Falling profits are small beer, says Rye River as brewery plots growth

Rye River Brewing Company, the Celbridge, Co Kildare-based craft brewery that rebranded from McGargles last year, saw its operating profit decline 81 per cent in 2021 to €52,343 as it negotiated what it called “the stop-start” nature of the hospitality trade during the Covid-19 pandemic.

Revenues at the brewery – which had four of the top 15 selling beers in the Irish retail market in 2021, according to Nielsen data – grew by just over 6 per cent to €7.5 million last year as it expanded its reach into the European market. Accounts filed recently by DP Financial, the entity behind the brewery, show that Rye River’s Irish revenues declined slightly from €4.7 million in 2020 to close to €4.6 million last year. However, the company generated an extra €900,000 in sales throughout the rest of Europe.

In a statement, Rye River said the business was hit with higher administrative expenses – which climbed 14 per cent to €1.7 million in 2021 – mostly due to moving to a 24/7 brewing model, a €1.3 million update of its packaging line and having to adapt to “the understandable ‘stop-start’ nature of reopening hospitality post Covid-19 waves with the resultant shift between emphasis on retail versus on-trade production and distribution”.

After tax, the company, which announced plans earlier this year to raise €3.5 million in growth capital, incurred a small loss of €28,171, down from a €334,000 profit for the previous year. Rye River employed an average of 62 people last year, compared with 56 in 2020.

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In a trading update, the company said sales volumes remained strong in the first half of 2022, “albeit with increased manufacturing costs” since roughly April.

“While recent investment in production efficiencies have eased pressure on costs, many increased costs are completely outside of the company’s control,” it said. “For instance, the sourcing of glass has moved from Russia to UK manufacturers since the onset of war in Ukraine, which will see an impact of €200,000 in additional costs in 2022.”

“Growing revenue and maintaining operating profitability in 2021 amid exceptional challenges in a further year of sustained flux resulting from the pandemic is an extraordinary achievement for Rye River Brewing,” said founder and managing director Tom Cronin, praising the “resilience” of his team.

“Despite the fresh headwinds posed by geopolitical events adding to inflationary pressures and some domestic and international uncertainty, our growth ambitions remain undiminished,” he said.