Profits plunge at Adnams

Adnams has reported a £148,000 loss before tax for the six months to 30 June.

Half year operating profits at the Suffolk-based brewer fell from £1.2m to just £142,000 on last year.

"In the shorter term a dramatic downturn in consumer confidence, fuelled and sustained by the credit crunch and exacerbated by rising food and fuel prices, has had serious effects on the UK beer and pubs market," said Adnams chairman Jonathan Adnams.

"In particular, the shift in drinking habits from pubs to drinking at home has accelerated, the impact of the smoking ban is working its way through the system and an exceptional duty increase has contributed towards making the purchase of alcohol in the on-trade prohibitively expensive for some drinkers."

He added: "Beer sales are currently the weakest part of the pub trade and as Adnams sells in excess of 90% of its beer outside of its own pubs it is exposed to current conditions to a much greater extent than regional breweries owning large tied estates."

The brewer reported a drop in beer volumes of 6% — a decline predominantly seen in the last three months. But its hotel division has benefited from more people opting to holiday in Britain.

Adnams recently said it had put its expansion plans for its Cellar & Kitchen (C&K) retail shops on hold for the year.

It still expects to open 30 stores by 2012 but has cancelled plans to open three more shops at earmarked sites in Oxfordshire, the Cotswolds and on the south coast this year.

Instead it will focus on the 10 shops already in its estate, including its first London area outlet, which opened in Richmond this spring, and a flagship store due to open in Southwold in November.

"We see a difficult period ahead and intend to reflect this in the way that we manage the business and as a result we shall vigorously control our cost base," said Adnams.

"We shall slow down some of the expansion plans for C&K and manage capital expenditure in accordance with the prevailing economic conditions."