Independent brewer sees profits fall by 19% last year in tough market place

One of the oldest independent brewers in the Greater Manchester area saw its profits slump by 19% last year.

Turnover at Robinsons Brewery in Stockport during the year ending December 2017 increased by 4.2%, to £71.2m. Meanwhile profit before tax fell by 19% to £3.1m.

Robinsons Brewery owns over 260 pubs and the year saw strong sales with further managed house openings and full year trading of recently invested sites.

There were higher overall operating costs and record levels of investment in tenanted and managed pub estates. As a result operating profits fell to £1.2m from £2.6m the previous year.

The family business said profitability was affected by a variety of internal and external factors.

Increased investment in 2017 affected profits but underlying performance remains strong with like for like in managed up 15.6 % and tenanted up 3.1%.

Robinsons has continued to invest heavily in the refurbishment of both its tenanted and managed estates, spending around £9.7m in 2017 on capital expenditure to improve the look, feel and longevity of their pubs.

During the year Robinsons completed the sale of 27 pubs and carried out significant investments at 31 pubs resulting in a revamped pub estate.

Managing Director of the pub division William Robinson said: “During the year, we substantially completed our disposal programme, which has created a strong platform from which we can invest for the future.

“We purchased three new pubs, two of which are now undergoing significant investment and we remain acquisitive for more pubs, in both tenanted and managed, to enhance our estate.

“Alongside this, we have continued to develop our pubs; completing over 80 significant refurbishments, investing in excess of £30.2m across our estate in the last three years, to improve these pubs for our customers, ourselves, and our licensees.”

Robinsons say the biggest challenge is increasing costs and taxation.

William Robinson said: “Beer Duty and business rate increases are a significant burden for both licensees, and ourselves, and we encourage the Chancellor in the forthcoming budget to increase his support for ‘physical retailers’, both pubs and the high street, by addressing the disproportionate and unfair taxation placed on them versus online retailing.

“In 2017, we paid £9.4m in Beer Duty. We are actively backing the BBPA ‘Long Live the Local’ campaign, encouraging our customers, staff and licensees to write to their MPs about the great work that British pubs do to support their communities, and the combined impact that Beer Duty and business rates have upon confidence and investment in the Great British pub.”

“Beyond these issues there’s increased competition and, of course, the potential challenges and opportunities that Brexit may bring. Thus, while the market conditions in which we operate in have been tough, our business is robust, and we are both optimistic and vigilant for the future.”

Managing Director of the Beer Division Oliver Robinson said: “Despite strong sales across all our business, margins continue to be challenging in all areas of the business as we continue to see above inflationary cost increases.

“We continue to work closely with our suppliers and customers to make sure where possible we minimise any increase to our very loyal customer base.”

“We operate in a challenging and competitive market, where customers want both value and quality, but we have adapted well to changes in brewing demand and styles as we reinvigorate our beer strategy and offer greater variety and choice for our customers.

“Trends in the beer market are dictating that a greater number of beers and styles are required to satisfy our customers and consequently an increase in 60-barrel brew lengths have been requested rather than the traditional 120-barrel brew lengths.”

“Over the past three years, we’ve also been working hard to implement an ambitious growth plan for Free Trade, Off Trade, Wholesale and Export – which appears to be paying off.

“Total volume in external sales again hit a new high with the increase in volume coming from the Off Trade and Free Trade. Own brands continue to grow and were supported by the joint venture we have with the Co-op.

“Trading proved more challenging in national sales due to a nationwide decline in the cask beer market and some historic customers focusing on their own brands rather than supporting a portfolio of guest ales. Export also proved challenging in what has become a crowded market.”

“We are evolving with the market and our craft beers such as Beardo and Mojo are proving a great conduit to expand our portfolio within the Off Trade and helps us drive our core packaged brands.

“The outlook for 2018 is in many ways similar to 2017: we will continue to invest in the long-term success of our business whilst looking to maximise returns through operational efficiency.”