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Tue 25th Mar 2025 - Update: Shepherd Neame, hotel dining research, Fevertree and AG Barr |
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Shepherd Neame CEO – if the economy rebalances and disposable income picks up, young people will behave not too dissimilarly to my generation: Shepherd Neame chief executive Jonathan Neame has said he believes if the economy rebalances and disposable income picks up, as they get older, today’s young people “will behave not too dissimilarly to my generation” in terms of their consumption habits. Neame, speaking to investors last night (Monday, 24 March), was answering a question about how the company was responding to the younger generation and their perceived lack of interest in drinking. “If you go around our pubs, particularly in London, which is always a good lead indicator, you do see plenty of twenty-somethings in the pubs,” Neame said. “They do tend to go out less frequently, but when they do go out, they spend more. If people of my age tend to have two days off alcohol, they may have one or two more, and when they go out, they spend at a higher value and consume more. There’s also plenty of reasons why people are drinking more no and low, and then there’s the strange new phenomenon of zebra striping (alternating between alcoholic and soft drinks). So, people are attracted to the socialising, the community and the engagement, and I still think pubs offer the best environment for people to do those things. I think long term, consumption will continue to reduce, but people will still want to go out for a good time. We did see something of this phenomenon in the early 1990s, when consumer spend was very tight, and there was a lot of talk about the growth in low and no. A lot of that trend was driven by economics, when it was just too expensive to go out and have an alcoholic drink. There’s a bit of that going on at this moment in time, particularly with young people, who in real terms, are earning less than they were 20 years ago. So, I think if the economy rebalances and disposable income picks up, as people mature, I suspect they will behave not too dissimilarly to my generation.” Responding to a further question around the company’s share price, and whether it would consider going private before it “attracts the attention of an unwelcome predator”, Neame said: “The family has still got a very strong holding, about 50% of the shares, and I don’t detect any desire from them to do anything apart from continue as an independent business for the long term. About 25% of the rest of the equity is held by private individuals, many of whom live locally, so our listed bit is the remaining 25%, who clearly wouldn’t like it if we went private. I think it’s quite important for people to have access to buy and sell their shares if they want to, and we’re not the only company moaning about their share price, particularly in this sector. It seems as if there’s a chronic malaise with small cap UK plc generally – hospitality very much so – but we have been here before. Twice in my time we’ve seen extraordinary outflows and depressed valuations. There was a change in tax law which undermined capital gains tax benefits in the late 1990s, and we went from £11 to £2 a share, but had bounced back very strongly by 2003. It then collapsed again due to another change in legislation, but from 2004 to 2007, went from something like £4 to £19. So, on thin demand, you can get extreme spikes and volatility in pricing.” Meanwhile, chief financial officer Mark Rider outlined the company’s challenge in the coming years as closing the between its current dividend compared to its pre covid position. “We’ve effectively had a different kind of challenge each year since 2021 onwards, with a different form of inflation each year,” he said. “In the previous financial year, about £4.2m of cost inflation on those core lines, and a similar amount on those categories as we sit here today. What we’ve been trying to do is raise prices where we can – while being very cognisant of demand trends which that can generate; really dial down on constant capex focus; and having the flexibility of moving our pubs between estates to get the best return we can under new circumstances. Our dividend was just over 20 pence, whereas pre-covid it was about 30 pence. That is driven by our earnings position, so that gap is the effect covid and post covid inflation has had. That’s the opportunity for us over the coming years – to close that gap back up.” Neame and Rider were speaking after Shepherd Neame last week reported that, for the 37 weeks to 15 March 2025, retail like-for-like sales were up 3.2% on last year, while like-for-like tenanted pub income for the 35 weeks to 1 March 2025 was up 0.5% on last year. For the 37 weeks to 15 March 2025, total beer volume was down 11.0% versus 2024, while own beer volume was down 12.8% versus 2024. It also reported that revenue for the 26 weeks ending 28 December 2024 fell to £85.0m from £89.0m the year before, while statutory profit before tax grew to £4.3m from £1.1m.
Premium Club subscribers to receive updated segmented Multi-Site Database with 3,360 operators and 27 new companies on Friday: Premium Club subscribers are to receive the updated Multi-Site Database on Friday (28 March), at noon. The next Propel Multi-Site Database provides details of 3,360 multi-site operators and is searchable in seven main segments. The database features 981 (29%) operators from the casual dining sector, 792 (24%) pub and bar operators, 571 (17%) cafe bakery operators, 472 (14%) quick service restaurant operators, 276 (8%) hotel operators, 214 (6%) experiential leisure operators and 54 (2%) fine dining operators. The database is updated each month, and this edition includes 27 new companies. The database includes new additions to the cafe bakery sector such as East Midlands cake cafe concept The Cake Solution, Nottingham bagel concept The Bagel Project, and Filipino bakery and cafe concept Panadera. Premium Club subscribers also receive access to five additional databases: the New Openings Database, the Turnover & Profits Blue Book, the UK Food and Beverage Franchisor Database, the UK Food and Beverage Franchisee Databaseand the Who's Who of UK Hospitality. All Premium Club subscribers will be offered a 20% discount on tickets to Propel paid-for events including Excellence in Pub Retail (May 2025) and discounts on specialist sector reports such as the International Brands report. Operators that are Premium Club subscribers are also able to send up to four members of staff to each of our four Multi-Club Conferences for free. Premium Club subscribers receive their daily Propel Info newsletter 11 hours earlier than standard subscribers, at 7pm the evening before. They also receive videos of presentations at eight Propel conference events two weeks after they are held. This represents around 100 videos of industry insight over the course of the year. Premium Club subscribers will be sent a dedicated monthly newsletter that will highlight key updates in the sector and direct subscribers to all the vital content their membership offers. Premium Club subscribers also receive exclusive opinion columns every Friday at 5pm, which include the thoughts of Propel group editor Mark Wingett and a host of industry leaders from across the sector. A Premium Club subscription costs an annual sum of £495 plus VAT for operators and £595 plus VAT for suppliers. Companies can now have an unlimited number of people receive access to Premium Club for a year for £995 plus VAT – whether they are an operator or supplier. Email kai.kirkman@propelinfo.com today to sign up.
Half of hotel guests order in or dine out when staying in a hotel: Rather than eating in a hotel restaurant or getting room service, half of hotel guests are likely to order food for delivery or dine at alternative restaurants during a stay, Zonal’s latest GO Technology report in partnership with CGA by NIQ, reveals. The survey, of over 3,000 British adults, shows the size of the opportunity for hoteliers who get their food and beverage offer right, but that currently, there is a perception that hotel food and drink is lower quality than can be found elsewhere. While some guests have a preferred hotel brand they return to, when possible, the report found that the majority will happily switch to a competitor if a better offer comes their way. This reflects a broader challenge for hoteliers, as while 86% of guests reported satisfaction with their last hotel stay, just 71% were happy with the quality (71%) and variety (68%) of the food and drink on offer. Room service also comes with its frustrations as 35% of guests find it too expensive, 26% complain about limited options, 25% about cold food, and 23% about the inconvenience of dirty plates being left behind. However, there are ways operators can win around guests. Nearly half (46%) of people say discounts would encourage them to eat in a hotel, while 43% said easy-to-find online menus would help. Furthermore, 38% said positive reviews would be a key factors in persuading them to opt for a meal at the hotel restaurant during their stay. The survey also revealed the top reasons people visit hotels. Weekend breaks came in first place, with 45% of people saying they stay in hotels on these occasions. This was followed by holidays (36%), visiting friends and family (29%) and for a celebration or event (18%). Tim Chapman, chief commercial officer at Zonal said: “Despite a challenging market, our research shows that there are clear opportunities for operators to capitalise on, particularly in areas like F&B, where revenue potential remains strong. With so many external dining options and delivery services available, hotels need to step up their game to capture more of their guests’ spending. F&B can play a big role in boosting revenue, especially as it helps balance out pressures on room rates and rising costs. By enhancing the quality, variety, and convenience of their dining options – whether in the restaurant or via room service – hotels can better meet guest expectations and encourage repeat visits, growing loyalty. Simple things like easy online booking and positive reviews can make a big difference in driving more pre-booked meals. At a time when margins are tight, focusing on F&B is a great way for hotels to stay competitive and keep their bottom lines healthy.” Karl Chessell, director hospitality operators and food, EMEA, CGA by NIQ, added: “Our research reveals some very encouraging trends for hotel operators and their partners. Usage has increased, satisfaction is generally high, and heavy engagement from younger adults is a good sign for the future. However, with business costs high and key inputs like labour and energy set to rise further, margins will be under pressure in 2025. Hotels will need to stay sharply focused on value and executing the fundamentals consistently well. Consumers are clear that technology can help, by making experiences more efficient and convenient. But it’s also vital to avoid neglecting the areas where human responses are more effective and meeting the needs of guests who still prefer the personal touch.”
Fevertree sees UK revenue drop but remains ‘clear market leader’ here: Fevertree, the supplier of premium carbonated mixers and Molson Coors, saw its UK revenue drop in the year to 31 December 2024 but said it remains a “clear market leader” here. While group revenue grew 1% from £364.4m to £368.5m during the year, it was down 3% in the UK, from £114.8m to £111.1m. Group gross profit was up 18% from £117.0m to £138.4m while group adjusted Ebitda grew 66% from £30.5m to £50.7m. “We remain the clear market leader in the UK, outperforming the mixer category at retail in 2024, despite well documented industry headwinds,” the company said in its preliminary results for the year. In January, Fevertree, announced it had entered into a long-term strategic partnership for the exclusive sales, distribution and production of the former brand in the US. The company said that following this announcement, it expects to deliver strong group revenue and Ebitda growth over the medium-term. “As highlighted at the time of the announcement, FY25 will be a transition year for the US business, and therefore we are comfortable with consensus expectations of low single digit group revenue growth and circa 12% group adjusted Ebitda margin,” it said. Tim Warrillow, co-founder and chief executive of Fevertree, added: “The Fevertree brand performed well in 2024, despite the subdued consumer environment. Across every key region, we are gaining market share, with more consumers discovering, enjoying, and becoming loyal to Fevertree each year across a growing variety of drinking occasions. This was particularly noticeable in our largest region, the US, where once again the brand grew strongly, and well ahead of the market. Our growing market share continues to be driven by our deep understanding of global drinking trends allowing us to make the most of evolving consumer preferences. As a result, non-tonic products now make up circa 45% of our global revenues, driven by the success of our ginger beer and our expanding position in cocktail mixers and adult soft drinks. Looking to the future, our focus remains on unlocking Fevertree's long-term potential across the world and capitalising on the unique position the brand has established sitting across alcohol and non-alcohol occasions.”
AG Barr – in line to deliver another year of revenue growth and margin improvement: Drinks firm AG Barr has said it is in line to deliver another year of revenue growth and margin improvement. In its results for the year to 25 January 2025, sharing its outlook for the coming year, the company said: “We entered the new 2025/26 financial year in a strong position and current trading is in line with our expectations. Our outlook for the year is unchanged – we expect to deliver another year of revenue growth and margin improvement. The guidance takes into account the fact that 2025/26 is a 53-week year, the proposed discontinuation of Strathmore and the additional regulatory compliance costs related to extended producer responsibility fees and the increased national insurance contributions burden.” It comes after the company reported turnover was up 5.1% in 2024, from £400.0m in 2023 to £420.4m. Adjusted profit before tax rose 15.8% from £50.5m to £58.5m, while statutory profit before tax rose 3.7% from £51.3m to £53.2m. Net cash at bank was £63.9m (2023: £53.6m) while full year dividend was 16.86p per share (2023: 15.05p). The company said: “Revenue increased by 5.1% driven by strong growth in soft drinks, up 6.4%. This was led by a standout performance from Rubicon and continued strong growth from Irn-Bru, with distribution gains and successful new product launches playing a key role. Statutory profit before tax of £53.2m was after £5.3m of one-off costs, treated as adjusting items, relating to the closure of the direct sales operation and integration of Boost. Our strategic programme to rebuild operating margin is ahead of plan, with adjusted operating margin up 130 bps to 13.6%. During the year, we made good progress with insourcing manufacturing. We also successfully completed projects to strengthen our convenience channel route to market and integrate Boost into our soft drinks business, all of which delivers significant commercial and operational synergies. In February 2025, an organisational simplification was announced to staff that will see the integration of the Barr soft drinks and Funkin businesses into a unified AG Barr operation, streamlining activities and fostering synergies. Today we are announcing the intention to discontinue the Strathmore brand later this financial year which, subject to employee consultation, could lead to the closure of the small manufacturing site located in Forfar, Scotland.” Chief executive Euan Sutherland added: “2024/25 was a successful year for the company. I would like to take the opportunity to thank my colleagues across the business who delivered these excellent financial results. Looking forward, we have a refreshed strategy centred on growth and are committed to our long-term financial targets. I am confident that successful execution of our plans will see another year of positive progress towards our long-term goals.”
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