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DB Breweries annual profit gains 8pc

NZN 9/06/2017 Paul McBeth

DB Breweries, whose managing director Andy Routley this week announced his exit, lifted annual profit 8 per cent in 2016 as the country's second-biggest liquor company fattened gross margins in the face of largely flat revenue.

The local liquor company owned by Dutch brewing giant Heineken reported net profit of $27.1 million in calendar 2016, up from $25.1m a year earlier, financial statements lodged with the Companies Office show.

Revenue rose 2.7 per cent to $499.9m, recovering some ground from 2015 when sales were down, while the cost of excise duty, raw materials and packaging edged up 0.1 per cent to $284.7m.

DB has been grappling with falling beer consumption and a growing demand for boutique products, with sales of craft beer on the rise.

That's spurred the likes of DB and rival Lion to buy their smaller craft beer rivals, the most recent being DB's acquisition of Tuatara in January.

The latest accounts acknowledge the acquisition after the December 31 balance date, while keeping the price paid secret.

Tuatara's cornerstone shareholder Rangatira Investments valued its 36 per cent stake at $3.6m, implying the entire business was worth $10m at the time, and the fund manager this month booked an $8.6m gain on the sale of various investments, including its share of Tuatara.

DB boosted its advertising and promotional spend in the year to $32.2m, lagging behind the pace of increase by larger rival Lion.

Liquor advertising remains a fraught subject in New Zealand.

Research this year from the University of Otago found alcohol sponsorship in New Zealand was prevalent in international sport, and the academics threw their weight behind a recommendation in the 2014 ministerial forum on alcohol advertising and sponsorship to eventually ban alcohol sponsorship of sports.

The local liquor group lifted its dividend to Dutch parent Heineken, paying $21m in 2016.

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