Yesterday’s announcement that Marston’s is acquiring the Charles Wells Brewing and Beer Business for £55 million and loose change (or “working capital adjustments”), at a pretty conservative 5.5 times ebitda, adds another five historic old brewery names, Courage, McEwans, Young’s, William Younger’s and Wells, to a portfolio that already reads like the line-up at a quite good small beer festival circa 1990: Marston’s itself, Banks’s, Jennings, Thwaites, Ringwood, Wychwood, Brakspear, Mansfield, Mitchells (with Lancaster Bomber) and, if you include beers Marston’s brews under licence, Bass and Tetley.
It will give the company six working breweries, and more than 50 “ale” brands, from Bank’s mild to McEwan’s Champion. That’s around twice as many as its closest rival, Greene King, which runs just two breweries, its own original home in Suffolk and Belhaven in Scotland, and continues brewing under the names of just five vanished brewers: Morlands, Ruddles, Ridleys, Hardy’s & Hansons and Tolly Cobbold. On the retail side, however, Greene King owns around 3,100 pubs and bars, making it the third biggest operator in the country, Marston’s “just” 1,750 or so, meaning it vies with Mitchells & Butlers for fourth place.
So what’s with Marston’s policy of adding ever more seemingly pretty similar “twiggy brown bitters” to its line-up? I interviewed the company’s chief executive, Ralph Findlay, two years ago, right after Marston’s had acquired Thwaites’s beer portfolio and made those beers available to all its pubs, and he was pretty specific about the desire to increase further his already considerable ale offer: “Choice is where the market is at,” Findlay said. “Range is something you simply have to have, both for licensees and their customers.” Even after the Thwaites acquisition, he said. Marston’s would continue to look for “opportunistic” purchases if they came up: “We look at potential acquisitions that are consistent with our strategy and which can contribute to our return on capital. We have had a strategy over the past five years that’s not been reliant on acquisitions, though we’ve made them when it’s been opportunistic to do so, such as the acquisition of the Thwaites brewing business. I think we’re in the fortunate position of having an incredibly strong beer range from the various breweries that we’ve got. It’s a strategy that is undoubtedly working.”
Why not, like others, just buy in beers, rather than buy breweries? Because, as Findlay says, it’s a strategy that is working. Marston’s also revealed its half-year figures yesterday. Own-brewed beer volumes were up two per cent, in a declining market. Sales were up three per cent, to £440.8m. Average profit per pub was up three per cent. Like-for-like sales were up between 1.6 and 1.7 per cent. More City analysts than not continue to have the company as a “buy”.
Should we mourn the capture of more beer brands by one large company? Not in this case, I believe, and the reason is something you probably don’t know, because Marston’s has never, curiously, made a big parade about it. Five or so years ago, Marston’s brewers made a mighty oath that they would not let any of their beers continue to go on sale in clear glass bottles, believing that the dangers of the product they poured their hearts into being light-struck and skunky through not using brown bottles was too great. The company’s marketeers accepted the brewers’ ruling, something that brewers at no other large UK ale brewery, apart from Fuller’s have been able to achieve: Greene King, Shepherd Neame, Hall & Woodhouse, all sell some or several of their beers in clear bottles, and even Charles Wells has at least one several of its brands, includingWaggle Dance (originally, history fans, made by Wards of Sheffield Vaux of Sunderland, then Vaux, then Young’s, and thus about to be on its fourth fifth owner) and the Burning Gold iteration of Bombardier (as the Beer Nut reminded me) in flint glass. The commitment by Marston’s to beer quality ahead of spurious marketing arguments about how consumers are supposedly encouraged to buy beers that they can see the colour of makes me more confident that Wells’s brand are in relatively safe hands under the boys from Wolverhampton.
Ironically, or at least I think it’s ironic, one of the brands Marston’s is acquiring distribution rights to via the Wells purchase, the Spanish lager Estrella, has just been running an ad campaign un the UK under the slogan “Darker bottle, better beer”, explaining to consumers that “research has shown that exposure to light damages beer and affects its flavour”, and for that reason it was darkening its bottles by 30 per cent.
I’m slightly puzzled that Charles Wells has said that, while it will now be concentrating on its pub estate, it will also be building a new small brewery in Bedford to brew the Charlie Wells “craft beers” and John Bull range, which it is not selling to Marston’s. Is this continued toehold in the brewing world a way of appeasing the family shareholders (many of them formidable elderly females who, Paul Wells once told me, all had his phone number and would ring him up when they felt the company’s figures weren’t good enough) who might try to vote down the sale of the main brewing operation if they felt the company was cutting off its roots after 141 years of supplying beer to the people of Bedford?
Charles Wells currently brews several beers I’m very fond of, including Courage Imperial Russian Stout, Young’s Winter Warmer and McEwan’s Champion, that will now be brewed under Marston’s control. For probably the only time ever, I’m going to let Tim Page, chief executive of Camra, speak for me: giving a cautious one thumb up to the takeover, he said yesterday: “Marston’s has a positive track record of keeping the breweries it acquires open, in situ, and in many cases investing in the sites to increase capacity, and we urge them to continue that policy. We’d also encourage them to protect the brands that they have acquired and increase the range available to beer drinkers, by continuing to supply them alongside the existing beers produced by Marston’s owned breweries.”