Adnams has reported a 12% (to £962,000) increase in its operating profits, alongside plans to invest £7m in its brewery, and £0.5m in its distillery.
The Southwold-based business which has both a pub estate and drinks production business, said its trading in the six months to 30 June 2015 had been affected both by the increased competition from craft brewers, and the changing structure of the pub market it supplied. Turnover was down 3% at £29.1m, which it attributed in part to the closure of two of its large managed properties for refurbishment. Own beer volumes were down by 5% after last year’s 18% increase.
Chairman Jonathan Adnams said that he believed the business had been successful in reading and reacting to industry trends: 'We have noted in previous reports that large managed house operators have become more important both to us and to the market as a whole. This creates some inevitable volatility in our volumes as these businesses rotate their offer.
'The beer market continues to evolve very rapidly as new products are launched, numbers of small producers continue to increase and consumer tastes change, inspired by the range of beers now available. This has created more challenging times for classic English beers like Adnams Bitter, however it has also created opportunities for our own new products.'
Ghost Ship beer had been a recent success story, he said. The substantial investment in the company's brewing operation will allow it to add needed capacity and flexibility. On the distilling side, Adnams Longshore Vodka recently won the International Wine & Spirits Competition’s vodka trophy, while Copper House Gin took the gin award. Strong gin demand means the distillery is currently operating at capacity, however the new investment is set to double capacity and improve efficiency.
Adnams also said it had sold three pub properties in the last six months, and converted two of its key outlets, the White Horse at Blakeney, and the Ship at Levington, to managed houses.
'We will continue to keep a strong property portfolio, however the shape of our business is moving towards our becoming a modern branded drinks company,' added Adnams.