Brand Health Check: Adnams

When down to one's last £10 in the pub, facing the task of making the money last all night, it is fair to assume that the carbon footprint of a pint becomes a low priority.

Suffolk brewer Adnams has positioned itself as a ‘cuddly' beer, with good environmental practices and ethical community schemes. However, it is a stance not best-suited to a recession.

After a decade of steady growth, the brand's year-on-year sales fell in 2008, from £47.4m to £47.1m. Profitability also plummeted by 64% to £1.5m. In an effort to cut costs, chairman Jonathan Adnams has frozen the pay of senior staff and sold six of its pubs.

Not least among Adnams' problems is its confused brand identity. A quick online search returns the description ‘quality wine, premium beer and stylish kitchenware'.

As well as its beers, wines and Cellar & Kitchen Stores, Adnams owns a chain of hotels in Suffolk. It even launched a ‘carbon neutral beer' last year, named Adnams East Green, which seems unlikely to have the old boys at the pub rushing to trade in their usual tipple.

The company has attempted to bring together its portfolio, most recently with a bi-monthly newsletter, created by Balloon Dog, aimed at professionals.

Can Adnams tap into a recession-hit consumer base? We asked Matt Coles, partner at licensed trade specialist Cardinal Research, and Adnams advocate Craig Smith, editorial director at customer publishing agency Velo, for their thoughts.

Matt Coles partner, Cardinal Research

Licensees, ale drinkers and industry professionals all love Adnams.

The brand benefits from solid positioning, contemporary packaging and the positive values of craft, tradition and local provenance. These are reinforced by a genuine commitment to sustainability, with eco-friendly distribution centres, carbon-neutral brand launches, reduced packaging initiatives and staff investment programmes.

Despite a decline in the on-trade market, Adnams' sales remain stable. So what is the additional operating expense that caused the profit slump?

Steep increases in the price of raw materials, a weak pound, asset depreciation, pub acquisitions and retail brand launches are all factors, even when such costs are spread over the long term.

However, indicators show that the cask ale market is bucking the downward trend of the wider sector, and has the potential to enjoy a renaissance. Soon, regional brewers will grasp this fact and drive it forward with initiatives that exploit the relevance of cask ale to the contemporary consumer. 

Adnams is powerfully positioned to lead the revival from the front.

Remedy

• Don't panic, Mr Adnams! This is a strong brand in a sector that is showing clear evidence of revival in a gloomy landscape.
• Continue to drive the development of contemporary values by targeting high-end quality pubs where the real-ale revolution is already well under way.
• Adopt chilled dispenser systems. ‘Modern man' is not interested in drinking warm beer.
• Emphasise Adnams' ‘modern green' credentials to reinforce its relevance.

Craig Smith editorial director, Velo

A century-plus provenance as a family-owned artisan producer? Check. Impeccable ethical credentials? Check. Well-judged brand diversification? Check.

Only the churlish could argue that Adnams has strayed from the right path in its recent brand management, and yet its profits have been eroded faster than a chunk of Suffolk coastline.

The world is sick, and Adnams has caught a cold. It's hard to imagine a brand that could be worse afflicted by pure sectoral circumstances, such as the smoking ban, stay-at-home drinkers, and an unfavourable euro exchange rate.

Against such a backdrop, free-market proponents might argue that freezing beer prices to support pub landlords and unveiling a carbon-neutral beer were luxuries it could ill afford. Not so. These are times that test a brand's mettle, and with manifest non-executive advice from leading ethical brands including M&S and Green & Black's, Adnams is preparing for an improvement in fortunes, not this year, but for the future.

The brand's unwavering support for its Cellar & Kitchen stores expansion, to bolster its brewing, wine retail and hotels portfolio, shows Adnams has the vision to be Suffolk's answer to celebrity chef Rick Stein's Padstow empire.

The problem? Despite all this, the Adnams story still feels like a secret for East Anglian gastronomes.

Remedy

• Boost investment in communications, focusing on digital channels and kitchenware stores.
• Make Adnams.co.uk a destination site for foodies and Europe-spurning British tourists.
• Improve the food offering. Bring in a ‘name' chef or affiliate with a complementary foods brand.