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Spirits business and retail outlets drive strong profit growth at Adnams

Published:  24 March, 2016

Adnams, the Suffolk-based brewer, distiller and retailer, saw profits rise 7.3% in 2015, despite flat sales growth.

Profits were up to £4.1 million from £3.8 million in 2014, with spirits volumes up a massive 39% year on year.

The company attributes the flat sales both to tough trading in the first six months of 2015, and the temporary closure of two of its key hotel properties for a number of months in the early part of the year.

Beer sales at the company were slightly down on 2014, reflecting the ongoing challenges in the on-trade but in-line with long-term trends.

Adnams is well placed to take advantage of the concurrent trend towards take home in the beer sector through its range of retail outlets.

It added one new store - in Bury St Edmunds - to its portfolio last year, as well as a pop-up shop in Ipswich during the Christmas trading period.

It has plans in the pipeline for two new openings in 2016, one in June and one in the autumn. Details have yet to be announced.

"The retail business is in its third year of profit and last year saw record sales which are now making a big contribution to the bottom line," chairman Jonathan Adnams told Harpers.

"The shops are hugely important to us; they have revolutionised the whole business.

"They act as a launch-pad for innovation in the product reage and offer us direct customer feedback and engagement which is vital."

The company has invested £0.5 million in its distillery operation and has a number of launches planned for this year.

"We see craft vodka as a growing category, and we are launching a rye vodka in around six weeks," Adnams said, "with a gin that incorporates it later in the year.

We will be releasing our first five-year old whisky in June - we are just getting to the point where we have aged whisky in reasonable quantities."

Adnams has positioned itself well to profit from the boom in UK gin manufacture, having launched its spirits business ahead of the curve in 2010.

"We set up the spirits business primarily with gin in mind, and its been flying off the shelves for us," Adnams said. "We believe we have one of the best micro-distilleries in the UK, and we're one of the few UK gin producers to also distill our own base vodka.

"It's a fragile business to be in, in some ways, but if you get the offer right, and the products right and the innovation right, and you have the right kind of conversation with your consumers, there is every opportunity to do well."