Robinsons Brewery, one of the oldest independent brewers and pub operators in the North West, owning over 260 pubs, has increased its turnover during the year ending 31 December 2017 by 4.2%, to £71.2m. Profit before tax fell by 19% to £3.1m.
The year saw strong sales with further managed house openings and full year trading of recently invested sites, coupled with higher overall operating costs and record levels of investment in tenanted and managed pub estates, as a result operating profits have reduced to £1.2m (2016: £2.6m).
Against a backdrop of landmark developments – including the launch of a brand-new beer with Iron Maiden and Help for Heroes, Old Tom being named World’s Best Designed Beer following an innovative rebrand, the embryonic growth of the managed estate, and a strategic disposal and investment programme to transform their pub profile – Robinsons plan to continue their long-term tradition of ploughing their profits back into the business.
The family business from Stockport, who recently celebrated their 180th anniversary, explains that profitability has been affected by a variety of internal and external factors. Increased investment in 2017 impacted on bottom line, however underlying performance remains strong with like for like in Managed up 15.6 % and tenanted up 3.1%.
In line with their strategy, Robinsons has continued to invest heavily in the refurbishment of both its tenanted and managed estates, spending around £9.7m in 2017 on capital expenditure to improve the look, feel and longevity of their pubs. In 2017, Robinsons completed the disposal of 27 pubs and carried out significant investments at 31 pubs resulting in a totally transformed pub estate.
Managing Director (Pub Division), William Robinson (pictured left), commented, “During the year, we substantially completed our disposal programme, which has created a strong platform from which we can invest for the future. We purchased three new pubs, two of which are now undergoing significant investment and we remain acquisitive for more pubs, in both tenanted and managed, to enhance our estate.
'Alongside this, we have continued to develop our pubs; completing over 80 significant refurbishments, investing in excess of £30.2m across our estate in the last three years, to improve these pubs for our customers, ourselves, and our licensees. Although there is still a lot of work, and a long way to go, we have a clear vision and a solid strategy for both our tenanted and managed pubs.”
Robinson continued, “In addition to our long-term strategy to invest in our pubs, to ensure we maintain the high standards we are setting, we will also continue to develop our exceptional licensee support package, be that through projects such as the Greener Retailing research project we carried out in association with The Centre for Enterprise at MMU, the group purchasing arrangements we have created over the past 10 years, the apprenticeship and training programmes we have developed to support our licensees, digital innovation to drive loyalty and footfall, or more recently the review of the role of our Business Development Managers. These are all intended to support sustainable growth for the future prosperity of the company.”
One of the biggest challenges Robinsons, and their licensees, face is increasing costs and taxation (both direct and in-direct). These are predominantly being driven by external factors, such as the Apprenticeship Levy, the increase in the National Living Wage, higher business rates and food inflation, Auto Enrolment, and the inflation in Beer Duty.
Roninson said, “Beer Duty and business rate increases are a significant burden for both licensees, and ourselves, and we encourage the Chancellor in the forthcoming budget to increase his support for ‘physical retailers’, both pubs and the high street, by addressing the disproportionate and unfair taxation placed on them versus online retailing. In the year 2017, we paid £9.4m in Beer Duty.
'We are actively backing the BBPA ‘Long Live the Local’ campaign, encouraging our customers, staff and licensees to write to their MPs about the great work that British pubs do to support their communities, and the combined impact that Beer Duty and business rates have upon confidence and investment in the Great British pub.
“Beyond these issues there’s increased competition and, of course, the potential challenges and opportunities that Brexit may bring. Thus, while the market conditions in which we operate in have been tough, our business is robust, and we are both optimistic and vigilant for the future.”
Robinsons remain encouraged by the progress they have made with their brands and the continued success of their partnership with Iron Maiden and the Trooper brand. The extension of which led to the creation of Light Brigade; a unique golden English ale developed in support of Help for Heroes, the British charity that provides recovery and support for the Armed Forces community whose lives are affected by their service. 6p of each pint and 5p of each bottle sold will be donated to help the thousands of Servicemen and women who live with complex wounds and injuries – both physical and mental – to regain their purpose in life.
Managing Director (Beer Division), Oliver Robinson (pictured right), commented, “Despite strong sales across all our business, margins continue to be challenging in all areas of the business as we continue to see above inflationary cost increases. We continue to work closely with our suppliers and customers to make sure where possible we minimise any increase to our very loyal customer base.
'We operate in a challenging and competitive market, where customers want both value and quality, but we have adapted well to changes in brewing demand and styles as we reinvigorate our beer strategy and offer greater variety and choice for our customers. Our range of excellent quality beers won no less than 20 esteemed awards in 2017 and our brew house had its busiest year since we opened it in 2012.
'Trends in the beer market are dictating that a greater number of beers and styles are required to satisfy our customers and consequently an increase in 60-barrel brew lengths have been requested rather than the traditional 120-barrel brew lengths.”
Robinson continued, “Over the past three years, we’ve also been working hard to implement an ambitious growth plan for Free Trade, Off Trade, Wholesale and Export – which appears to be paying off. Total volume in external sales again hit a new high with the increase in volume coming from the Off Trade and Free Trade. Own brands continue to grow and were supported by the joint venture we have with the Co-op.
'Trading proved more challenging in national sales due to a nationwide decline in the cask beer market and some historic customers focusing on their own brands rather than supporting a portfolio of guest ales. Export also proved challenging in what has become a crowded market.
“We are evolving with the market and our craft beers such as Beardo and Mojo are proving a great conduit to expand our portfolio within the Off Trade and helps us drive our core packaged brands. Our seasonal beers offer us range and variety and our “White Label” beers offer a point of difference to our tenanted, managed and free trade cask customers. Our own range of craft keg is evolving but our focus remains on our core cask brands.
“In addition, our bespoke wine range has yet again set a high standard nationally with more awards won in 2017 for its collective range than any other wine supplier nationally.”
Robinson concluded, “The outlook for 2018 is in many ways similar to 2017: we will continue to invest in the long-term success of our business whilst looking to maximise returns through operational efficiency. We are committed and prepared for many more generations of family brewing and pub ownership and our investment strategy should be seen as a sign of that.”