A North East drinks and gifts group has posted record revenues despite what it described as a “challenging” economic backdrop.
Directors at Annfield Plain-based Lanchester Group said the year ended June 2022 was one of the most trying in its 42-year history, with Covid-19 challenges, costs and supply chain issues combining to test all of the group’s companies. Despite the challenges, the group – which includes Lanchester Wines, Greencroft Bottling, Spicers of Hythe, The Wine Fusion, Lanchester Energy Ltd, Lanchester Properties Ltd, Bon Bon’s Wholesale and Full Circle Brew Co – is forging ahead with the development of a new £20m bottling facility which, when complete, will be able to bottle more than a quarter of all UK wines.
Consolidated accounts show the group’s turnover rose from £109m to £127m in the period, although Ebitda dipped from £10.5m to £9.6m, predominantly due to increasing cost of goods and transport. Tony Cleary, owner and director of the Lanchester Group alongside his wife Veronica, said: “The last financial year has been one of the most challenging in our history, the combination of the pandemic, wars and supply chain issues has created a perfect storm for all businesses. It’s a testament to the group’s diverse businesses and the outstanding talent of our staff that we’ve managed better than most, but our profitability has taken a hit.
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“We’ve seen shipping prices rising off the scale and demurrage costs rising dramatically – last year the group paid £1.2m in demurrage charges alone. This was totally unexpected and wholly caused by the unreliability of vessel arrival dates, which is out of our control.
“Most importantly, we continue to invest in our people. We’re a family business and we place great emphasis on the health and wellbeing of our teams. Despite falling profitability, we issued a group-wide wage increase and additional cost of living financial payments to every member of staff, and are developing a staff health care scheme. We’ve continued to recruit, now with around 550 employees across the group, and we remain one of the biggest employers in the area.
“We continue to embark on ambitious projects focusing on our future growth. Most notably our £20m Greencroft Two build, which will be the new home for Greencroft Bottling and the UK’s newest wine bottling facility. Environmental sustainability has always been a priority or us and so we’re spending more than we might otherwise on a new building, investing an additional £3m in sustainable practices.”
When complete, Greencroft Two will be more than 22,000 square metres – around 240,000 square feet, or about the size of four football pitches – and will more than double the potential capacity at Greencroft Bottling to up to 400m litres per year, which is equivalent to 28% of all wine sold in the UK. It will be powered by its own solar farm and Lanchester’s on-site wind turbines.
In Yorkshire the firm has moved its luxury confectionery business Bon Bon’s Wholesale to new premises following £1m investment in the building’s infrastructure, including a new solar array. The move followed a record year for the business in which turnover rose 25%.
During the year, Lanchester Group promoted three new managing directors, with Andrew Porton becoming managing director of the wine division, covering Lanchester Wines and The Wine Fusion, and Kirsty Firth and Ben Yates becoming joint managing directors of Bon Bon’s.
Mr Cleary said every business within the group has been affected by issues with availability and pricing of dry goods, including glass, which is affected by the war in Ukraine and packaging affected by the Finnish pulp mill strikes. Spicers of Hythe had issues sourcing hamper baskets from the Far East.
While challenges remain, Mr Cleary said the firm’s diversification puts it in a strong position.
He added: “Wine grapes are a crop and therefore subject to fluctuation, which affected both of our wines businesses – Lanchester Wines and The Wine Fusion. Our biggest selling brand Nika Tiki Marlborough Sauvignon Blanc was unavailable for nearly the whole year due to the disastrous 2021 vintage in New Zealand, coupled with increased demand from China and Russia.
“We are a diverse group of businesses spanning different sectors and various customer bases. This was a strategic development plan to ensure that, as a group, we remain strong with each business supporting the others as needed. This has particularly worked to our advantage over these challenges in recent years.
“While we continue to mitigate a difficult global climate with rising inflation and supply challenges, we are in a solid, sustainable situation, and we step into our next financial year in a strong position.”
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