Profits at Berry Bros & Rudd have tumbled after the wine and spirits merchant was hit by inflation, a slowdown in US spirits consumption and a decline in the value of fine wines.
Operating profits excluding en primeur at BB&R fell by 77%, to £3.4m, while EBITDA slid by 51.2% to £10.4m in the 12 months ended 31 March 2024. Losses before tax and exceptional items were £1.2m down from a profit of £9.5m the year prior.
BB&R blamed “falls in fine wine prices, increased advertising and promotion investment and significantly inflationary pressures” for the dip in profitability.
“It was a turbulent year in the global fine wine and spirits markets, as well as in the luxury consumer goods sector more generally,” said BB&R CEO Emma Fox. “Global uncertainty and challenging macro-economic headwinds, coupled with a year of planned high investment for BB&R, resulted in an anticipated drop in EBITDA.”
BB&R took a minority stake in Cotswolds Distilling Company last April. It also joined forces with the Symington family to acquire Hambledon Vineyard in September 2023.
“Our business thinks and plans in generational timescales and therefore we have not let the market conditions deter us from investing in our future growth and capabilities,” said Fox.
Revenues excluding en primeur, meanwhile, fell by 3.3% to £246.0m. The fall was predominantly down to a sales decline Berry Bro’s & Rudd’s US spirits import business Hotaling.
It also booked a £4.6m impairment charge in relation to falling real estate prices in San Francisco, where it owns a distillery.
“Our USA business had a very challenging year,” Fox said. “Here, we faced large headwinds after two years of tailwinds a tough consumer economy in the USA, the post-Covid spirits boom halting, changing shopper habits, tight inventory management, and inflation.”
However, it was “a ‘game of two halves’ across the group portfolio”, with BB&R’s core fine wine & spirits business recording a low-digit increase in revenue (0.6%) year on year. “We grew customer numbers, particularly our collecting customers, and drove a greater frequency of purchase across the year, owing to strong campaigns,” said Fox.
BB&R’s premium spirits unit had also “performed well”, with its The No.3 London Dry Gin bucking category declines to grow revenues 10.3% year on year.
BB&R brands and UK distribution channels grew by 11.8%, with both BB&R and third-party brands seeing sales growth, Fox added.
Earlier this year, BB&R threw open the doors to its first ever dedicated spirits store, which is adjacent and physically linked to the brand’s physical home No. 3 St James’s Street.
Revenues from events hosted at No. 3 St James’s Street grew by almost 16% in the year to March.
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