December 7 2013 Latest news:
Thursday, August 15, 2013
St Peter’s Brewery is divising a comeback strategy in America after seeing its profits stung by an explosion of US microbreweries.
The South Elmham-based business has tasked its importers with creating new initiatives aimed at rekindling America’s love affair with English ale, which has been hit by a newfound loyalty in the country to American brands.
But the firm has been encouraged by emerging markets in Russia – and is still looking to establish a foothold in Eastern Europe, China and the rest of the Far East.
The focus on growing overseas exports come as its UK revenues faced increased pressure, as alcohol discounting in British supermarkets made it difficult to meet its margins.
And it also struggled with escalating commodity prices – particularly organic malt and hops – and the rising cost of its cardboard packaging.
The fallout saw its pre-tax profits drop 99.04% from £161,839 to £1,561 – although turnover increased by £63,078 to £4,212,415 last year.
But Colin Cordy, managing director, said the company’s balance sheet remained strong and it was still offering itself up for a takeover in a bid to move the business forward.
Mr Cordy said: “We have found it pretty difficult since the recession started to get supermarkets to increase their prices on beer because they see it as a discretionary product – they want to keep the costs of alcohol down as much as possible.
“And after a certain amount of time that starts to hurt because the price of utilities and raw materials are going up.
“But overseas trading has been really good. The business has been robust and we have some new markets doing well – particularly Russia.
“But in the last quarter we have started to see a downturn in English beers in America. This is caused by the growth in US micro breweries – a pattern which we have also seen here in the East of England.
“Meanwhile, people in the US are also being encouraged to be loyal to brands and buy American.
“But we are more or less where we expected to be in May and July. The US continues to be fairly challenging, but we are picking it up with other overseas markets.
“Our profits before tax have been non-existent compared to last year, but our balance sheet is strong and we have invested in the brand.”
But he maintained that – despite recent difficulties in the UK – the company was still ripe for a takeover.
He added: “Over the last 16 years we have become a respected English brand in a lot of markets around the world and there is where we think the opportunity lies when the purchaser comes along. We have already had some approaches from some people and some point there will be the intention to sell. Perhaps when the world economy wakes up we will get some interested parties to take us to the next stage.”