Bewley group made profit of €1.6m last year

 

CAMPBELL BEWLEY, the Irish tea and coffee group, made a profit of €1.6 million last year, although turnover fell 13 per cent to €72 million as recession-struck customers cut back on caffeine purchases.

Pretax profit rose to €1.67 million last year, up from €1.56 million in 2008, as the company compensated for the decline in its sales by cutting costs.

The group’s workforce was reduced by about 100 people to 800 employees, with most of the cuts taking place in its Rebecca’s cafe business in Boston.

“2009 was very much get into survival mode and take your costs back,” said John Cahill, chief executive of Campbell Bewley.

Mr Cahill said the company did not lose customers in 2009, but that the average value of transactions fell. This was true in particular of its landmark Grafton Street cafe, where turnover fell by a third in 2009 and has declined by a further 15 per cent this year.

While morning and lunchtime trade is now flat year-on-year, the evening trade is still suffering.

“Where before you had maybe two-thirds of people ordering a large pasta, now it’s two-thirds small,” said Mr Cahill.

“Customers began to curtail their spending pattern even though they were still coming through the door.”

Turnover at the historic cafe building, which houses a Cafe Bar Deli franchise, fell to approximately €5.5 million, according to Mr Cahill. The group pays annual rent of €1.5 million on the site, which he described as “excessive”.

Bewley’s, which has more than 4,000 trade customers in the Republic’s food-service sector and also sells branded tea and coffee through hotels and the grocery trade, has been hurt by lower sales in convenience stores due to the fall-off in construction employment. It has also seen revenues decline in the subdued office sector and from lower tourist custom.

However, Mr Cahill said 2010 had been a better year. Although like-for-like sales are running down 2 per cent, a number of business wins means total revenue will be up 2-3 per cent on 2009.

The group has signed new deals to supply coffee to Dunnes Stores’ Timepiece restaurants, Burger King and Mace, while in the US, Rebecca’s has signed a contract with American Airlines.

Campbell Bewley’s turnover in the Republic fell 19.6 per cent to €33.4 million.

In Britain and the North, its smallest market, turnover increased by 57 per cent to €3.2 million. With the Irish market likely to remain constrained, the UK is a target area for export growth, Mr Cahill said.

In the US, where it owns the 30-strong Rebecca’s cafe chain and catering business in Boston and the Java City operation in Sacramento, turnover fell 9.5 per cent to €35.3 million.

Sales of Bewley’s-branded tea and coffee in the grocery market have grown in volume, Mr Cahill said, but are declining in value terms. The company is also seeking to expand fresh coffee sales, believing the Irish market is “a generation behind” the US, where fresh coffee is the norm.

“It’s still very unstable out there,” Mr Cahill said, citing poor consumer confidence in the Irish economy. “We’re not over-optimistic, but we’re not over-pessimistic.”