Bottled water brand Highland Spring suffered a 12 per cent decline in revenues last year as it absorbed a fall in sales caused by the pandemic, but narrowed its pre-tax losses thanks to restructuring efforts to bring down overhead costs.
The Perthshire-based company, which is owned by the al-Tajir family, said the results demonstrated the resilience of the business in difficult market conditions. It added that it remains confident in its long-term strategy.
Highland Spring extended its lead as the UK’s number one brand as volumes fell by 2.7% versus a 9.1% decline across the broader market. This helped it secure a 10.3% share of total unflavoured water sales in the UK, up from 9.6% in 2019.
Extended closures across the hospitality trade and the plunge in commuter traffic amid stay-at-home orders drug group turnover down to £88.1 million versus £100.5m previously. The average sales price, measured in pence per litre, was also adversely impacted as consumers moved away from purchasing small single bottles in favour of large multi-pack bottles for home consumption.
Highland Spring said this trend was beginning to reverse, but is not expected to return to pre-Covid levels in the current year.
After taking account of £1.1m of restructuring costs, pre-tax losses in 2020 came in at £1.8m, down from £2.7m the year before. At operating level, losses fell to £184,000 from £1.2m previously.
During the year Highland Spring closed its Speyside Glenlivet water bottling plant in Moray with the loss of six jobs. The upmarket brand, sold primarily to high-end restaurants and whisky aficionados, had struggled prior to the pandemic amid the increasingly competitive market for glassed natural source water.
The group, which employs about 400 people, received £979,000 in furlough grant during 2020. It also benefitted from a £7,000 reduction in rate payments under emergency business support measures from the government.
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“Our focus in the last 12 to 18 months has been on protecting our employees and ensuring the long-term sustainability of the business,” outgoing chief executive Les Montgomery said. “It is great testament to the commitment and dedication of all our staff that they adapted so well and continued to deliver strong performances.
“Despite the challenges of 2020, the business has remained resilient in the face of the pandemic, and we are currently in recruitment mode to ensure we have the right skills to meet demand as the country moves forward to a different way of life.”
The vast majority of what the group sells is unflavoured still or sparkling water, either under the Highland Spring brand or for the own label market. However, 2020 saw the introduction of flavoured Highland Spring in cans in response to “evolving consumer trends”.
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A new dedicated rail freight facility at its main base in Blackford is due to go operational next year and is expected to be carrying more than 40% of the company’s finished goods by the end of 2022. This will take approximately 8,000 lorry journeys off the roads each year, equivalent to an estimated 2.7 million miles per annum.
The group – which in the past has come under attack for its role in encouraging single-use packaging – said it will be carbon neutral by the end of this year, and is on course to achieve net zero emissions by 2040. It also continues to pursue several plastic recycling initiatives.
Highland Spring announced in August that Mr Montgomery will be retiring as chief executive, a post he has held since 2007, at the end of this year. He will then take on a non-executive role at the company, with his former duties taken over by joint managing directors Simon Oldham and Mark Steven.