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Adnams: an arrow in the heart

Added: Tuesday, March 19th 2024


You can tell things are getting serious when Adnams says it has financial problems and urgently needs fresh investment.

A threat to the future of any brewery is worrying but, for me, the case of Adnams is an arrow in the heart. The first piece I ever wrote for What’s Brewing was about the Suffolk brewer and I have followed its growth and success ever since, with regular visits to its idyllic seaside home in Southwold.

That article was about not only Adnams but also Tolly Cobbold, based in Ipswich. Tolly at the time was the biggest brewer in Suffolk – much bigger than Greene King – and it had a shocking reputation for its beer.

After a quick tour of the brewery and a glass of keg ale in the visitor centre, I hurried on to Southwold where I was introduced to the joys of Adnams Bitter and Broadside. Over the years that followed, Tolly Cobbold changed hands several times and went out of business in 2002.

In contrast, Adnams blossomed. A new, environmentally-friendly brewery was built. Its beer became widely available and Ghost Ship, now its leading brand, is for my money one of the finest cask ales on offer.

But now the company has financial problems – problems that are symptomatic of those facing all regional, family-owned and small independent brewers.

Last month Adnams said it was “looking at options to bolster its finances” and it needed an injection of private capital. It added that its problems were the result of “significant inflationary pressure on labour, energy, raw ingredients and borrowing costs” with the added complication of weaker consumer demand.

The major cause of the problems was a 25 per cent decline in sales of cask beer since 2019 and the impact of the Covid pandemic and pub lockdowns. As a result, its operating losses in the first half of the last financial year rose to £2.4 million. Its shares fell by 50 per cent and their value dropped by almost two-thirds.

A glimmer of hope comes in its report of improved trading this year but there’s clearly a long and slow road to recovery. Adnams won’t go out of business – it’s too big and respected for that to happen. It’s call for help will be met and let’s hope it won’t be in the form of hedge funds or investment companies looking for a quick buck with some asset stripping thrown in for good measure.

The brewery runs 45 pubs, inns and other properties and it might be tempting for the wrong sort of new investor to say that some of that real estate should be sold to help pay off the debt.

Ghost Ship

It’s been said many times in these pages that the government must take urgent action to save both pubs and breweries but help doesn’t come. A report last month said that as many as 100 London pubs could stop trading this year unless they get help with energy bills that have gone through the roof.

They also need help with business rates and VAT.

And both pubs and breweries need not a freeze in excise duty but a steep cut in the tax on draught beer. Pubs are shackled and lose out to supermarkets as a result of the ever-increasing price of draught beer.

The supermarkets claim back VAT on alcohol and in effect pay no tax. It’s a scandal and it makes a mockery of what is laughably called the “free market” and fair competition.

This affront to fair play has been pointed out many times by Sir Tim Martin, the boss of Wetherspoons. Recently knighted, he has rather more clout than me, but the government turns both a blind eye and the other cheek and takes no action to close these glaring loopholes.

And so the mayhem goes on. Adnams is struggling, Elland Brewery, in spite of winning yet another award for its 1872 Porter in CAMRA’s champion winter competition, has gone into liquidation.

And to rub salt into the glaring wounds, Heineken has reduced the strength of John Smith’s Bitter “to encourage moderation”. Did you hear a horse laugh? The truth is that Heineken will save several million pounds a year in duty: scarcely an exercise in moderation.

Will the Chancellor help pubs and breweries in this month’s Budget? I’m not holding my breath. His government seems more intent on committing collective suicide than running a viable economy.

Against the odds, I trust and pray that Adnams will pull through. I look forward to my next trip to Southwold, re-phrasing the words of the former Poet Laureate John Masefield as I travel:

“I must go down to the sea again/To the lonely sea and the sky/And all I ask is a Ghost Ship/And a beer to steer me by.”

First published in What’s Brewing, March 2024.