its size Adnams is a complex business selling a large variety of products in many different ways through many different channels. This makes our system needs relatively onerous and the process or change particularly challenging.

“Adnams beer volumes were ahead of the market for the first six months of 2019, showing an increase of 2% against a market fall of 1%. 

"We have been particularly pleased by the success of our low alcohol product, Ghost Shop 0.5%, which we launched a little over a year ago. Ghost Ship 0.5% meets the fast-growing demand for low alcohol drinks. 

"Gin volumes were down in the first half of 2019. We noted in our 2018 accounts that the UK has seen a huge boom in small distilleries in the last few years and the market has fragmented as new flavours of drink have been launched. Demand has continued to grow, but it has been spread over an ever greater range of products and producers and supermarkets are stocking fewer traditional gins as they cater for the ever-growing range of new flavours. We have launched special edition gin flavuors in 2019 with Orange and Sea Buckthorn in March and Lemon and Tamarind in June. 

"Recent trends in the drinks market have been towards premiumisation, healthy lifestyles, authenticity and experience. Adnams' strategy plays strongly to these trends. 

“Our shops performed an important role in helping to display our brand to a wider audience, in acting as a launch platform for our new products, and in providing a valuable sales channel through which we can directly sell product that we make or brand ourselves. The disruption from our new systems had some inevitable impacts on our bank debt which at June 30 was £21 million compared to £18.6 million on June 30, 2018.”

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