Merrydown doubles soft drinks investment

Drinks group Merrydown has warned that profits will be hit this year because of increased spending on its Shloer soft drink range.

The brand increased sales by 47 per cent in the year to March 31 because of trade and consumer promotions.

The company plans to more than double the amount being spent on marketing the Shloer range this year, with TV and press advertising, price promotions and more sampling campaigns.

It has stepped up its targeting of pubs with a new sales team, who have already gained listings for the 275ml format.

But chairman Andrew Nash warned that the increased marketing would hit profits for the year to 2002 before giving a kick to growth the following year.

"The full benefits of this investment should be realised in the year ended March 31 2003, but there will be some impact on profitability on the current year," he said. "We are determined to take a long-term view."

Merrydown reported today (May 23) that annual pre-tax profit rose 41 per cent to £1.05m and turnover was up 12 per cent to £17.6m.

The business has been through a shake-up over the past three years after the failure of Two Dogs alcopops, and is focused on Shloer and Merrydown cider.

Its cider range, which includes Merrydown Vintage and Merrydown Classic, remained profitable despite "a difficult background of a cider market that declined in the year".

Mr Nash said: "The challenge is to react to these difficult market conditions and create a sound basis to realise the brand's long-term potential. The response to the recent cider trading conditions has been to focus on retaining Merrydown's existing customers while protecting profitability with a focus on operational efficiency and rigorous cost control."