Brewer Adnams Expresses Lack of Positive Support from Labour Amid Growing Apprehensions Regarding Debt Pile
Struggling beermaker Adnams has criticized the UK government for failing to provide adequate support to the hospitality sector, as the company grapples with an unsustainable debt pile.
Simon Townsend, the interim chair of Adnams, criticized the government for offering no positive assistance to the industry, which is facing several headwinds this year. He pointed to questionable economic growth, increases in employment costs, and unreliable consumer confidence as significant challenges for the sector.
Last October, Chancellor Rachel Reeves introduced measures that impacted the sector, including increases in employers' National Insurance Contributions, the national minimum wage, and a package of tax hikes.
"Businesses like Adnams are receiving no positive support whatsoever from the Government, despite our role as an important employer at the heart of the communities which we serve," Townsend said, adding that the group was currently pursuing a "self-help story."
Pub operators and brewers have called on the Government to alleviate some of the pressure by implementing measures such as a VAT cut on food and drinks sold in hospitality and reforming the business rates system, which they argue would level the playing field with online giants.
However, these calls have fallen on deaf ears amid warnings of job losses and venue closures following the Chancellor's tax-hiking Budget.
Adnams' cost pressures have added to the brewer's woes, as the company's indebtedness remains unsustainable, even with a decline in debt from £15.9million to £15.3million over the year. The company will sell assets to reduce borrowings, having reportedly abandoned a sale of its business last year.
Losses narrowed to £2.7million over the year to December 31, compared to £4million the previous year, while sales rose 3 per cent to £68.1million. However, sales of products in shops, including Southwold Bitter and Double Ghost pale ale, fell as conditions on the high street remained challenging.
The beleaguered business replaced former boss Andy Wood with Jenny Hanlon last year, becoming the first female chief executive in the 150-year-old firm's history. The brewer hopes to boost its fortunes by focusing on maximizing sales of its best-known Ghost Ship and Southwold Bitter drinks.
Relevant Information from Enrichment Data
- The UK government has announced a foundation apprenticeship for the hospitality industry and plans for a Hospitality Graduate Apprenticeship Scheme at Level 7, set to launch in August 2025 and September 2025, respectively.
- The proposed Extended Producer Responsibility (EPR) policy requires packaging producers to pay for managing their packaging, and hospitality leaders have expressed concerns about its potential economic impact and double payment for waste collection. They have requested a delay in implementation.
- Adnams, facing unsustainable debt and challenging business conditions, is estimating savings from the sale of assets to reduce borrowings.
- Despite calls for aid from pub operators and brewers, the UK government is focusing on initiatives like the proposed Foundation Apprenticeship and Hospitality Graduate Apprenticeship Schemes, scheduled for 2025.
- With mounting concerns about the proposed Extended Producer Responsibility policy and potential double payment for waste collection, hospitality leaders are requesting a delay in implementation.
- Amid escalating costs and decreasing sales, Adnams is exploring various avenues for growth, including investing in its branded drinks such as Ghost Ship and Southwold Bitter, and considering options in stocks and insurance, seeking financial stability for the 150-year-old business.
