Berry Bros families fear inheritance tax ‘body blow’

The families behind the historic London wine merchant Berry Bros & Rudd fear that the Labour government’s changes to the inheritance tax regime threatens their continuing ownership of the 376-year-old business.
Emma Fox, the business’s chief executive, said that a 50 per cent reduction in business property relief, which allows family businesses to pass down property tax-free to the next generation, was a “body blow” to the venerable St James’s institution.
The business is still owned by the Berry and Rudd families and has about £90 million of property on its balance sheet, including headquarters in Pall Mall, Europe’s largest fine wine storage facility in Kent and a 50 per cent stake in the Hambledon Vineyard in Hampshire.
Emily Rae, the merchant’s chief financial officer, said the relief was “something that the families have relied upon to keep the business within the family”.
She said: “We really have to think differently about that now on our balance sheet, where we would invest going forward, or how we best structure everything for them.”
Fox, 56, a former Asda and Bass executive, added that the budget could affect investment decisions: “We call it patient capital because we’re not expecting a return quickly. This is about investing for generations. So the budget last week really was a body blow and I think it’s going to force us to operate differently.”
Berry Bros joins a growing list of family businesses to sound the alarm on changes announced in the budget. Sir James Dyson described the scrapping of the relief as a “family death tax” in The Sunday Times and said it would kill off established family businesses and “any incentive to start new ones”.
The comments came alongside the release of Berry Bros accounts for the year to March, which showed a more than 50 per cent fall in headline earnings (ebitda) year on year to £10.1 million. The firm recorded a pre-tax loss of £2.2 million, down from £11.9 million the year before, amid what the company describes as “incredibly tough market conditions”.
The fall was driven by a planned £27 million of investment across the business including the joint venture with the port house Symington to buy Hambledon and the acquisition of a stake in the Cotswolds Distillery as well as a significant slowdown in its US business, Hotaling.
The San Francisco-based spirits importer and distributor, which generates about 30 per cent of the firm’s revenues, has been hit by a substantial post-pandemic reduction in spirit sales across the United States which has been felt across the industry as Americans move on from a pandemic-induced buying spree.
Fox said Hotaling had shown signs of progress over the past six months and she expected to be ahead of competitors as the market rebounds.
The merchant’s core business in fine wine retail and storage saw single-digit growth, with “more customers buying more frequently”, Fox said. Storage revenues, with collectors paying a premium to store fine wine in a temperature-controlled environment, were up more than 25 per cent on the year before and the business has just completed its first fine wine auction as it looks to develop more routes to market. The events and entertainment business grew 16 per cent.
The board approved a dividend of £13.10 per share, up from 794p in the previous financial year, which the chair, Lizzy Rudd, said reflected “the sustainable underlying growth in the business”.