Here We Go Round the Mulberry Bush
What Roger Protz, the well-known beer writer, calls "death by retailing"
As the national breweries switched to keg in the 1960s, the majority of
smaller players sought to ape their superiors (albeit in size only!).
The growth of lager in the 70s saw similar sheep-like manoeuvres with millions
of pounds of investment into own-lager brands.
Eventually smaller brewers lost the battle, dropped their own brands and
bought the more heavily supported brands of their big brothers.
Currently some of the smaller breweries are trying to copy the nationals in the
race to develop nitrokeg brands but it is not hard to foresee the
demise of Spencers, Lambtons and XS Smooth.
Seemingly many lessons are simply not learned by everyone.
Is it fear of failing to impress shareholders or City analysts with a
progressive and forward-looking management?
Is it simply ego that drives some to ape the big brewers?
Whatever the reasons, the same issues appear in the growth of branded and
megapubs - the drive to comply with "the expert opinion of analysts" and conform
to perceived standards of acceptable excellence.
Demographics tell us that in 2005 there will be a boom in
the age groups 18-24 and the over-50s. Already these are the groups
using pubs and spending most. Presumably the corporate thinkers are well aware of this and this is driving the two main strands of development: large, noisy theme pubs for the young and quiet, food-oriented pubs for the mature.
What follows is just a selection of the goings on - there has been a tremendous
churn in the industry in 1997-98 and it's certain to continue in 1999.
Not so easy
Cambridge is currently being developed by the big boys, which at this stage
will leave us with a second Rat & Parrot, Hogshead, All Bar One, Firkin and a Wetherspoons.
This is not a large development (yet!) compared to other cities:
it is up to a decade behind in such developments.
Cardiff, Bradford, Sunderland, Tyne & Wear, Coventry are all experiencing a
change of attitude of the licensing & planning authorities after their recent bad experiences.
In late 1998 Brighton planning committee rejected two
major licensed complexes yet JD Wetherspoon got planning permission
for The Regal, Norwich, against residents' objections.
A recent York licence approval required no TV or video games, adequate staff to be on duty, CCTV and Pubwatch membership.
A Hogshead in Redhill was refused by a planning inspector
due to recent public disorder and the loss of retail space.
Two of the largest specialist estate agents, Fleurets and Christies,
believe the high street superpub boom is over.
With the ball now rolling in Cambridge, the name of the game is to prove one's progressive credentials.
Thus a "dynamic retailing concept" appears such as The Rattle & Hum - "Cambridge's premier night spot" already on day 1, it claimed.
Playing the game
Examples of brewers & pub groups taking up the game are everywhere:
Moreover all these appear small fry when considered against Birmingham's planned
£75M Star City Leisure complex - a 25 acre site next to Spaghetti Junction.
It is a multi-million pound reclamation programme funded by Birmingham Heartlands
Development Corporation involving the removal of 100,000 tons of rubble with new
access roads & roundabouts already built.
- Is looking to sell its franchised and leased pubs in order to
switch investment into hotels and other "leisure concepts" such as
health clubs and hotels.
It sold 1241 pubs to Nomura in late 1998.
- Vaux (now the Swallow Group)
- Bar Centos - cafe bar formula
- Bramwells - community managed pub formula
- Led by recently-recruited retailer Martin Grant, it wants to
dispose of two breweries & 350 tenancies to concentrate on its branded outlets.
- Were about to sell their 549 tenancies to the Premier Pub Co. for £137.3M with financing arranged by
the UK's largest pub operator - that well-known Japanese bank Nomura
- to raise cash for investment in branded managed operations (and to give £60M to shareholders).
Marston's have spent over £6M on the Nomura deal.
- However Wolverhampton & Dudley Breweries mounted a £267M takeover bid for brewery plus all its pubs, subsequently
increased to £289.3M.
- Greene King seemed to be interested in bidding too at first but
W&D allegedly discouraged this by offering to sell 170 pubs to GK.
- Then Marston came back with a spoiling bid for W&D, which would close the Camerons (Hartlepool) and Bank's (Dudley) breweries and divert production to
Bass' M&B Birmingham brewery. It would sell off W&D's 1000
tenancies and 200 managed pubs.
Fortunately the Office of Fair Trading
is investigating this bid.
- W&D sees no future in regionals and wants to grow. It's fully committed to community
If it gets its way, the other regionals will almost certainly have to follow suit and
with drastic consequences and a reduction in consumer choice.
They also then become targets for the national groups.
- Regent Inns
- Cafe Jazbur
- Pukkabar & Curry Hall
- Jongleurs - comedy outlets
- Have always succeeded running what can only be
regarded as traditional pubs, now find themselves under scrutiny from
"expert City analysts" and in an effort to prove what a forward-thinking
company they are, have drawn up a portfolio of branded concepts.
- Morrells of Oxford
- Recently purchased by Michael Cannon (of Devenish & Magic
Pub Co. fame), aided by Paul Beadle (Greenall Managed House fame),
has clearly stated that concentration on food is the wise option
for its 132-pub estate. Its beer is produced under contract by the
Dorset Thomas Hardy Brewery.
It completed its first pub refurbishment 40 days after the takeover
(The Village Inn, the sole pub in Berinsfield, Oxon.).
- Wolverhampton & Dudley
- Plans 40 more Varsity "student-friendly" pubs, making 49.
They concentrate on food, drink & conversation, with no discounted drinks, big TVs or video games.
- Has just opened a Wetherspoon-style venue in Manchester, The Goose: smoke-free areas, quiet, food oriented,
and low beer prices.
The site will feature from Scottish & Newcastle alone four outlets:
It will also have from First Leisure a Heroes Sports Bar, supplied by
Scottish & Newcastle.
- Rat & Parrot
- New Orleans
- Mediterranean-style restaurant
- Live entertainment bar
In a project of this magnitude only the big can compete.
No small pub chain or individual Free House will be able to exist alongside the giants.
No micro brewer (certainly) or regional (probably) will
be able to strike up supply agreements if the nationals so choose.
However, as concerning as these developments are - which must be viewed collectively -
there are signs that some companies are beginning to
reassess or simply never sought to play the game.
- Is about 400 pubs under the 4312 Beer Orders limit which would
require it to sell some off.
It has announced (less than 6 months after proclaiming the great plan)
a switching of expenditure away from megapubs into other leisure concepts.
Some has even gone to Whitbread Pub Partnerships, its tenant and lease division,
to secure 14 new pubs after years of disposal.
It's planning to turn the closed Flowers brewery in Cheltenham into a £30M leisure centre
and perhaps a micro-brewery.
It's just announced the sell-off of 75 of its smaller pubs to the Alehouse pubco
and it's one of the retailers experimenting with linked retail chains, e.g.
having a Costa Coffee cafe within a Hogshead.
For a while it seemed to have an interest in taking over Regent Inns but that's not a themed chain.
- There's a rumour of a possible takeover by Granada and
of a bid for First Leisure (currently run by Michael Grade).
- Allied Domecq
- Scruffy Murphys
- Mr. Q's
- One AD executive, Tony Hale, said at the recent AGM that huge investment into
megapubs only diverts money from one outlet to another.
(Surprise! It's not "new money".)
Another executive, Andrew Knight, said AD believes passionately in the future of unbranded and community pubs.
- Their "Going for Growth" programme has trained over 1000 managers in pub leadership skills.
- As an aside, they get the prize for silliest Internet domain name in the industry:
(why not allieddomecq.plc.uk, for instance?)
- Newt & Cucumber
- Wig & Pen
- Bar Beristo
- Artist's Fare
- Exchange Bar Diners (bar/restaurant)
- Are planning to pull out of town centres in favour of
community and tenanted pubs. They bought the Newt & Cucumber youth-oriented
chain from Unicorn Inns in 1995 but now plan to sell or convert them.
- JD Wetherspoon
- Tim Martin now talks of "individualised pubs", accepting he has built some
too large & needs to give "architects more freedom with design".
He plans to spend £100M on 80 new outlets (creating 2000 jobs).
Small is beautiful
Some of the smaller companies appear very bullish, enough to buy and strengthen
their traditional base.
The uniqueness of the British pub is celebrated by everyone.
The variety in style of outlet, the variety of product, the variety of people
have long been central to the pub's success.
The growth of the branded and megapubs tends to go against this tradition.
The McDonaldisation (literally in the case of The Churchill, Madingley Road) or the Firkinisation of the brewing & pub
industries helps only the very big player.
- Shepherd Neame, Kent
- With profits up 9%, is to raise investment in its pubs and is interested in strategic purchases.
- Cains, Liverpool
- Has purchased and is looking for a few more sites to sell its successful brews
outside its immediate trading area.
- Mitchells, Lancaster
- Has reinforced its commitment to its core business by announcing
a 5-year plan to double its estate to 200 and a £750,000 project on
its existing brewing site of a museum and tourist centre.
- Charles Wells, Bedford
- Has developed Cox's Yard, Stratford-Upon-Avon, as a pub, museum, brasserie,
tea shop and conference centre.
The brewing kit from the Ancient Druids, Napier Street, Cambridge was transferred.
Back to Basics and
and Pubco News.
ALE February 1999 No. 293
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