Berry Bros & Rudd families warn inheritance tax changes threaten legacy of historic wine business
The Berry and Rudd families, owners of prestigious London wine merchant Berry Bros & Rudd, have expressed concern over recent changes to inheritance tax that could threaten the future of their 376-year-old business.
The Labor government’s proposed 50% cut in business capital gains—allowing family businesses to depreciate assets tax-free—has left families struggling with the prospect of new costs.
Emma Fox, CEO of Berry Bros & Rudd, described the policy change as a “body blow” for the family-run agency. The company’s assets, estimated at £90 million, include its historic headquarters in Pall Mall, a large state-of-the-art wine cellar in Kent, and a 50% share in Hambledon Vineyards in Hampshire.
Emily Rae, CFO of the business, emphasized the importance of help, saying, “It’s something that families rely on to keep the business within the family.” This change has caused households to reconsider their long-term investment strategies, with possible changes to their balance sheet and asset allocation in the future.
Fox, a former executive at Asda and Bass, warned that the changes to inheritance tax could hamper the company’s ability to make long-term investments, impacting its “patient capital” approach that focuses on product growth rather than short-term profits. “This budget forces us to work differently,” he added.
The concerns of Berry Bros and Rudd are similar to those of other UK family businesses, with industry figures such as Sir James Dyson criticizing the policy as a “family death tax” that could disrupt both established businesses and budding entrepreneurs.
The warnings from Berry Bros & Rudd coincide with the release of its financial results for the year ending in March. The company reported a 50% drop in earnings before interest, taxes, depreciation and amortization (EBITDA), down to £10.1 million, and a pre-tax loss of £2.2 million. This reduction reflects a challenging market environment and significant investment, including a £27 million commitment to expand its operations.
Investments include a joint venture with port house Symington to acquire Hambledon Vineyard and a stake in Cotswolds Distillery. However, the business has faced headwinds in its US operations. Hotaling, its San Francisco-based spirits retailer, which accounts for about 30% of the company’s revenue, has experienced a steep decline as post-pandemic spirits sales slump across the U.S. market.
Despite these challenges, Fox noted an improvement in Hotaling’s performance over the past six months and expressed confidence in its leading competitors as the US market rebounded.
The wine retailer’s core business of fine wine sales and storage is strong, with single-digit growth in retail and a 25% increase in storage revenue, driven by collectors paying premiums for temperature-controlled wine storage. Berry Bros and Rudd recently completed its first wine auction as part of an effort to diversify its offerings, while its events and entertainment division grew by 16%.
Lizzy Rudd, chairman of Berry Bros & Rudd, emphasized the board’s commitment to business sustainability, approving a dividend of £13.10 per share—up from 794p last year—reflecting “steady business growth” despite challenging conditions.
