TaxPersonal TaxSpotlight – Cider profits less than rosy

Spotlight - Cider profits less than rosy

HP Bulmer FD Alan Flockhart says the company's long-term strategy is to grow the whole market.

It’s not only the apples getting squeezed at leading UK cider maker HP Bulmer, but the profits as well.

Analysts are predicting the market-leading drinks manufacturer and distributor will unveil annual pre-tax profits of £23.4m next Tuesday – only a slight improvement on last year’s figure of £22.1m, which was 26% down on the result for the previous year.

Finance director Alan Flockhart admits the market has been especially difficult, with poor weather last summer preventing people from getting into their customary hot-weather drinking habits. Drinks sales during the World Cup were also disappointing, but a good Christmas improved the situation, he explains.

Flockhart says Bulmers’ philosophy for the way forward is not to boost its market share – which stands at an already sizeable 58% of the cider drunk in the UK – but to boost the size of the market as a whole. ‘We are doing a lot with our customers to build their businesses as well as building ours,’ he says.

Bulmers makes some well-known brands of cider including Woodpecker, Strongbow and Scrumpy Jack. But Flockhart emphasises that Bulmers should be seen not just as a cider maker but as a distributor and manufacturer of long drinks. Both Amstel and San Miguel beer, for example, are distributed in the UK by Bulmers.

The company is involved at all levels of the production and supply chain, from the apple trees right through to handing the finished product to the customer.

It is here that Flockhart’s extra skills – he has a degree and training in mechanical engineering – can add value to the business. He is a clear believer in integrating the finance team with the parts of a business they are involved in, so they are able to contribute fully rather than being a ‘bunch of boffins sitting in ivory towers’.

Like other drinks manufacturers and distributors, Bulmers is planning carefully for the millennium festivities.

Flockhart says: ‘Clearly there will be opportunities. It’s a time of the year when people are always fairly festive – but there is a limit to just how festive people can be!’

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