Pre-tax losses at Innis & Gunn jumped by almost a third last year, as the Scottish brewer felt the impact of ballooning energy costs and other supply chain pressures.
The Edinburgh-headquartered brewer recorded an operating loss of £1.2m for the year ended 31 December 2022, up from £859,000 in the corresponding period the year prior, according to documents filed at Companies House.
Gross profits also fell by 9.6%, to £5.4m, a factor Innis & Gunn blamed on “cost pressures that have hit the supply chain”. It said it was attempting to correct course with a “focus on margin and product range”.
The cost of energy was cited as a significant factor in the brewer’s growing losses.
“Energy costs impacted the whole group and significantly increased cost pressures on the business, an implication that continues to carry on into 2023,” director Dougal Sharp wrote in the company’s accounts. “We are working with energy brokers to mitigate these increases as much as possible and provide some certainty to the business by agreeing fixed contracts.”
In a bid to improve margins, Sharp said Innis & Gunn had “executed a forensic review of each product line” to ensure it “not only enhanced the brand, but also that it provided a strong margin return”.
The company had also increased its prices and increased investment at its brewery to reduce “reliance on third parties” for production and packaging, Sharp said.
Turnover increased by 3.1% to £19.9m (2021: £19.3m). Sharp said this was “largely driven by the return of the UK on trade to normal trading”.
“Despite external challenges that were felt across the whole Industry, the group grew revenues by 7.7% through a combination of measures resulting in volume growth, sales price per hectolitre growth, and hospitality sales growth,” he added.
Citing NIQ data, the company said it had maintained its position as “Scotland’s number one craft beer brand” in the off-trade by value.
It hailed the value of a “strong programme of marketing activity”, NPD including a Islay Whisky Cask variant produced with Laphroaig and consumer events such as the Royal Highland Show in helping it to reach new consumers “across the UK and internationally”.
Looking ahead, Sharp warned Innis & Gunn’s “attention on margins and costs must be ever more acute”.
“A prolonged economic downturn could also exert pressure on the company’s margins. Increased production costs, fluctuating commodity prices, and supply chain disruptions may further impact profitability,” he added.
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