TWO of the north’s biggest alcoholic drinks companies saw their profits squeezed last year by surging costs.
Guinness-maker Diageo saw costs within its Northern Ireland business rise by 25% last year, while Tennent’s northern business was hit by an 18% increase in its costs.
It significantly reduced the profitability of both operations.
Despite its turnover increasing by 6.4% to £180m in the year to June 30 2023, Diageo NI Ltd reported a 62% fall in pre-tax profit to £2.4m, which was £4m below its 2022 performance.
Diageo NI’s beer sales increased by 7% to £122.5m last year, while spirit sales were up 5% to £57.5m.
Tennent’s NI Limited also banked a solid 16% uplift in beer and cider sales to £61.2m last year.
But its costs rose by more than £7m to £48.2m in the year to February 28 2023.
According to accounts filed with Companies House, the surge in costs was largely driven by raw materials, consumables and ‘other purchases’.
The company’s profit before tax fell by £2m (38%) to £3.3m.
A £1.2m tax bill for the year left Tennent’s NI with a bottom line profit of £2m for 2023, which was £3.2m lower than the previous financial year.
Although historically linked to the Tennent Caledonian brewery in Glasgow, it has been part of the Dublin-based C&C group since 2009.
Based in Culcavy, Co Down, Tennent’s NI is primarily concerned with the marketing and distribution of drinks brands both owned by C&C and other major companies.
C&C’s own brands include Magners, Heverlee, Clonmel and Five Lamps.
The Tennent’s northern operation saw its staff numbers fall again last year, dropping from 64 to 57.
But the accounts reveal its highest paid director received more than £1m in the year to February 2023 through emoluments, retirement benefits, exercise of share options and pension contributions
The same report shows Tennent’s NI paid £10.3m ion excise duties last year.
The excise duties paid by Diageo NI came in at £77.4m in 2023.
Diageo NI saw its full-time workforce grow to 131 last year, up by 12 people.
As well as its corporate office in Belfast’s Upper Queen Street, Diageo also operates a Baileys facility at Mallusk, a beer bottling and packaging plant in East Belfast
Subsequent to the period covered in its latest published accounts, Diageo secured planning approval in August 2023 for a £26m expansion of its Baileys operation in Co Antrim.
The green light for the project came 16 months after Diageo announced plans to invest £24.5m in its east Belfast packaging facility.
Outside Guinness and Baileys, Diageo also owns Smithwick’s, Harp, Smirnoff, Captain Morgan and Gordon’s.
In December 2023, US news website Axios reported that Diageo was seeking to sell off its beer portfolio, keeping only Guinness.
Diageo said it does not comment on “market speculation”.
Of the £3.36 billion global sales reported by the drinks giant for the year to June 30 2023, beer sales accounted for just 14%, while spirit sales generated 81%.
Diageo secured planning permission in December for a new €200m brewery in Co Kildare.
The new facility will brew lagers and ales including Smithwick’s, Harp, Rockshore, Hop House 13 and Kilkenny.
It will be the second largest brewing operation on the island after St James’s Gate, where Guinness will continue to be produced.
