Friday 30 September 2016

Greene King – rising costs and penal taxation

I realise that I could be talking about current news with that title. But you know me, I rarely venture beyond the safety of the 1950’s. Which is where we’ll be today.

Looking at Greene King’s annual report for 1952. As is traditional, it kicks off with the chairman moaning about the level of taxation:

But shareholders get 21.25 per cent, divi

The hope that the Government may see its way to reduce the duty and taxation generally, to enable the Brewery to charge a more reasonable price for its products was expressed by the chairman (Captain Sir Edward Greene, Bart., M.C.) when the 65th annual meeting of the shareholders of Messrs. Greene King & Son, Ltd., was held at the Westgate Brewery on Wednesday.

We sincerely hope our expenses will not increase still further, and that the Government may see its way to reduce beer duty and taxation generally, sufficiently to enable us to charge more reasonable price to the public for our products." he said.” 
Bury Free Press - Friday 22 August 1952, page 1.

Brewers are still waiting for the government to substantially reduce beer duty. I think it’s fair to say that it’s probably never going to happen. The high price of beer was seen by the industry as the main cause of falling beer sales. I’m not sure it was quite that simple.

As with other breweries, sales were falling generally, but sales of bottled beer were increasing:

“Sir Edward said that barrelage showed a small decline on the previous year, but sales of bottled beer still continued to rise. During the year a stronger Pale Ale in bottle - Abbot Ale - was introduced to meet the demand of those who required and appreciated a beer of that character.

The new bottling store a Bury St. Edmunds was not progressing as quickly as they could wish, but it was hoped that it would be ready before December to deal with the heavy demands for bottled beer as the existing plant was extended to the full.”
Bury Free Press - Friday 22 August 1952, page 1.

The popularity of bottled beer probably explains the introduction of Abbot, which must have been intended to compete with posh bottled Pale Ales like Bass, White Shield, Ben Truman, Double Diamond, etc. In the early 1950’s brewers got a little more room for brewing stronger beers and many came up with a higher gravity Pale Ale, either on draught or in bottle. Young’s Special and Fullers London Pride both first appeared around this time.

The combination of wartime (and post-war) restrictions on building work and the surge in demand for bottled beer left many breweries struggling to keep up. Building new, or expanding existing,  bottling stores in a running theme in the early 1950’s

Despite decent sales, profits weren’t up much because almost everything they earned was being taken in tax:

"We have been obliged to realise some of our investments to meet these commitments as the penal taxation imposed on the industry to-day has taken away the cash required for the payment of such items." he said.

Turning to the Profit and Loss Account, the chairman said that it would be noticed that although gross profits (£468,043 compared with £411,399) had increased satisfactorily, the net profit, after allowing for taxation (£81,543 compared with £76,777) showed only a moderate increase. This was largely due to the amount required to be provided for taxation.

Referring to the cash position — "a point which must causing concern to all Boards of Directors to-day" — Sir Edward said that apart from paying £744,822 in Beer Duty, the Company had to find an extra £50,000 during the year for the purchase of barley and for erecting and equipping the new bottling stores. In addition increased costs of maintenance to breweries and properties had to be met and transport, wages, salaries and stocks had also risen.”
Bury Free Press - Friday 22 August 1952, page 1.

Looking at the figures, you understand why the chairman would be a little pissed off: three quarters of a million paid in beer duty but profits of less than £100,000.

Turning to the Appropriation Account, Sir Edward said that £32,000 had been allocated to the Reconstruction and Contingency Reserve, bringing that fund to £201,725. This would leave a balance of £136,374 18s 4d. to be carried forward in the Appropriation Account as  against £135,591 13s. 9d. last year.

Of the future, Sir Edward said that unless the duty on beers, wines and spirits was substantially reduced sales were unlikely to increase by an appreciable amount, and unless taxation was reduced it was impossible to create cash reserves with which to replace plant and machinery, or to rebuild and improve their licensed premises.”
Bury Free Press - Friday 22 August 1952, page 1.

An inability to generate enough surplus cash to update the brewery and its pubs was a reason many sold up in the 1950’s and 1960’s. At a certain point maintenance and replacement of plant couldn’t be put off any further and the only options were closure or sale. Last brewery to go that way was Gales.

Let’s take a look at Abbot and some of Greene King’s other beers from this period:

Greene King beers 1954 - 1960
Year Beer Style Price per pint d package OG FG ABV App. Atten-uation colour
1954 Stout Stout 19 bottled 1034.3 1012.7 2.79 62.97% 450
1954 Sweet Stout Stout 26 bottled 1046.6 1020.3 3.39 56.44% 450
1956 Harvest Brown Ale Brown Ale 22 bottled 1035.2 1013.9 2.75 60.51% 105
1959 India Pale Ale IPA 20 bottled 1033.3 1010 3.02 69.97% 25
1960 Lager Lager bottled 1034.9 1006.4 3.56 81.66% 9.5
1960 Suffolk Ale Strong Ale 34 bottled 1056.8 1015.7 5.14 72.36% 70
1960 Abbot Ale Pale Ale 30 bottled 1048.6 1006.7 5.24 86.21% 19
1960 India Pale Ale IPA 20 bottled 1033 1007.7 3.16 76.67% 25
1960 Abbot Ale Pale Ale 22 draught 1051.3 1007.9 5.43 84.60% 20
1960 Best Bitter Pale Ale 15 draught 1038.4 1007.4 3.88 80.73% 20
1960 Ordinary Bitter Pale Ale 13 draught 1033.9 1005.7 3.53 83.19% 26
1960 Bitter Pale Ale 15 draught 1037.0 1006.3 4.00 83.11%
1960 Mild Mild 12 draught 1030.7 1006.1 3.20 80.29%
1960 Burton Ale Brown Ale 20 bottled 1033.4 1011.7 2.80 64.97%
1960 India Pale Ale IPA 10 bottled 1033.2 1008.5 3.20 74.40%
Whitbread Gravity book held at the London Metropolitan Archives, document number LMA/4453/D/02/002.
Which Beer Report, 1960, pages 171 - 173.

You can see that by the end of the 1950’s there was also a draught version of Abbot, plus two weaker draught Bitters. Pretty sure the one called Ordinary Bitter is IPA. They were almost certainly all parti-gyled together.


Barm said...

Do you know when they started labelling the draught bitter as IPA? I have seen 1970s pump clips where it was called “IPA Bitter”.

I have always thought that Greene King’s reputation suffered from having their session-strength bitter as their flagship beer, where other brewers were represented by their premium bitters outside their local markets: London Pride, Landlord, Pedigree etc.

The Best Bitter here resembles today‘s IPA more than the Ordinary one does.

Stono said...

did GK have an outside local market though ? they werent "big" enough to be hurt by the beer orders shakeup, and would have been competing locally with the likes of Tolly Cobbold, who I dont recall had a premium bitter either.

Id also not discount beer blending was a fairly common practice, so youd have half of bitter/IPA mixed with half of Abbot or half of XX Mild,which then fills the gap even if its not marketable.

John Lester said...

The beer described as Ordinary Bitter may well be IA Light Bitter, which was mentioned in Frank Baillie's book, but had disappeared by the mid-1970s at the latest (but see Ron's blog for 7 June, showing that IA was described as "Best Bitter" in 1924).

As for the history of IPA, all I can add is that pump clips in the early to mid-70s tended to describe it as "IPA Best Bitter". I'd have thought, incidentally, that Abbot rather than IPA was Greene King's flagship beer - certainly in the 70s and 80s.

Tolly Cobbold did have a stronger bitter called Cantab in the 70s; and in the 80s they introduced Original, though this was only a bit stronger than the standard bitter.