Sunday, 10 May 2015

Watney, Combe Reid (part two)

We’re continuing our look at the history of Watney, Combe, Reid.

I’ve written about the crisis in British brewing just before WW I before. The Liberal government whacked up the price of licenses for pubs and breweries. In the process making pubs less profitable and therefore less valuable. As most of a brewery’s capital was tied up in their tied houses, the drop in value of pubs left them with way too much share capital.

“The vital question of profit and loss for many years was a matter of urgent as well as vital concern. Brewing firms at about that time were forced to acquire licensed houses at very high prices to assure for themselves an outlet for even the minimum output essential to keep large brewing plants in commission. The return from these tied houses was quite inadequate and the times were lean indeed. The rate of dividend on the new firm's deferred ordinary shares for ten years, 1906-16, ranged from 3 per cent, to nothing. In 1906 the shares were written down by 75 per cent! About the end of the 1914-18 War, however, the tide turned and ran so strongly for the company that by 1925 the whole of the written-down capital had been restored.”
"Brewing Trade Review, 1950", pages 42 - 43.

Many breweries had write down their shares by similar amounts. Oddly, the final years of WW I – when brewing was highly regulated, and gravities slashed – were when the brewing industry got back into shape and started generating reasonable profits and dividends.

This demonstrates how well Watney did in the 1920’s:

"Watney Combe.
It was announced Friday afternoon that the dividend on Watney Combe Reid stock was to be increased from 17 per cent, to 19 per cent, for the year to June 30 last. The report is now available, and shows trading profits of £1,365,483. This compares with £1,340,735 the year before.

Another £400,000 is placed to general reserve, but it is stated that a similar amount placed to reserve last year has been expended improving properties and converting leaseholds into freehold. The general reserve is £759,455.

The financial position is very sound. There are investments in Government securities for £532,879."
Dundee Courier - Monday 30 July 1928, page 2.

If there’s one thing that helps build team spirit, it’s a good piss up. I can’t imagine this was a beer-free event:

“There were minor problems in plenty incidental to the merger. One of them (worth mentioning only because of the original and practical solution found for it) was jealousy among the three staffs. This was dispelled by putting them aboard a river steamer on a fine summer evening, taking them to Greenwich and putting them right with a capital dinner and a capital speech.”
"Brewing Trade Review, 1950", page 43.

Many of London’s large breweries, situated in the city, by the river or in the East End, were hit by bombs.
“Then came the greater hazards of the 1939-45 War, when the Pimlico brewery, various stores and houses were bombed, the brewery time and again, 12 horses being killed by one high explosive bomb and a fire lasting several days being started by an incendiary. At this stage only does the firm's flair for ingenious solution of difficulties seem to have been slightly out of register. Goats were installed in the stable, because they were said to set the horses an example of imperturbability during bombing. In the result, the goats were found cowering in a corner paralysed with fright while the horses remained placid.”
"Brewing Trade Review, 1950", page 43.
I was quite surprised by the ownership structure of the company in the 1950’s. Much more splintered than I expected, with a large number of relatively low-value share holdings:

“To-day, the firm ranks with major organisations in other trades which have The character of a great public service, with the need to show a profit acting as an incessant spur to further effort, to unflagging efficiency and initiative. Financially it is a "pyramid," broadly based on more than 10,000 holdings of deferred ordinary shares averaging little over £300 each (the number of holdings in 1907 was 871). The larger concept of the purpose of this great organisation has found its finest expression perhaps in the improved public house: during 1918-40 the firm spent the immense sum of £1,003,577 on modernisations costing over £1,500 and £2,780,956 on rebuilding. The effort is the more remarkable for the fact that it was started when the memory of dividend-less years was still fresh.”
"Brewing Trade Review, 1950", page 43.

Seems an odd ownership for an aggressively modern firm like Watney. Several London brewers were keen on “the improved public house” between the wars. Barclay Perkins and Whitbread had similar schemes to improve and enlarge pubs, making them acceptable to a larger group of society. Food and facilities like bowling greens were often added.  Though brewers were offered frustrated in their attempts to make their pubs nicer places by teetotallers on licensing committees. They wanted to keep pubs as disreputable as possible to make them easier to close down.

More Watney history to come. Maybe some more recipes, too.

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