Adnams reports falling beer sales in H1

Adnams reports falling beer sales in H1

Ale brewer Adnams plans to start distilling its own vodka and gin as it looks to diversify amid tough conditions on the UK beer market.

Adnams will install a micro-distillery at its brewery in Suffolk, eastern England, before the end of the year. The brewer said today (19 August) that it plans to offer a range of hand-crafted gin and vodkas alongside its traditional beers. 

"We believe that we will be the only brewery in the UK distilling spirits and will be able to offer a product that we have prepared from grain to glass," said the firm. Gin and vodka from the new Copper House Distillery should be on sale in time for the Christmas period, it added.

Adnams' expansion into spirits comes as the firm continues to grapple with a shrinking UK beer market.

Volume sales of the group's namesake beer and other own-brewed brands fell by 6% for the first half of 2010, Adnams said today. The size of the UK cask ale market fell by 9% for the same period, compared to the first half of 2009, it said. The on-trade has proved particularly tough for beer sales.

"The beer and pub industry continues to be under considerable pressure both politically and economically," said Adnams. The group reported a slight slip in half-year sales, from GBP23.4m (US$36.5m) last year to GBP23.1m this year, and said it held up revenue by refusing to drop beer prices at its pubs.

Operating profits for the six months to the end of June slipped to GBP826m, from GBP922m a year earlier, hit by tough market conditions and also a poor performance at the group's fledgling wine retail business. Net profits fell more steeply, to GBP436m from GBP591m in the first half of 2009.