Mitchell's of Lancaster has some explosive plans

Mitchell's of Lancaster, long-regarded as a quiet local brewer, has some explosive plans.

For many years Mitchell's of Lancaster was quietly thriving as a local brewer with a small portfolio of pubs in the city and the surrounding countryside.

But it has now embarked on plans to increase its estate fourfold, invest in its brewery and boost its profile as a regional brewer.

This summer the board appointed Dermot McCarthy as the first non-family member to serve as managing director in its 118-year history.

"If we don't raise the profile of Mitchell's, we will get lost in the morass of other brewers," McCarthy said.

"The logical progression is for us to to establish ourselves as a regional brewer rather than just a small local brewer."

McCarthy, who joined Mitchell's as company accountant in 1984, was also the first non-family member to serve on the board when he became finance director five years ago.

Founded in 1880 by William Mitchell — who moved to Lancaster from Yorkshire — the brewer remains an independent private company.

Although the family surname has been replaced on the board by Barkers and Pearsons, it is still run by Mitchell's descendants who own 100 per cent of the shares, with his great-grandson, Bill Barker, as chairman.

However, three years ago the company chose to make a major shift in direction by selling its freetrade business to Greenalls' Tavern business.

"Although the freetrade business was very strong, it was distracting us away from our core business of brewing and running a pub estate," McCarthy said.

Tavern now handles distribution of all drinks supplies to the Mitchell's pub estate and has helped to build national sales of its brands which are now available from the West Country to Scotland.

"It was a radical step for us as well as a cultural break that has given us a tremendous boost in profitability," McCarthy said.

With the cash from the sale of the freetrade business, Mitchell's was able to reduce borrowing and prepare for expansion of its tied pub estate which had stood at about 52 for many years.

In March last year it bought 27 outlets from Blackburn brewer Daniel Thwaites before buying a further batch of 17 from the rival in July this year.

Mitchell's now has 94 outlets, 70 of them tenanted, stretching beyond its original North Lancashire trading area into East Lancashire and Cumbria.

It has begun a five-year development plan aimed at growing to between 150 and 200 by the end of 2003.

There are a small number of managed houses, mainly within Lancaster and the surrounding area. Despite one Irish theme pub in the city centre called Fibber McGee's, it is not interested in developing retail brands.

"We have taken the decision not to go down the route of concepts because investing huge amounts of money into a single site brings too much risk," McCarthy said.

Instead, it believes tenanted pubs offer good returns on smaller investment and a stable base for steady future growth.

Jonathan Barker, the founder's great-great-grandson, is the new director in charge of the tenanted houses.

"We have a good quality estate which means we can attract more entrepreneurial business-minded people which is good for the stability of the business," he said.

With many of them dating back to the previous century, there is a continuing programme of helping tenants to maintain and repair the outlets.

As a family company, the directors maintain close links with tenants and has a ratio of 34 pubs to each business development manager.

The estate ranges from city centre venues for students to community pubs, many with accommodation, in rural east Lancashire and west Cumbria.

With some of its trading areas suffering from high unemployment, Mitchell's tailors promotions and brands according to local markets.

This includes offering a low-cost ale, Castle, to outlets which are deemed to be in particularly difficult markets.

"We think we have become more radical in how to run a tenanted estate," McCarthy said.

Mitchell's plans to invest about £750,000 into improving its brewery, including a new visitor centre to turn the site into one of Lancashire's tourist attractions.

With a capacity of 20,000 barrels a year, the Victorian brewery is the only one left in Lancaster. Mitchell's moved to the site in 1985 when its original owner, Yates & Jackson, was bought by Thwaites.

Since its pubs are fully tied on ales, Mitchell's brews its own guest beers to complement its Bitter and Bomber brands.

These include Old Faithful and seasonal ales such as the current Guy Fawkes, the upcoming Christmas Cracker and spring's Conqueror.

It has also started to brew mild again, which has proved popular in its new trading areas following the Thwaites acquisitions.

The beer brands have been boosted by a new drive to promote the brewer's name, such as providing free branded glasses to all its pubs and fitting standard Mitchell's signage outside all its outlets.

New initiatives being considered include targeting the off-trade with bottled Bomber and developing new on-trade brands, such as herbally inspired brews.

This has been put into the hands of head brewer Ian Kendal who joined last year from Boddington's.

With its plans to invest, Mitchell's hopes it is establishing itself as a survivor in a sector that is continually being pruned and consolidated.

Jonathan Barker believes that his family's brewery is stronger for being an independent private company because it allows them to look into the long term rather than seek short-term returns to satisfy outside investors.

"This gives us more stability and means we will be around for a long time," he said.