By Scott Wright
THE founder of Innis & Gunn, Dougal Sharp, has declared “everyone is digging into their reserves of resilience” with economic uncertainty coming hard on the heels of the pandemic, but insisted there remains a huge opportunity for the brewer and bar owner to continue growing its brand.
Innis & Gunn reported a marginal fall in revenue for 2021, by one per cent to £21.1 million, when it faced global supply-chain upheaval and trading restrictions brought by the outbreak of the Omicron variant of coronavirus at the end of last year.
The company, which operates four taprooms in Scotland, reported a gross profit of £7.4 million for 2021, up 7.4 per cent on 2020 but behind the £9.1m it made in 2019. The rise in gross profits came despite a rise in administration and overhead costs to £5.74 million, to 27 per cent of turnover from 25% in 2020.
Last year saw Innis & Gunn invest in systems and processes to drive efficiencies, remove single-use packaging from its canned range and move to new headquarters on Edinburgh’s Orchard Brae, as well as redesign the packaging of its core beers and debut an alcohol-free lager.
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Speaking to The Herald, Mr Sharp said 2021 had been a “pretty good year” for Innis & Gunn, despite lockdowns being in place for longer in Scotland than the rest of the UK, with trading taking longer to recover.
Mr Sharp said: “Thanks to the fact we have been continuing to invest behind our brand, we have weathered the storm well. And I think it continues to keep us set up well for the future. If you look at what is happening this year, although margins are under pressure for everybody, we are growing really strongly.
“We have a very clear strategy for the business. It is growing the on-trade in Scotland, growing the on-trade in England, and capitalising on that growth in the on-trade in the off-trade. That strategy is paying off.”
In the on-trade, Mr Sharp said he is hoping the company will be able to open its fifth taproom, on Glasgow’s West Nile Street, in November. Asked if he was looking for further sites, Mr Sharp said the company would always assess good opportunities in attractive locations, but said it was being “cautious” given the current economic uncertainties.
“But if you look at our brand and our business, we are ambitious,” he said. “We have huge opportunities to grow our lager and other products in Scotland. We are seeding the brand and succeeding where it is listed in England in the on-trade, and we know that our taprooms are an incredibly valuable part of our offering.”
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The four existing taprooms owned by Inns & Gunn are in Glasgow (Ashton Lane), Edinburgh (Lothian Road and The Shore, Leith) and Dundee (South Tay Street).
Mr Sharp added: “They give the consumer who goes in there the ultimate Innis & Gunn experience... so we are ambitious to roll it out. Quite rightly, every business is looking at things and being selective and cautious... but that doesn’t change the scale of our ambition. This will pass.”
He noted that government measures such as the six-month energy price cap for business would always be welcome, but he said: “We need long-term stability and clarity about what the long-term strategy is going to be, because six months is vanishingly short in business. We need to be planning way, way out, ahead of six months.”
Mr Sharp added: “Of course we have got to pray that the war comes to an end in Ukraine and things begin to stabilise across Europe. It is causing a great deal of uncertainty and misery, not just for people fighting the war but for people across Europe who are having to deal with the consequences.”
Asked how concerned he was about the impact on consumer spending from surging inflation and rising interest rates, Mr Sharp said: “Consumers will be looking at spending right across everything and making decisions, but if you look in real terms the price we are charging for our beers both in retail on-trade and in grocery still represent superb value for money.”
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Meanwhile, Mr Sharp said the company’s plans to build a brewery on land at Heriot Watt University in Edinburgh remain on hold. Mr Sharp said “nobody more than I wants to build this brewery” but explained inflationary measures mean the cost of the project, including steel and energy, would be around 25% to 30% higher the original budget. It will focus in the meantime on growing the Innis & Gunn brand across the UK amid the current macroeconomic challenges.
Mr Sharp said the brewer has all the production capacity it needs through its long-term partnership with C&C Group, which sees the bulk of Innis & Gunn’s volume produced at Tennent’s Wellpark Brewery in Glasgow.
He also highlighted the importance of the Inveralmond Brewery in Perth, where it brews craft products such as the Ossian brand and IPAs (India pale ales), and carries out barrel-ageing activity. Innis & Gunn acquired Inveralmond in 2016.
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