Friday, 9 October 2015

The dangers of a monopoly

I’ve not abandoned Anthony Avis’s entertaining memoir of 40 years in the brewing industry. Just paused a while to catch my breath.

His view from the eye of the takeover storm is helping me to understand the process much better.  To see the factors driving consolidation in the brewing industry. One very important cause was the fall in beer consumption after WW II. It put a lot of pressure on brewers. Coupled with most pubs being tied, it left few avenues for expansion to the ambitious brewer. Other than to pub competitors and so gain control of more pubs.

Absentee, uninterested (except for the money it earned them) owners also played a big part. The family brewers that survived were mostly those where family members continued to play an active part in the day-to-day running of the business.

But I digress. I wanted to quote Avis again. This time on an unexpected danger: gaining a local monopoly. I’ve a personal interest in this topic, as I grew up in a town dominated by a single brewer. But I didn’t realise at the time how short-lived this phenomenon was. Courage only got their stranglehold on Newark’s pubs after buying John Smith in 1970. This ended in the late 1970’s when Courage swapped pubs with Bass and Allied.

Balderton, the Newark suburb where I lived, went from 4 Courage pubs to 2 Courage, 1 Bass and 1 Allied. And from zero pubs selling cask beer to two.  Half a dozen or so of Courage’s 30-odd pubs in Newark itself also changed hands. Meaning the near-monopoly had lasted fewer than 10 years.

Loco monopolies weren’t uncommon. Tetley owned a ridiculous percentage of the pubs in Leeds. Partly through buying up local rivals such as Melbourne, but also through the formation of Allied Breweries. Ind Coope had owned a considerable number of pubs in town and these were transferred to Tetley. Similarly, the pubs Tetley owned down South became Ind Coope pubs.

Avis is talking about the Tadcaster Tower Brewery here:

“The company saw out the War years, the exigencies of the time requiring it to exchange all its Grimsby public houses with Hewitt's Brewery pubs in York, under the pressure of government guidance for economy in transport costs. Brewery companies were very partial to the idea of monopoly of trade in a district, if only because they were more experienced in regulation than selling; they were not made aware of the dangers of such a concept in reality, which was to reinforce the continuance of what they were doing and the way they were doing it - however, it made for a cosy existence. In this particular case, Hewitt's came off worse, as it left them owning or controlling virtually all the licensed premises in Grimsby. Tadcaster Tower Brewery {TTB} were not so dominant in York, and the competition kept them on their toes.”
"The Brewing Industry 1950 - 1990", by Anthony Avis, 1997, page 27.

Many such schemes existed in WW II. Sometimes brewers just supplied other brewers’ pubs with beer, but on others occasions pub ownership was exchanged. It was a very sensible way of avoiding unnecessary transportation of beer.

That’s a very telling point about breweries being better at regulation than selling. The way the trade was structured, with most sales being in tied houses, didn’t exactly encourage salesmanship. It’s no coincidence that the brewery famed for its advertising, Guinness, had no tied estate.

Avis makes some more good points here:

“One of the more extreme examples of local monopoly, to my knowledge, was that of Bentley & Shaw in Huddersfield, where, after the take-over by Hammonds, the latter controlled over seventy five per cent of all licensed premises in the town. The result was a sameness to all the public houses; they looked alike inside and out - the style was identical, furniture, decor, the beer on sale - even the tenants (there were very few managers then). The same brewery senior management laid down the rules and the policy, and like all monopolies, became very efficient at control and very short of inspiration; any idea which for its implementation called for a change in routines, an upending of hitherto accepted philosophies, and a degree of risk, was treated with  suspicion and, usually, rejection. The not unreasonable argument put forward against any change was that of "Why alter success, and what is there to be gained by it? They (meaning the customer) have to drink in one or other of our pubs because we own them all". This argument was extended to the consideration of improvement of existing outlets and certainly to the construction of new ones; why improve or build when the customers have no choice where to drink? This led on to the idea of closing a pub where the brewery owned two or more in the same catchment area, on the basis that the customer would have to patronise what remained. Management thought slid into thinking in terms of control only; nothing wrong with that if the retailing had been left entirely to tenants to exploit, with only a tie for beer supplies; but it was not.”
"The Brewing Industry 1950 - 1990", by Anthony Avis, 1997, pages 27 - 28.

Why make an effort when the drinker had no choice? Seems like a recipe for long-term failure.

Another good example of a local monopoly was Norwich. The city had boasted three decent-sized breweries, but all fell under the control of Watney. Who closed two and supplied the city’s pubs with keg beer from the remaining one. Hardest hit were the villages around Norwich. While they once might have had two or three pubs from the different local brewers, once Watney got control of them all they started drastic pruning. Why run two or three pubs in the same village? The punters had no choice but to drink your beer in your pub.

Plenty more nuggets still to unearth from Avis’s delightful book.

1 comment:

marquis said...

Looking at the article, it's strange that Home Ales didn't go down rhw same route.There were many small villages boasting two or more Home Ales pubs, often across the road from each other.And in the nature of things, the beer tasted different in them.