January 27, 2009 8:40 am

Adnams warns after drop-off in trading

The increasing number of pub closures across Britain has forced Adnams, the Suffolk brewer and wine merchant, to warn on full-year profits.

Figures last week from the British Beer and Pub Association (BBPA) estimated that 39 pubs closed each week in the last six months of 2008, compared with a still high 36 pubs in the first half of the year.

Adnams sells almost all of its beer to pubs and bars, and warned that despite a “reasonably strong” Christmas period, tough trading conditions and fewer pubs meant profits for 2008 would be “substantially lower” than 2007.

Its sales of beer by volume dropped 6 per cent last year, though it said this was a better performance than the market generally.

BBPA figures estimated total industry sales volumes for ale fell about 8 per cent last year. The on-trade market, made up of pubs and bars, fell by about 10 per cent, it estimated.

Adnams said trading since August was weaker than anticipated and described the national on-trade as “exceptionally weak”.

“We’re facing two winters in the pub industry,” said Andy Wood, managing director. “The economic winter and the regulatory one.”

Beer sales have hit their lowest levels since the 1930s as the recession, the smoking ban and increases in alcohol duty have buffeted the brewers.

The industry has also warned that a mandatory code of conduct in the proposed Police and Crime Bill would further increase publicans’ costs.

By contrast, the off trade – including off-licences and supermarkets – has benefited from rising sales as consumers choose to stay at home.

Mr Wood said Adnams’ off-trade sales had improved as the brewer kept out of the alcohol price wars.

Adnams said its tied estate and hotels found trading in November and December, excluding the Christmas holiday period, especially tough.

“Increased cost has been incurred in recent months in providing support to some of our tenants,” it added.

Adnams also warned that the drop in sterling against the euro and the dollar had seriously eroded margins in its wine business.

However, it became the first leading brewer to say that it was holding its prices for all of 2009.

Last year Adnams rejected any change to its share structure following pressure from Guinness Peat, which built a stake of more than 5 per cent but at the time had only 2.5 per cent of the voting rights.

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