Black Sheep moves out of the red for the first time in five years

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Black Sheep
Jo (left) and Rob Theakston

Masham-based Black Sheep Brewery in back in the black for the first time in five years after reporting sustainable growth in turnover and a significant increase in operating profit for the year to the end of March.

The positive performance was on the back of a declining cask ale market, which fell by 7% year-on-year.

July 2017 marked a significant moment in Black Sheep’s 26-year history as it launched its first-ever small batch craft lager, 54° North, a brand created in homage to the brewery’s hometown of Masham, which sits on the 54thparallel.

Black Sheep’s brewing innovation and diversity continued with the creation of new products to the on and off-trade markets. This included securing national off-trade distribution for 54° North and scaling production up to bottled and canned format, while launching several new seasonal and bottled brands, including Flying Circus and award-winning beers Venus & Mars and Choc & Orange Stout.

The brewery’s reputation across the beer and pub industries was further strengthened as it was recognised by the BBPA with its prestigious ‘Beer Champion 2017’ annual award. Black Sheep also built on its Yorkshire roots as it became the official brewery of the Tour De Yorkshire – one of the UK’s premier sporting events – and renewed its sponsorship with Yorkshire County Cricket Club.

The Board is actively looking into developing a sustainable packaging solution for its bottled products, while also exploring investment in Black Sheep’s retail presence, as strategies to deliver potential long-term growth.

In its annual results, the brewery announced:

  • A 3.3% increase in turnover to £18.6m from £18m in 2017;
  • A strong increase in operating profit of £697,000, from a £437,000 operating loss in 2017 to a £260,000 profit in 2018;
  • A continued commitment to brewing innovation with the creation of seven new beer brands in a variety of pack types, including the launch of its first-ever lager, 54° North;
  • In March 2018, 24% of the beer Black Sheep brewed came in brands it hadn’t thought about just two years ago;
  • National recognition across the beer and pub industries for its commitment to brewing in the UK, as Black Sheep was named The British Beer & Pub Association (BBPA) Beer Champion 2017;
  • Plans to develop Black Sheep’s own £2m packaging facility for its bottled products, as well as the potential to diversify the company’s retail operation;
  • Paul Theakston, Black Sheep’s founder, will step down from the Board after the AGM later this month.

MD Rob Theakston said: “This has been another year of progress for Black Sheep as we demonstrated our ability to adapt to the challenging market and trading conditions to deliver positive results and an award-winning year. The day-to-day running of the brewery and the collaborative efforts of our team has contributed massively to this year’s success, executing the Board’s strategy to reshape and make Black Sheep even more competitive.

“We have continued to diversify the Black Sheep brand with the development of several new products to the on and off-trade that complements our existing, core range. The launch of 54° North, our first-ever lager, was one of many well-received new additions to the Black Sheep range.

“Our innovative brewing approach is helping to set Black Sheep up for the future as we continue to face a shrinking cask market, and this diversification will be crucial to our future success.”

Chairman Andy Slee said: “We have enjoyed a positive year, despite varying challenges facing brewers, including the disproportionate tax burden on the sector. Black Sheep currently pays five and a half times more in beer duty than eBay pays in UK corporation tax which strikes me as wholly unfair. Beer duty and business rates remain the issues focusing the sectors time at present, especially in dialogue with Government.

“I am delighted that we have been able to meet our targets and deliver encouraging results. Our priority remains building on this positivity and delivering a sustainable future.

“Third party packaging continues to be a high cash commitment and plans are in place to provide a cost-effective solution that has the potential to deliver long-term profitability for Black Sheep. We are also exploring the possible investment in developing our retail operation that could drive further growth, as the industry continues to diversify.”

The original ‘Black Sheep’ was Paul Theakston, who founded the company in 1992. Andy said: “The entire Board and I would like to wish Paul all the very best in his well-earned retirement. Paul has overseen the development of this iconic brewery over the last 26 years and been instrumental in making Black Sheep a household name that is exported throughout the world. His sons, Rob and Jo, the wider management team and the Board will continue to uphold the values and legacy he has left behind, producing great Yorkshire beers day in and day out.”