Friday, 18 September 2015

Paying for take-overs

Take-overs have been very much talked about lately. You must be getting fed up with me saying this: it's nothing new.

The apparent motive may vary - acquiring brands with a cachet, expanding capacity, grabbing more pubs - but the underlying one is always the same. Making more money.

I was so happy when I found a copy of "The Brewing Industry 1950 - 1990" by Anthony Avis. Not because it's rare* as a book. But because it's a rare insider's view of the crazy consolidation of the 1950's and 1960's.

I'd almost said something above about being a materialist**. But in my, albeit fairly shallow so far, research into the whole merger thing, individuals have been more important than I expected.

Anyway, back to the topic. And a quote. Which could easily be a CAMRA text from the 1970's. But it isn't. The author was in brewery management, Hammonds to Bass Charrington.

"Take-overs and mergers had to be paid for, and this took two forms - the obvious step was an increase in the price of beer, and the other was the removal of good trading houses out of tenancy into direct management by the brewery, in order to secure both wholesale and retail profit. Increasing the price of beer enabled the brewery companies to increase the rents to tenants, on the specious argument that increased prices meant higher retail profits and therefore the tenant could afford to pay higher rent, and that too was based on the trade the tenant was doing in his house - the harder he worked and the more he increased his trade, the greater his rent. He effectively paid for his own success. By taking good trading houses under management, the brewery companies also effectively took away the incentive from a tenant to work hard to be in line for promotion to a better house. It took some years of this devious thinking on the part of brewery companies to get through to the tenants, accustomed to benevolent and paternalistic treatment by the brewery. The traditional, if unwritten, promise of a brewery to its tenant, that so long as he increased the trade of his present public house and sold ever increasing barrels of beer, he would be in line to get a bigger house when it came up for letting, and that the brewery would look after all his business problems to allow him to concentrate on the retailing, quite suddenly and within a few years vanished. A whole new ball game, with new rules, started up."
"The Brewing Industry 1950 - 1990", by Anthony Avis, 1997, page 28.


* My copy is no. 94 of 200.
** In the fucking philosophical sense.


Anonymous said...

I asume that it is such things that worries when Heineken buys Lagunitas (alright 50% then) or when Dugges (a Swedish smaller brewery that are growing) join forces with Carlsberg in terms of distribuation and sales. I can't really see that it's new/strange or even wrong. I can't see either that it is anything wrong with my reaction to not like these breweries as high as before even thou theire beer probably are the same. We should also remeber that beerdrinkers eazy forget like I have forgiven Fuller's for what they did with Gales, a few years back. We custumers decide about what to drink, simply!

Anonymous said...

Regarding rents, the local breweries such as Shipstone's and Home Ales charged nominal "wet rents" , seeming to be happy with the profits from merely selling their beer.Food sales were the landlord's or landlady's perk.
I remember visiting a Bateman's pub in the early 70s , the landlord told me that the rent was £15 per quarter and "Mr George" gave a 6% ullage allowance.

Martyn Cornell said...

Mine's copy number 15 ... signed 'A Avis"

It really is the best brewery insider's reminiscences every written. Fabulous book.