Brewer says food performs strongly

Sep 2 2008 by Henryk Zientek, Huddersfield Daily Examiner

BREWING and pubs chain Greene King today said sites selling food continued to perform strongly as it battled against challenging trading conditions.

The group’s retail arm reported like-for-like sales growth of 1.6% in the 16 weeks to August 24, compared with the 2.8% decline seen in July.

Greene King said its Hungry Horse chain was seeing good growth, while the Loch Fyne restaurants acquired last year were “performing well”.

The company told shareholders ahead of its annual meeting: “Despite the current trading challenges and lacklustre outlook for the UK economy, the board anticipates meeting its expectations for the year.”

The company’s tenanted estate said like-for-like profits were down by 1.7% for the 16 weeks, compared with an unchanged performance seen in July.

The company added that an increasing level of support was being provided for licensees.

Sales in its brewing division, which includes the brands Old Speckled Hen, Abbot Ale and IPA, were down by 3% – but the company said this was a strong performance given double-digit declines in the on-trade beer market.

Meanwhile, Greene King’s Scottish brewing business Belhaven continues to perform ahead of expectations with like-for-like sales in its managed pub estate ahead by 4.6% on a year earlier.

Suffolk-based Greene King, which has about 1,800 managed and tenanted pubs across the UK, recently reported pre-tax profits of £142m for the 53 weeks to May 3, up by 2% from the previous year.

In today’s trading update, the company described its business model as “robust and resilient” and said strong cash flows allowed continued investment in growth areas such as food, accommodation and premium ale.

It added: “In the value for money segment of the market, Hungry Horse is in good growth, while at a more premium position both Loch Fyne and the Inns division are performing well.”

However, the company said its drink-focused community sites were being more adversely affected by market conditions.

Greene King, which was founded in 1799, acquired Belhaven in 2005 and followed that with the takeover of brewer and pub operator Hardys & Hansons plc in 2006.

Last year, Greene King bought Loch Fyne Restaurants, for £68.1m.