Hong Kong wine charge increases Berry Bros losses
- Thursday 17 October 2013
Berry Bros & Rudd reported net losses of GBP6.2m for the year to the end of March 2013, versus losses of GBP4,000 in the previous year, according to official figures published at Companies House on Thursday (17 October).
While the result partly reflects the firm’s position at midway point of a five-year investment strategy, losses were made worse by a one-off GBP4m charge related to the wine and spirit merchant’s attempt to recoup funds from an unnamed ex-distributor in Hong Kong.
Lower prices for top Bordeaux wine, particularly during the 2011 vintage en primeur campaign, also contributed to group net sales dropping by 16% for the 12 months, to GBP138.7m.
But, speaking to decanter.com, Berry Bros MD Hugh Sturges said that the losses were expected and ‘the wine business remains pretty healthy and is profitable before the exceptional items’.
He declined to offer specific details on the Hong Kong charge, but said, ‘we have engaged in legal action to get money back from that old distributor. It’s a big number, but it’s an exceptional cost.’
During the financial year, the group also invested GBP3m to build its own distribution networks in Hong Kong and Singapore.
Sturges said the firm has continued to improve sales of non-Bordeaux wines, and especially those from Burgundy, Italy and Spain. ‘We will maintain our positions, if not increase them, in Spain and Italy,’ he said.
On Bordeaux, he said ‘the market is still recovering’ but that Berry Bros will be ready for ‘when Bordeaux comes back, which it will’. Such is Asia’s long-term potential, ‘the laws of supply and demand will out in the end’, he said.
At the same time, he believes the price falls during the 2011 en primeur campaign represent something of a return to normality, following the buzz of two consecutive, stellar vintages in 2009 and 2010.
‘People will look back in history and see ’09 and ’10 as being exceptional,’ he said. ‘People forgot what en primeur conditions used to be [like], in all the excitement.’