Asahi UK's £14m loss a 'bellwether for the industry'

Last week Asahi’s UK arm, which is responsible for brands including Peroni, Fuller’s, Dark Star, Meantime and Cornish Orchards, posted a loss before taxation of £14m for the year ended December 2023.

It marked a £7.6m increase in pre-tax loss compared to the previous year’s downturn of £6.4m due to the “current challenging economic climate, particularly production and distribution”, according to the trade update.

Aurora Capital managing director George Holmes told The Morning Advertiser (MA):​ "Asahi’s £14 million loss is a stark reminder of the huge challenges currently facing the hospitality sector.

“As one of the industry’s biggest players, their financial struggles underscore broader issues that many smaller businesses are also facing. 

Changed landscape 

“Rising costs across the board—whether it's energy, raw materials, or labour—are putting immense pressure on margins.

“For brewers like Asahi, the impact is twofold: they're not only facing higher production costs, but also their traditional customers are tightening their purse strings.

“Hospitality businesses are still struggling to fully recover from the pandemic and adjust to a changed landscape.”

This comes as the latest figures from Office for National Statistics (ONS), released on Wednesday 16 October, showed the headline rate of inflation had risen by 1.7% in the 12 months to September 2024, down from 2.2% in August.

As September’s inflation figures are used to calculate the annual uplift to business rates, a rate of 1.7% means a "likely increase" of £48m for hospitality businesses​, trade body UKHospitality (UKH) estimated.

This continuously challenging economic environment is even more “precarious” for smaller hospitality firms that don’t have the same “resources” as larger firms to weather ongoing losses and makes access to finance and cash flow management “more critical than ever”, Holmes added.

Funding solutions 

“Inflation has pushed up the cost of doing business, while consumers are cutting back on spending, including dining out. These dual pressures have created a perfect storm, and even well-established brands are finding it hard to make a profit.

“As business finance specialists, we've seen increased demand from hospitality businesses seeking funding solutions to stay afloat over the last few years. Without strategic financial planning and support, more businesses in the sector could find themselves in a similar position. 

“The situation with Asahi is a bellwether for the industry, and it’s clear that many businesses will need to rethink their strategies to survive the current climate”, the managing director continued.

Earlier this year, Asahi UK moved production of all its “local beer brands” together under one brewing operation at Fuller’s Griffin Brewery in Chiswick, resulting in the closure of the Meantime brewery and taproom, with its beers now produced at the Griffin Brewery.

Though the Asahi UK trading update assured: “The company will continue to manufacture, distribute and sell its range of quality beers and ciders brewed at its locations in the United Kingdom and provide a full portfolio of drink products to its customers.

“The company’s strategic priority is to grow market share within the UK through its portfolio of premium domestic and international alcoholic and non-alcoholic drinks.”