Thursday, 10 September 2020

Beginning of the end for Barclay Perkins

The 1950s were troubling times for UK brewers. Beer consumption was falling and as a reaction mergers and takeovers were occurring at an increasing pace.

Early in 1955 a proposed merger between Courage and Barclay Perkins was announced.

"Big brewery merger in prospect
Courage and Barclay Perkins

Notes from our City staff — Friday Evening
The preliminary stages of an important brewery merger were announced today. The boards of Courage and Co. and of Barclay Perkins and Co. state that they have agreed in principle to the desirability of a merger by the formation of a holding company to acquire the share capitals of the two companies. An independent firm of chartered accountants, Peat, Marwick, Mitchell and Co. has been instructed to prepare a report with a view to advising the respective boards as to a suitable basis for such a merger.

Issued capital of Barclay Perkins is £2,911,000 and of Courage £2,540,000. At December 31, 1953. assets of the last-named group £13,417,000, and at March 31, assets of Barclay Perkins amounted to £12,948,000. The two groups, whose headquarters are in London, have a large trade there and in the home counties."
Yorkshire Post and Leeds Intelligencer - Saturday 12 February 1955, page 7.

What surprised me is how similar in size the two breweries were. Both has assets of around £13 million. Though, with £2.9 million in issued capital compared to £2.5 million, Barclay Perkins was slightly larger in that respect.

With the two breweries so close together on the south bank of the Thames, it doesn't take a genius to work out the likely outcome.

"Both companies earned trading profits of more than £1,000,000 in their last accounting years, and in each ease they were higher than a year before and both increased their distributions. The motive for merging two such strong units is probably the familiar one that the big brewers are all trying to extend the area in which they can sell, in particular, their bottled beers — and amalgamation is a simple way of doing so. In addition. there are several districts in which both companies operate and, therefore, substantial saving in operating costs could be effected."
Birmingham Daily Post - Saturday 12 February 1955, page 15.

The obvious way to make a "substantial saving" was to close one of the breweries.With their trading areas pretty much identical, supplying both sets of pubs from one site wasn't going to be much of a logistical problem.

Yes, Barclay Perkins was profitable, but it was only making a net profit of just around £200,000 - less than it had in the 1930s. And it was operating at well below capacity. In 1955 it produced 228,343 barrels - less than half the 485,431 barrels it churned out in 1946. While it 1912 589,543 barrels were brewed.*

Did the Barclay directors realise what was going to happen? You think it would be pretty obvious to anyone with half a brain. But, having read Anthony Avis's book, it seems many brewery owners were blind to what selling up entailed long-term.  

* Document ACC/2305/1/711/1 in the London Metropolitan Archives

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