1950 – a mixed year for Hammonds

British brewing entered the 1950’s with a good deal of trepidation. The signs weren’t good. Beer sales were falling and costs were rising. Maintaining profits wasn’t easy.

Hammonds seem to have coped well, despite the tricky conditions:

“HAMMONDS UNITED BREWERIES LIMITED
Dividend maintained in difficult year
The 61st ordinary general meeting was held Monday, January 16, the Empress Hotel, Bradford, Mr. H. L. Bradfer-Lawrence, Chairman and Managing Director, presiding.

Group trading profits for the year ended September 30 declined by £46,000 to £558,000, but the net profit of £234,033 left good cover for the distribution of an unchanged dividend of 15 per cent. and a bonus of 5 per cent. The group balance sheet covering figure of £6,846,000 disclosed reserves amounting to £1,738,000 and net working capital £474,000.”
Yorkshire Post and Leeds Intelligencer - Tuesday 16 January 1951, page 5.

A 20% dividend sounds pretty good to me. That they could still pay that out despite a fall in profits must have been reassuring to shareholders. From what we’ve already learned, the family owners were happy to let Bradfer-Lawrence run the company as he generated a nice income for them.

The reserves and working capital look pretty healthy. I wonder if the reserves declined as Hammonds embarked on their takeover spree in the following years? The money to finance them had to come from somewhere.

Bradfer-Lawrence had a somewhat dewy-eyed view of the tied house system, and seemed to consider it a natural development.

“As I have said, the present tied house system has been evolved over 200 years of effort. It Is true the greatest fillip was given In the last 100 years. On the other hand, for many of the first 100 years it was an unconscious development which had to stand the trials and errors which always go hand in hand with development. The improvement achieved between the wars is the mark of success so noticeably attained and which was possible in no other way. Out of the "tied house system" has grown, however unconsciously, the Co-operative movement, and still later the multiple stores development. Between the first and the last there is little or no difference in distributive methods whatsoever.

All the national brewers except one have tied houses. Between them they own some 12 per cent, the total number and command about the same percentage of the total trade. The point has almost been reached when any further considerable amalgamation or absorption from the capacity point of view must a very gradual process from the physical point of view.”
Yorkshire Post and Leeds Intelligencer - Tuesday 16 January 1951, page 5.

Who were these national brewers? Guinness, for sure (they were the publess one). Bass and Whitbread, probably. Maybe some of the other large London brewers. I’m surprised by how large a percentage of pubs national brewers owned. Though I suppose it depends on how many brewers were considered “national”.

I know exactly which brewers were national in 1974. And by then they owned more than half of Britain’s pubs:

Tied House ownership in 1974
Brewery	No.Tied houses	% of total
Courage	5,921	8.18%
Grand Metropolitan	5,946	8.21%
Scottish & Newcastle	1,678	2.32%
Allied	7,665	10.59%
Bass	9,256	12.78%
Whitbread	7,865	10.86%
Total Big 6	38,331	52.94%
Other brewers	13,800	19.06%
All brewers	52,131	72.00%
Free houses	20,273	28.00%
Total Full on-licences	72,404
Source:
Monopolies and Mergers Commission

It’s strange to think that Bass used to own 1 in 8 pubs. Or is it scary?

Comparing tied houses to the Co-operative movement is just  . . . weird. Other than both being examples of organisations running multiple retail outlets, I can’t see the connection.

Now something about bottled beer. Which seems to have been the only chink of daylight for beleaguered brewers.

“More bottled beer sold
Trading conditions during the year have been somewhat patchy although over the whole of your combine we have reason to feel satisfied. Cask barrelage output, in spite of a substantial decline experienced by one important subsidiary, is very little below that for the previous year, end the percentile fall is much less than the national figure. There has been, however, a welcome increase in bottled beer sales; whilst wines and spirits sales have increased considerably.

The general trend from draught beer to bottled beer is in an upward direction, but still very slow. In 1939 the respective figures were for 75% draught and 25% for bottled beer sales. Today, after 12 years including 6 years of war, the figures are 70% and 30% respectively.”
Yorkshire Post and Leeds Intelligencer - Tuesday 16 January 1951, page 5.

I’d be interested to know what the draught/bottled split was in 1945. Because the proportion of bottled beer produced fell during the war, for a variety of causes. But mostly because making it used more resources than draught beer. 1939 to 1950 isn’t a great comparison for that reason.

One reason that the percentage dividend seemed so high was that the company’s assets were undervalued:

“A dividend of 15 per cent, and a bonus of 5 per cent. on the Ordinary capital may at first seem high. It must however be remembered that the fixed assets have in most cases remained at the figure at which they were acquired (in some cases as long as 60 years ago). Whereas annual figures the accounts reflect from year to year the steady (in wartime rapid) depreciation in the value of money. If the fixed assets, which form such a great part of the balance sheet total, were revalued at current prices they would reveal substantial hidden values bringing the capital employed into true perspective with the greatly increased annual operating costs and so properly reducing the interest rate yield to shareholders to a much lower percentage. This would accord more with the present fractional value the pound (as compared with 60 years ago, when most of such fixed assets were last valued).”
Yorkshire Post and Leeds Intelligencer - Tuesday 16 January 1951, page 5.

Using 60-year-old valuations seems totally crazy. Why hadn’t they revalued their assets?

Finally this little paragraph, which doesn’t quite mean what you might think:

“During the year, pensions schemes (cum life assurance) for staff and working directors have been entered into with the Guardian Assurance Company which will amplify and/or incorporate similar and more limited schemes already in operation in certain subsidiaries.”
Yorkshire Post and Leeds Intelligencer - Tuesday 16 January 1951, page 5.

By “staff” they don’t mean all employees, just salaried ones. That is, those employees paid monthly rather than weekly. Basically those with office jobs and the like. During the 1950’s employers started to use pension schemes as a way of retaining staff during a time of full employment.