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Where is the growth in the UK Drinks sector?

Where is the growth in the UK Drinks sector?

Published on: 24/11/2016

With so many factors impacting on the fortunes of the UK Drinks sector, new research has identified which areas of the market are attracting the highest growth and who is making the most profit.

New findings from Plimsoll Publishing Ltd have revealed firms within the UK Coffee market are among the fastest growing in the UK drinks sector - growing by 5.6% and making average profit margins of 4.8%.  

It seems that Whisky Traders is a profitable area as average profit margins reached 16.7% in the latest year - despite average company sales growth of just 0.2%.

Interestingly, too, it seems that growth within the Coffee market is widespread as larger companies are growing by 8.7%, compared to the smaller companies who are growing at 7%.  However, it’s not all plain sailing for the bigger corporations as, in general, larger companies are less efficient in generating sales from their asset base – averaging £2.09 for every £1 invested.

Nevertheless, the success in the coffee market is not being shared by all. Sixteen companies have made a loss for the second consecutive year and as a result 21 firms have lost a quarter of their value.

Please see below a breakdown of the growth rates and profit margin in each industry:

Industry

Sales Growth %

Profit Margin %

Coffee

5.6

4.8

Bottled Water & Coolers

4.5

6.3

Pubs & Bars

4

4.1

Tea & Coffee

4

4.8

Beer Sellers

1.8

2.6

Brewers

1.8

6.2

Soft Drinks

1.3

3.8

Whisky Traders

0.2

16.7

Bottling

0.1

5.4

Wines & Spirits Retailers

-0.1

2.3

Wine  Wholesalers

-0.1

2.5

Smoothies & Fruit Juices

-0.2

3.8

Alcoholic Drink Manufacturers

-1.4

5.9

Wine Bars

-1.7

3.9

Distilleries

-2.4

13

Away from the coffee market, there are some areas of the drinks sector which are experiencing slow growth – namely Distilleries, Wine Bars and Alcoholic Drink Manufacturers.

Within these industries the question remains: how do these companies return to growth?

Within certain industries it’s important to look at the breakdown of sales growth between large and small companies to see who is growing and who is not.Looking at the Distilleries market it seems that larger companies are, on average, experiencing declining sales growth yet smaller firms are growing slowly. It wouldn’t be surprising if many of the larger organisations look to acquire some of the smaller players in order to return to growth and improve their bottom line. In industries that have similar characteristics it seems a round of consolidation is entirely possible.

For more information please contact Chris Glancey on 01642 626 419 or alternatively email chrisg@plimsoll.co.uk.

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