I’ve already discussed some of them: failing equipment; absentee, uninterested owners; lack of someone to inherit and run the business. And, of course, in the case of listed companies where the board members didn’t own a majority of the shares there was the possibility of a hostile takeover.
Whitbread’s tactics were to play on brewers’ fears of the latter. That’s how the Whitbread Umbrella came about. Whitbread offered to buy a minority stake in a brewery company to make them a difficult target for a hostile takeover. Ultimately, however, in many cases in simply led to a takeover by Whitbread.
Stones, which had a large number of small shareholders, was vulnerable to a hostile bid which is why they struck a deal with Bass Charrington in 1967 to sell up. The directors saw this as the best way of retained at least some control over their destinies. Again, it didn’t quite work out like that, but you can understand the thinking of the Stones’ directors.
Brewers were of particular interest to asset strippers because of the huge amount of capital embedded in their tied house estates. Fear of asset strippers was behind the “merger” in 1962 of Tennant Brothers and Whitbread:
“It was subsequently explained that a major incentive for the merger had been a need for Tennant's to avoid the attentions of asset strippers. At that time, there were unscrupulous speculators who were seeking out, buying up and closing down small-to-medium sized breweries in order to sell off their considerable assets. The breweries usually occupied prime sites in towns and cities and were filled with valuable copper metal. They owned hundreds of public-houses: many of these also on prime sites, and very often they owned houses, rented out to their workers. When all these assets were realised, it was plain that a brewery was worth much more closed down and sold off than it was when it was purchased as a going concern.”
"The Brewer's Tale" by Frank Priestley, 2010, pages 22 - 23.
Tennant had dodged the asset strippers, but what would life be like under Whitbread? They gave Tennant all the usual assurances about retaining their own identity. Call me cynical, but I know how these things usually work out.
“We didn't know very much about Whitbread's except that they were a large, London-based company that produced Mackeson Stout which was advertised regularly on television and Whitbread Tankard which was an early keg beer. Keg beer, unlike traditional draught, was filtered and carbonated, rather like most bottled beers. The advantage of this was that it was much more stable than draught and it remained in good condition tor much longer. The disadvantages were that filtration removed some of the finer flavours and carbonation rendered it somewhat gassy to the palate of those more accustomed to traditionally conditioned ales. However, we were assured that our traditional methods and products would be retained and that we would continue to trade under the name of Tennant Brothers Ltd.”
"The Brewer's Tale" by Frank Priestley, 2010, page 22.
Like many brewers with national aspirations, Whitbread was an enthusiastic early adopter of keg technology. But they were quite inconsistent. For a long while in the 1970’s none of their northern breweries, with the exception of Castle Eden, produced any cask beer. While in the south some of their plants produced large amounts of cask.
I suppose I should mention at this point that the first pub I ever entered was a Tennant’s house. Though it was a few years after the Whitbread takeover. It served beer the typical northern way: through metered electric pumps. Which made it easy to switch over to bright or keg beer without it being so obvious.
Next we’ll learn what Whitbread really did to Tennant.