THE managing director of Inverarity Morton has underlined the “transformation” in the company as new accounts show it has returned to profit following two years blighted by the pandemic.

The Glasgow-based drinks wholesaler made a pre-tax profit of £1.5 million in the year to September 30, and declared it is on course to report a result “every bit as good” in its current financial period.

The return to the black follows losses of £561,123 and £1.97m in 2021 and 2020, when business at the on-trade focused company was decimated because of the closure of bars, restaurants, and hotels during lockdowns.

Speaking to The Herald about the turnaround in the family-owned wholesaler’s fortunes, managing director Stephen Russell said: “It really is almost like a transformation in the company. [We are] delighted to come out the other end, absolutely delighted.

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“Our business literally fell off a cliff for the best part of two years. We literally lost somewhere between £2m and £3m over the event.”

Mr Russell explained: “We are lucky because it is a family-owned company. We are not dependent on a bank. The family supported the business. You just had to keep your head up and know that we would come out the other end.”

Mr Russell, who has worked for the company for more than 45 years, said Inverarity Morton is now reaping the benefits of changes it was able to make during the quiet periods of lockdown. Chief among those was the introduction of a new system at its 100,000 square foot warehouse in Thornliebank, including a move to voice-activated stock picking and the introduction of electric “ride-on” trucks for staff, which Mr Russell declared has had a transformational effect.

He said: “The new system has definitely created major efficiencies throughout the company. That is transmitting to the bottom line.”

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Mr Russell added: “The digital age is working for us. Beforehand, for example, if we got goods in, it was a very manual process. You would check in the order, sign the paperwork and the paperwork would go round different departments. Now, somebody signs a barcode at the back door and it’s in the system. It has definitely improved the efficiency all the way round.”

The new accounts show turnover at Inverarity Morton leapt to £69.9m in 2022 from £34.4m the year before.

But while it benefited from the reopening of the economy after Covid, both it and its customers are being challenged by the continuing cost of doing business crisis.

Mr Russell said the inflation crisis was a “nightmare” as some suppliers were now  putting through price rises twice a year.

He said: “We’re not a producer. We can try and influence our own wine agency people. But when you have got Diageo coming and saying the price of Smirnoff and the price of Guinness is going up, there is nothing we can do about that but pass it on.

“At the end of the day, everybody just has to keep passing on increases. It will ultimately have a detrimental effect on people’s ability to spend.”

Mr Russell added that in these circumstances, Inverarity must focus on ensuring the quality of the service it provides stays high.

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He said: “Service is what we have to fight on - service, range, efficiency.”

Asked to sum up the mood among customers in the on-trade, Mr Russell said conditions remain tough, noting that even successful businesses are “probably flat-lining”.

He flagged the rise in interest rates over the last 18 months as a major factor influencing whether consumers are able to eat out in the restaurant sector.

Mr Russell said: “If you imagine the amount of money on a monthly basis that that is going to suck out of people’s disposable income… If anybody is trying to cut down, one of the easiest things people can do is not go out for a meal.

“They can go to Marks & Spencer, buy a meal and a bottle of wine, stay in, and watch a movie. That’s one of our competitors now. We need people to go out to bars and restaurants and hotels. That is our business.”

Despite the challenges, Mr Russell said trading in the firm’s current year, which has passed the halfway stage, was progressing “just as well” as last time.

“I’m expecting this year to be every bit as good as last year,” he said.

Inverarity Morton currently employs 150 people, 50 fewer than before Covid struck.

It has ordered eight new 18-tonned Mercedes trucks, at a cost of more than £1m, in order to comply with new low-emission zones in Scottish cities, and recently bought an electric van to fulfil smaller deliveries in Glasgow. The company’s sales force now also drives hybrid or fully electric vehicles.