The turbulence in the fine wine market and wider macro-economic landscape saw revenues at the UK’s oldest fine wine merchant fall by 3.3% on last year and EBITDA slide by 51.2% – but investment rose as CEO Emma Fox said the company looked to its “future growth and capabilities”.
Group turnover for Berry Bros. & Rudd in the 12 months to 31 March 2023 fell by 3.3% to £245.98 million (excluding adjustments for en primeur), according to the documents filed at Companies House, down from £254.28 million in 2023, while the company also recorded a loss before tax and exceptional items of £1.2m down, from a profit of £9.46m the previous year (or £19.59m in 2022).
CEO Emma Fox wrote it had been “a turbulent year” in both the global fine wine and spirits as well as the wider luxury consumer goods sector more generally, coming at a time of high inflation, high interest rates and falling prices. “Global uncertainty and challenging macro-economic headwinds, coupled with a year of planned high investment for BB&R results in an anticipated drop in EBITDA,” she said in her report section of the financial records.
US declines
EBITDA before exceptional items was recorded at £10.08m, a 51.2% slide from the previous year (£20.67million), but the core fine wine and spirits business in the UK and Asia performed well “with a low digit increase” in revenue, Fox said. The ultra-premium spirits segment had also performed well, she said, across both the UK and US, with BB& R brands and UK distribution up 11.8%, and the third-party brands also in growth. En primeur also saw growth of
Customer numbers – particularly customers who collect fine wine – rose, and there were also more frequent purchases, she said.
However performance on the other side of the Atlantic showed a different story, she noted. The US business had a challenging time fighting the “large headwinds” evident in a tougher consumer economy, she argued, followed two years of tailwinds, and there was a sales decline in the American spirits import business, Hotaling, indicating that that “the post-Covid spirits boom” has well and truly halted.
Distributors were reporting lower operating profits and “unpredictable consumer behaviour”, which had led to heavy destocking and larger declines in shipments and depletions, Fox said. Overall, this had contributed to a 51.5% decline in the EBITDA and lower operating margins.
However, Fox pointed out that BBR had “not let the market conditions deter us from investing in our future growth and capabilities”, and that £27m had been invested in new technology and business ventures that will drive revenue and brand awareness or “diversify income streams”
Brand investments rose from £10.33m in 2023 to £15.12m, which had charged through profit and loss, the documents showed.
Chair Lizzie Rudd said the business had “adapted to the challenges posed by tough market conditions, high inflation and interest rates” while continuing to push the boundaries “of what it means to be the most trusted fine wine and spirits merchant in the world”, growing, adapting and innovating the business “when many of our competitors are scaling back”.
She pointed to the company’s minority stake in Cotswold Distillery, which was acquired in April 202, as well as its partnership with Symington Family Estates in acquiring England’s oldest commercial vineyard, Hambleden Vineyards just over six months later.
“We expect the market challenge of the past year to persist over the next twelve months, in an industry that has not seen stability in some time. Despite this, we have made a reasonable start to the financial year and I am confident that the group’s strategy and sound financial footing makes us well-place to make the most of the opportunities that inevitably arise from such times.”
As a result, a dividend of 1310p per share was issued (640p in Oct and 670p to be paid out in Jan 2025) which the company said reflected the “sustainable underlying growth in the business”.
“The underlying positive performance of this year, in spite of the challenging market conditions is a direct result of the talent, dedication and commitment of our employees past and present,” Rudd added.
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