Friday 9 September 2016

Business good for Tetley

The seven years I lived in Leeds as a young man left me with a lasting love of Tetleys. They were one of the few Big Six breweries that could inspire such affection.

Why was that? For one thing, their beers were good. And they didn’t mess around with them. In all the years I drank it, Tetley’s Mild didn’t change one iota. Always exactly the same and always reliable. They didn’t mess up their pubs, either. Something highlighted when they swapped a few Leeds pubs with Bass Charrington. Who promptly “improved” them.

It always gave me the impression of a very well run business. Which it appears that it was:

Co-ordination of subsidiaries

Col. F. Eric Tetley’s speech The 58th Annual General Meeting of Joshua Tetley & Son. Ltd., was held at 12 noon on December 31, 1954, at the Registered Office of the company. The Brewery, Leeds, 10, Col. F Eric Tetley. Chairman of the company, presiding.

The secretary of the company Mr Robert F. Tetley, read the notice convening the meeting and Mr. W. N. Herald of Messrs. Peat, Marwick, Mitchell & Co., read the report of the auditors.

The chairman then suggested that as the directors’ report and statement of accounts had been the hands of the stockholders for the required period of time they should be taken as read (This was agreed.)

Trading results
The chairman then went on to say I have much pleasure in submitting for your approval and adoption the accounts and directors’ report for the year ended September 30. 1954 The company itself, apart from its subsidiaries, showed an increase of some £15,000 in sales of beer and total income of £6,737,524 shows an increase of £12,901 over the figure for last year. The income for 1954 has been absorbed in the following manner:
Beer duty 61.10%
Taxation Materials and production costs, (excluding wages) 10.30%
Wages, salaries and pension schemes  6.10%
General trade expenses  8.90%
Depreciation and reserves  3.00%
Interest  1.20%
Dividends (net) 2.70%

As regards our subsidiaries. Reaney & Greaves Ltd. shows a slight profit of £1,616, while Duncan Gilmour & Co. Ltd and its subsidiaries have yielded a trading profit of £96,621 for the seven months from March 1, the date on which we took over.

The trading expenses of the company have risen by some £38.000 while the charge for interest on loan capital shows an increase £30,000.”
Yorkshire Post and Leeds Intelligencer - Monday 03 January 1955, page 3.

I’m getting old. I moved to Leeds in 1975 – just 20 years after this annual report was published. That’s more than 40 years ago. I like making these calculations to put things into perspective.

You can see that members of the Tetley family were still firmly in control at this time. Tetley had been one of the first Yorkshire breweries to grow to become quite large. In the 19th and early 20th century pub breweries still accounted for a fair amount of the beer brewed in Yorkshire. The last homebrew pub, the Lord Nelson in Armley, only stopped brewing about the time the report was published.

The family rule wasn’t to last much longer. In 1961 Tetley merged with Ansells and Ind Coope to form Allied Breweries. After such corporate mergers, control inevitably slipped away from family members, though they didn’t anticipate it at the time. Exactly the same occurred to the Charringtons.

I find the table showing where the money they earned went very revealing. To the government in the form of tax, most of it. When you consider that part of the wages would also have gone to the government in the form of income tax and some of the operating expenses would have included other taxes, such as on fuel, probably around two-thirds of their earnings went on some form of tax. I’m sure that if you looked at a German brewery at the same time things would have looked very different.

It meant that the price of raw materials and the level of wages had little impact on the price of beer. The rate of tax was the greatest influence on how much beer cost. Which could also be a factor in many smaller breweries having survived until this point. It levelled the playing field. The advantages of scale – lower wage bills and cheaper materials - weren’t going to lower your production costs by that much.

But there was area where larger breweries had an advantage: less beer was lost during the production process in a bigger plant. Tax was paid according to the volume and gravity of wort in the fermenter. Brewers were allowed wastage of 6% on this to allow for losses during the process from that point. In a large brewery the actual wastage was usually less, meaning they got some beer tax free.

That was a bit more than I intended. Best stop now. Next time we’ll look in more detail at their latest acquisition, Duncan Gilmour.

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