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Higher energy and glass costs take swig out of wine supplier

Post Time:Feb 23,2009Classify:Company NewsView:337

Kingland looks to grow overseas sales as margins get squeezed

Using barges on the Manchester Ship Canal might have won Tesco plaudits from environmentalists, but it hasn't done a great deal for profits at its Salford-based supplier Kingsland Wines & Spirits.

Accounts for parent company Marplace (Number 368) Ltd show that pre-tax profits in the year to the end of June 2008 fell by around 19 per cent to £896,000, despite a 5 per cent rise in sales to more than £125m.

The company is a supplier to major retailers such as Tesco, the Co-operative Group, Spar and Nisa Today's. Its brands include Barossa Drive, Hidden Rock and The Boulders.

The company has previously been owed by the Co-operative Wholesale Society and Premier Foods, but has been through two separate buyouts within the past eight years. It is now owned by managing director Andy Sagar, commercial director Karen Wilson, manufacturing director Mark Dixon and supply chain director Michael Forde, who each hold 25 per cent.

The accounts say the company managed to grow “in a tough trading and economic environment”.

It said that prices of both glass and energy had increased its cost base, but it had managed to partly offset this by making a number of efficiency savings, including a reduction in the amount of packaging it uses.

It also said that it had successfully integrated a “major new customer” who serviced the UK pub market and had broadened its international reach by selling more wine in Scandinavia — overseas sales climbed by £460,000 to more than £2.7m.

“The costs of entry to new markets and the integration of new customers has hit short-term profit growth but will make an important contribution to the group's results going forward, as well as broadening risk,” it said. During the year, Peel Ports announced that Tesco had launched a “green” initiative to ship bulk wines in 20ft containers from Liverpool's Royal Seaforth Container Terminal down the Manchester Ship Canal directly to the Kingsland bottling plant in Irlam.

It said this would cut carbon dioxide emissions by around 80 per cent as each barge shipment removes the need for 160 lorry trips of 40 miles each.

Kingsland said the current economic climate, plus the globalisation and rationalisation of supply chains, were the key challenges it faces, as well as potential legislation from the government, which is attempting to reduce alcohol consumption with a television advertising campaign promoting responsible drinking.

Paul Sherlock, managing director of Kingsland's Planet Wine, said that his firm had just increased its year-on-year sales for January on top of a “record” year in 2008 when sales reached £18m.

Planet, founded 16 years ago and based in Sale, sends most of its wines directly from suppliers in France and Belgium to its own customers, who are mainly independent wholesalers and distributors based “all over the world”, according to Sherlock.

He said his firm had succeeded because it had developed a good customer base and dealt almost exclusively with premium brands.

“It's all about product availability,” he said. “Go into any bar and you'll see the same 100 spirits you see in other bars around the world. There are secondary brands out there, but people get a sense of comfort from a recognised brand.”

Source: Kingsland Wines & SpiritsAuthor: shangyi

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