Berry Bros toasts strongest year in a decade
Fine wine merchant Berry Bros & Rudd has toasted its best year in a decade, with group sales and operating profits hitting its highest point since 2010, according to accounts filed at Companies House, following a restructuring of the core business under its then executive chairman Lizzy Rudd.
In the year to 31 March 2020, underlying group sales rose £220.45m (before the accounting adjustment for en primeur sales), compared to £219m in 2019, while underlying group operating profit (excluding en primeur adjustment) grew a whopping 214% to £5.238m, up from £1.667m the previous year.
“However, with a revaluation loss of £3.3m on BBR’s UK property portfolio primarily due to the impact of covid-19 on year end valuations, the company recorded an overall loss for the financial year of £593,000, ”
“Despite the impact of Covid 19 playing havoc throughout the world in the final months of our financial year, the year ending 31 March 2020 was a strong one for Berry Bros & Rudd, with all our primary trading KPIs heading in the right direction,” it said.
The boost came on the back of the strategic refocussing of the businesses core operations, under then executive chairman Lizzy Rudd (who has since returned to her role as chairman, following the appointment of Emma Fox in July). This reorganised the business into four core channels – fine wine services, brands, agency, and retail & customer experience, as well as the partly- owned US subsidiary, Hotaling & Co, which distributes owned and imported premium spirits in the US.
Strong core sales
In the refocussed core business, strong Bordeaux 2018 and Burgundy 2018 en primeur sales helped generate more than £30m of revenue, with the customer private reserve storage business also up 21% year-on-year – which was it noted was unaffected by the pandemic in the last month of the financial year.
Retail sales also saw strong growth, with Christmas and Black Friday contributing £5.8m of sales, an increase of 12.5% on the previous year and although both shops and the events business were closed in March, this was ‘pivoted’ to online retail, with the last few days of March provided BBR’s highest ever sales volumes of around 42,000 bottles.
Meanwhile Brands recorded a “solid” year that was “eclipsed” by the relaunch of its gin brand, No. 3 this year, the profits of which are being reinvested to grow.
The B2C agency business, which sells to the on and off-trade, and BB&R Partnerships, saw growth of 3.6%, but the portfolio has been streamlined to increase profitability. Furthermore, the closure of the on-trade was reported as having “a dramatic impact on sales, profit and cashflow for the business unit” at the end of the financial year.
Outside the UK, the US business saw growth, of 13%, to £38.8m, despite the impact of Covid-19 at the end of the financial period. The acquisition of a new San Francisco property is set to see further growth though a new direct to consumer platform, and investment in a distillery.
Tech changes to fully integrate software systems including HR, payment, point of sale and e-commerce and stock management also provided a boost, it said.
“The efficiency and working capital management benefits of this state-of-the-art system are starting to show and we expect to see overheads reduce and customer service improve over time as a result,” the report said.
It said it had set its sights on “a sustainably profitable and cash generative business which puts the fine wine private client business and our spirits brands at our core, and our customers and producers at the forefront of everything we do” as well as reducing its overheads and increasing efficiency.
In spite of the fact that the impact of Covid-19 was only felt in the last few weeks of the financial year, the company’s results noted that the effect of the pandemic had “dramatically affected” both itself, its suppliers, customer and employees and only parts of the business that could be safely operated were so, as priority was placed on employee, customer and supply chain safety. Furthermore a business-wide purchasing freeze had been imposed with active steps taken to strength the financial position “in order to guarantee the long-term viability” of the business, it said.
CORRECTION: This article has been updated to clarify that although Lizzy Rudd was executive chairman throughout the FY20 financial year she stepped back to her previous role as chairman in July. Finance director Emily Rae has also clarified that the loss is attributed to revaluation of investment properties in the UK, rather than Hong Kong as originally stated.