Blood money as Heineken takes over in Edinburgh

Jeremy Blood has been confirmed as managing director of Heineken's British operations following the takeover on 29 April of the country's biggest brewer by Carlsberg and Heineken. Blood was director of corporate affairs for S&N and he will run the company from the existing offices in Edinburgh. The group will continue to be known as S&N for the time being.
As a result of the takeover, Carlsberg will acquire S&N's 50% stake in Baltic Beverages Holding, the biggest brewing group in Russia, and will also control S&N's investments in China and Vietnam. Carlsberg will further own Kronenbourg in France, the country's biggest beer brand.
In Britain, Kronenbourg, which is brewed under licence, will become a Heineken brand. Jeremy Blood was quick to quash rumours that the brand might disappear as it was seen as a competitor to Heineken. "Kronenbourg has been brewed under licence for 50 years and will continue to be a major brand," he said. He also ended speculation that Heineken would be brewed in Britain and stressed that it would remain an imported brand.
What is missing from Blood's statement is any reference to S&N's ale interests, which are centred on John Smith's in Tadcaster, Yorkshire. John Smith's Bitter, mainly in its "nitro-keg" form, remains a massive brand but the entire Tadcaster operation will have a cloud over it until Heineken makes its intentions clear. The Campaign for Real Ale is seeking urgent talks with Jeremy Blood to discuss Heineken's attitude to its ale brands.

S&N buys Deuchars and brewery
will pass to new owner Heineken

Caledonian Brewery has been bought -- lock, stock and barrel -- by Scottish & Newcastle, which means ownership of the Edinburgh brewery will pass eventually to Heineken. In 2004, S&N, which had closed its breweries in both Edinburgh and Newcastle, bought the Caledonian site in Slateford Road and also took a 30% stake in the company. The brewery continued to be run by the Caledonian management led by managing director Steve Crawley while S&N used its enormous muscle to promote the Caley brands in the free trade. Caledonian Deuchars IPA, far and away the biggest brand, is now available nationally as far away as Cornwall.
Steve Crawley will remain at the helm of Caledonian and will oversee a dramatic change of ownership when Heineken moves in. Earlier this year, Carlsberg and Heineken successfully bid for S&N, with Carlsberg taking over S&N's interests in Russia and the Baltic States, and Heineken becoming responsible for S&N's activities in Britain.
The Harviestoun Brewery, a subisidiary of Caledonian, will become independent: Heineken will have no involvement in the company but Steve Crawley will become a non-executive director.
It seems unlikely that Heineken will tinker with a brand as successful as Deuchars IPA, a past winner of CAMRA's Champion Beer of Britain award. The Dutch company might be tempted to cash in on the property potential of the Slateford Road site, on the road to Edinburgh Airport, but wise councils will point out that consumers tend to react against beers when they are moved from their original home : Deuchars brewed in Yorkshire or Manchester would take the gloss of a successful Scottish brand.

Marstons gobbles up Brakspear and Wychwood

In a deal worth between 10m GBP and 11m GBP, national brewing giant Marston's has bought the leading Oxfordshire-based regional Refresh UK, a drinks company that owns both the Brakspear and Wychwood breweries. Since the turn of the century, Marston's of Burton-on-Trent -- which includes Banks's of Wolverhampton -- has bought Jennings of Cumbria, Ringwood of Hampshire and now Refresh.
Rupert Thompson of Refresh, who will leave the company in six months' time, says the deal will be good for his brands. "In today's highly competitive market, we lack muscle, especially in the pub trade, where we own no outlets. There's a logic in working closely with Marston's because of their strength in the on-trade and our strength in supermarkets."
Wychwood's Hobgoblin strong dark ale is now a leading packaged brand. The merger will mean Marston's will be the biggest seller of premium bottled beers. It will also acquire the top-selling organic beers in Britain, which include Prince Charles's Duchy Originals beers.
Refresh UK was formed in 2000 and last year posted a turnover of 24.9m GBP and pre-tax profits of 1.1m GBP. It owns the Wychwood brewery in Witney and added the former Brakspear plant from Henley-on-Thames when that brewery closed. The plant includes Brakspear's famous "double drop" fermentation process that gives Brakspear Bitter and Special their characteristic aroma and flavour. Refresh UK brews a total of 50,000 barrels a year.
Rupert Thompson admits that while the Wychwood brands have done well, the Brakspear beers have struggled, probably a result of consumer anger with the former owners' decision to stop brewing in Henley and become a pub company. (Considerable confusion is caused by the existence of a Brakspear pub company and an unrelated Brakspear brewery.)
While it is true that Marston's has a good track record of not closing the breweries it has bought, there must be considerable anxiety over the loss of yet another successful regional producer. There may well come a time when Marston's will review its overall production and decide that some of its brands, currently brewed in Cumbria, Hampshire and Oxfordshire, could be transferred to Burton or Wolverhampton.
Rupert Thompson undoubtedly saved the Brakspear brands and unique brewing kit and for that all beer lovers should salute him. But the loss of yet another independent regional brewer is a cause for concern.

Make your mind up, Coors
-- do you like museums?

The giant American brewer Coors, owner of the former Bass breweries in Burton-on-Trent, plans to axe its visitor centre and brewing museum in the town on the grounds of cost (see previous blog and main website) -- but runs a highly successful brewing museum in Denver, Colorado. A report in the Rocky Mountain News reveals that Coors, based in Golden in Colorado, is updating the brewing museum to use state-of-the-art technology in order to attract even more visitors to the facility.
It seems clear that Coors is more committed to a museum in its home state than to the former Bass Museum it inherited in Burton. The Bass Museum attracted a quarter of a million visitors a year but numbers have fallen to a fraction of that figure as the visitor centre gets little support or promotion.
Coors says it costs £1 million a year to run the visitor centre in Burton. That's small change for a company the size of Coors -- but it's struggling in Britain, along with rivals Carlsberg. InBev and Scottish & Newcastle, as a result of the global brewers' "deep discount" policy with supermarkets. Discounts are so severe that the global brewers make at most 1p in profit from each bottle or can.
A report in the trade paper Morning Advertiser, 27 March, shows to what extent the supermarkets have the brewers by the throat. The paper reports that the multiple retailers will continue to offer cut-price promotions for alcohol in spite of the steep rise in duty imposed in the March Budget.
The paper adds: "One off-licence chain, Bargain Booze, has even written to brewers asking them to absorb the extra costs or face being de-listed from its 600 shops. A letter seen by The Observer said: 'We will have to review the position of any brands where the retail ticket is increased in our business...We reget to say that we cannot absorb the increases in costs that the Budget would seem to demand."
Bargain Booze ask suppliers to help by "absorbing these increases within your own company."
The global brewers should learn the lessons of recent history. In the early 1990s the large regional brewer Charles Wells in Bedford took a decision to phase out production of own-label beer for suupermarkets. Profits on own-label were so low that the company faced severe financial difficulties. Instead Wells built up its own portfolio of brands, including ales and lagers. It has merged with Young's of London to form Wells & Young's. Its Bombardier premium ale is now one of the most successful cask and packaged brands in the country and the company has overtaken Greene King in volume terms.
If the global brewers stood up to the supermarkets and got realistic prices for their beers they wouldn't face financial meltdown -- and Coors could afford to support the Burton visitor centre.

Coors to axe visitor centre

The giant American brewer Coors will close its visitor centre in Burton-on-Trent in June, leaving Britain without a major museum dedicated to the history of brewing in Britain. The site was first known as the Bass Museum but ownership passed to Coors when Bass left brewing and the American company bought the world-famous breweries.
Coors says the running of the visitor centre costs £1 million a year and, in a declining beer market, it needs to invest that cash into supporting its key brands. It says visitor numbers have declined even though it offers free admission to people who live in the town. But the centre has not been promoted outside Burton.
The museum is a magnificent collection of brewing artefacts. As well as detailing the history of brewing in Burton, famous for its India Pale Ales in the 19th century, the museum also covers the history of brewing world-wide. There is also a collection of old brewing vehicles, including a car shaped like a bottle of Worthington's White Shield, as well as dray horses.
It would be a tragedy if this collection were broken up and lost. The local MP, Janet Dean, will host a meeting in Burton on Wednesday 26 March to discuss ways to save the centre. One idea being floated is to form a trust to run the museum that, unlike Coors, could attract public funds, including Lottery money. When Whitbread left brewing all the material assembled over many years that traced the history of the company from the 18th century was thrown in a skip -- it's vital that this does not happen to the Burton collection.
In the long term, even if the Burton museum can be saved in some form, London is the obvious place to house a major museum dedicated to British brewing and the English pub. The problem is cost. When a group made up of representatives of the London brewers, CAMRA and the trade paper the Morning Advertiser looked at the possibility of opening a museum in London, high rents in the capital made the project impossible. We were offered the basement of the Hop Exchange in Southwark, which would be an ideal site, but the annual rent was £100,000.
The Mayor of London was unable to help but once the Burton issue has been solved -- if it can be solved -- then further attempts will be made to look into the possibility of a museum in London that will celebrate Britain's unique contribution to the world of beer.

Alistair is no Darling

Chancellor Alistair Darling has hit beer with a swingeing increase of 4p a pint -- action that will heap misery on British pubs, lead to more closures and do nothing to tackle binge drinking and the sale of cheap alcohol by supermarkets.
With around 30 pubs a week closing in Britain, the trade needed help not hindrance. But Darling has been pressurised into this massive price increase as a result of intense media pressure and the absurd claims of bodies such as Alcohol Concern. For a start, a 4p increase will be substantially more by the time beer reaches the bar and wholesalers, retailers and publicans have added extra pennies to maintain their margins. The likely increase will be round 6-8p a pint.
The result will be that pubs will be at an even greater disadvantage to supermarkets and off-licences, which will continue to promote cheap beer and other alcoholic drinks, with beer in particular being sold cheaper than bottled water.
The best way to tackle binge drinking among a minority is to encourage them to use pubs. Pubs are licensed premises. People drink moderately and sensibly in pubs and publicans can lose their licences if they allow unruly and drunken behaviour. Young people learn to drink sensibly in a pub atmosphere by mixing with older and more experienced drinkers.
Darling's price increase will encourage rather than deter excessive drinking on the streets as people forsake the pub for supermarkets. It's black day for pubs and pubgoers while the supermarket bosses will be rubbing their hands with glee.