Edinburgh-based craft brewer Innis & Gunn is planning to grow its pub sites north of the Border and expand them into England, and return to profitability this year after racking up a loss in 2018 as it ploughed cash into the business and pulled the plug on loss-making operations.
The beer maker’s founder and master brewer Dougal Gunn Sharp said the firm is set to report a “strong” profit this year after racking up a loss of about £2 million in 2018, while turnover saw a 6.5 per cent year-on-year jump to reach £23.9m.
Innis & Gunn sold two million extra pints in the year compared to 2017, taking total output to 20.6 million pints – and is the number two independent craft brewer in the UK off-trade. “Innis & Gunn lager became the largest craft beer by volume and value in Scotland and now accounts for three out of every four craft lagers sold in supermarkets across Scotland.”
The brewer’s total beer volume grew by about 15 per cent, driven by lager growing by 38 per cent. Volume has risen 70 per cent over the past five years and group turnover by 51.4 per cent over the same period.
“We’re delighted with the topline performance of the business, particularly with lager… we’ve made big strides in a number of key areas,” said Sharp, noting the continued trend for drinkers “rejecting mass-produced beers in favour of beers like Innis & Gunn with real character”.
The beer firm in 2018 reviewed its loss-making retail business, buying out its retail joint venture partner and revamping its food and drink offering. It has reopened its site on Lothian Road, for example, having shuttered its St Andrews premises.
It is now also present in Dundee and Glasgow, and has a “sustainable” base on which to roll out its taprooms “now that we’re happy with the concept”. He added: “We’ll certainly seek to expand our offer in Edinburgh and Glasgow, but clearly there are other sites in Scotland that we would consider, as well as potentially sites down in England in due course.”
Exports now account for 50 per cent of Innis & Gunn’s total value of sales, and its international market “continues to go from strength to strength,” said Sharp.
The firm has been making major in-roads into Canada, where it is the number one imported craft beer, and in 2018 created a dedicated an on-trade sales team to build a bigger draft presence in the country, for example.
The business also wound up a loss-making distribution business in France last year, switching to a simpler model in the market, while it is eyeing growth in Asia, Italy and Spain – where it has a tie-up with Grupo Damm.
He also said the brewer’s headcount in 2018 grew “substantially” from 2017 in anticipation of further growth – while he also touched on its plans to build a new brewery, the first large-scale facility of its kind to be built in Edinburgh for more than 150 years, aiming to be ready to apply for planning in the final quarter of this year.
“We hope to be operational in the early part of 2021,” Sharp said, with the project to secure the firm’s long-term roots in Edinburgh and Scotland and give the required capacity and flexibility to continue its growth trajectory.
The venture is a major undertaking, noted the businessman, the son of a brewer. "[But] the opportunity to build a brewery in Edinburgh, following in the footsteps of [my father] who took a brewery over and made it a huge success in the 80s/90s, it’s a huge thrill for me and something that I’m very much looking forward to completing and seeing it bear the fruit that I know it will."
As for how it will be funded, he stated: “Currently all funding routes are on the table as we explore all options for how we fund this brewery.”
He also hailed Edinburgh's status as a food and drink destination. "We feel that puts us in a very strong position because we’re headquartered here, we're building a brewery here. It’s thrilling to see the development in the food and drink space that’s happening right now in this vibrant capital."
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