Broadland Drinks has released its 2019/20 annual report showing a strong performance given the continuing fall in UK wine consumption, the political uncertainty surrounding Brexit and the highly competitive retail sector. The Company’s sales revenue increased by 11.9% to £79m (2019: £70.6m) and profit before tax increased to £2.9m (2018: £2m). This, in turn, saw net assets increase to £11.6m (2018: £9.2m).
The Company continues to invest in its own brands, for example extending the small format brand MINIVINO into cans and introducing a range of Three Mills Botanicals. Furthermore, two new brands were launched - No Ordinary, aimed at consumers looking to explore less well known wine regions or grape varieties, and La Fiesta, which was launched in January 2020 and now has a listing through a major grocery multiple as well as the convenience sector and wholesalers. The core brands Three Mills, MINIVINO, Proudly Vegan and Waipapa Bay continue to show strong growth with increased distribution through key retailers in both the UK and USA.
The growth in overseas turnover has been impressive with a 79% increase from £4.54m to £8.16m largely driven by sales to the USA, in particular the successful delivery of the Wine Advent Calendar to a major retailer operating across multiple US States.
“As part of our focus on innovation and brand building,” comments Broadland Drinks Chief Executive, Mark Lansley, ”we changed the company’s name to Broadland Drinks, from Broadland Wineries, with the aim of extending our portfolio of products and repositioning ourselves in the broader drinks marketplace. The first initiative of the year was to invest in a canning line initially offering line extensions to our existing brands – MINIVINO, Three Mills and La Fiesta - and then creating a number of innovative new drinks which are in the pipeline for 2021. The line capacity also means that we can offer key retailers medium and short runs for own-label cans, encouraging easy trial and innovation.”
The year has not been without its challenges. The UK Government announced a significant change to the legislation on Post Duty Point Dilution (PDPD), which took effect on 1st
April 2020. Broadland reformulated its products to mitigate the change and introduced new products such as the Three Mills Botanicals and the La Fiesta range of drinks. This legislative change will also shape the finances of the company going forward, as the shift backwards in the duty point will reduce bank borrowings and stock holding value, positively affecting cashflow and the working capital cycle. This may also result in a lower turnover in future years, as customers are able to take product under bond or on deferment account.
Finally, the Company has dealt with the impact of the Covid-19 pandemic by supporting its on-trade customers and working closely with off-trade customers and suppliers to ensure that stock availability is maintained. Sales are above budget for the first three months (April-June) of the financial year, with exposure to the on-trade offset by retail demand.
Mark Lansley concludes, “The Company’s existing long-term growth strategy should continue to deliver growth and I am cautiously optimistic for the future.”