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Wed 7th Oct 2015 - Black Sheep Brewery cuts losses in ‘bewildering’ beer market
Black Sheep Brewery cuts losses in ‘bewildering’ beer market: Yorkshire brewer Black Sheep, founded by Paul Theakston, has reduced losses as it battles to compete in a beer market that has ‘changed beyond recognition in four years’. The company saw sales rise 6% to £19,544,983 in the year to 31 March 2015. Pre-tax losses were £34,340, reduced from losses of £181,587 the year before. Chairman Paul Theakston said he was “bewildered and amazed at how much the beer market has changed in the last three or four years”. He said: “The model for the business we started all those years ago, three or four brands of beer into the on and off trade and taking advantage of the volumes available through the big pub companies, has now gone. With 1,400 or so small brewers taking a rapidly increasing share of the cask market with their duty pricing advantage and their wide range of interesting beers, the mid-sized longer-standing cask brewers compete with one hand firmly behind their backs. The regional brewers we all know and love are doing well, but mainly because of their skill in developing their long-standing tied estates. With no such estate to support us, we are at the sharp end of the need to change and adapt to today’s market.” Managing director Robert Theakston told shareholders in his annual report: “This has been another year of progression for us all at Black Sheep. It continues to be a mix of positive change and frustration in equal measure. We have succeeded in moving the business close to profitability, but not at the pace we had set out and hoped at the start of the financial year. Our total focus remains on getting the company back into profit but at the same time balancing the cash position against the need to drive hard towards our goals. I would once again like to thank you for your patience and support as we firmly believe we are on the right path for long term success. The year was one of two halves. When I stood before you at the AGM last September we were on budget. The trouble with our industry at the moment is that it remains very unpredictable, and the last six months of the financial year proved extremely challenging. Best Bitter, our biggest cask brand, has remained under pressure, and consumer spending has stayed cautious despite the noise that the economy was moving forward. A number of our key customers reported having a particularly challenging first quarter to this calendar year, the last quarter of our financial year. Despite all this we still managed to move our operating profit up to £148,000 and as you will see in the report ended the year with a small loss before tax of £34,000 which is a progression of £147,000 from the previous year. We continue to concentrate on product and channel of trade change to sell more profitable forms of beer. The cask market generally remains thinly profitable as margins continue to be squeezed by the ever growing number of micro brewers. It would be very easy for us to drop prices and increase turnover but we believe that is not the way forward for the business, and, as such, we have been focusing on controlling costs and managing the customer base. We have increased turnover this year by 6% to £19.5m. This is largely due to the growth in the off-trade which has moved to 33% of the overall business and we have achieved an overall improvement in our gross margin as a result of internal cost management. I know that you as a shareholder will be as frustrated as I am that we seem to be edging ever closer to profit, but as a team I feel we have all the tools to take the next step forward.”


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