Ringing the changes

Although it is Britain's oldest brewery, Shepherd Neame retains a modern image. Andrew Catchpole reports.

Jonathan Neame is not short of an opinion or two. From high street binge-drinking to government legislation, fox hunting to beekeeping - primed with a subject he will launch into it with a passion and insight that would benefit many a politician. He's at his best, of course, when defending his interests as the fourth generation scion of the Kent brewing family that runs Shepherd Neame.

As chief executive of Britain's oldest brewery - Shepherd Neame was established in 1698, though evidence suggests beer has been brewed at this North Kent site at least as far back as 1100 - he has a lot to defend. His strongest suit is the challenges facing the regional brewers. And the question of how they can best survive.

"Further consolidation is inevitable, with further breweries certain to be closed down," he says, just minutes after we meet at the Sheps' HQ in the small market town of Faversham.

"The national brewers have become one or two brand companies and we don't want to be part of that," Jonathan adds. "Everyone talks about a national market but Britain has always been a regional beer-drinking culture. The few are driving national brands, but there is a strong counterpoint to this among people who want specialist beers with a clear regional identity."

It's fine fighting talk, and Shepherd Neame backed it up last year by spending £5m above and beyond its annual investment budget expanding its operation. The company acquired and developed both a site for a £2m keg plant opposite the brewery and a 6.5 acre site on the outskirts of town where it located its new warehouse and distribution centre, plus its growing wine division. "You might ask - is it the right thing to do when beer is in decline?" says Jonathan. It's clearly a rhetorical question. "Yes," is the answer. "Because the market is maturing and drinkers are increasingly looking for quality beers."

This seems a bold statement given both the fact that the beer market is in decline - dropping by 6.4 per cent last year alone - and Shepherd Neame's own profits from the brewing of its Hurlimann and Steinbock lagers, plus other imports like Holsten Export and Oranjeboom. However, its sale of beers grew with Spitfire leading the charge, up 10 per cent.

Again Jonathan is quick with a reason why. "I don't think the way to look at the market is in terms of ale and lager. We think of it in terms of mainstream and specialists, like Shepherd Neame," he says. "And this is where the regional brewers - by offering a more individual selection of ales, lagers, wines and locally-biased foods - come into their own."

It's not, however, a case of regional heritage being a passport to survival. Jonathan argues that the only regional brewers which will survive are those in areas which have retained a strong identity.

"Look at the regional brewers that are getting stronger," he says. "Kent, Cornwall, Yorkshire, Cumbria and London have all retained a strong regional identity and so the local brewers are thriving. The same is also true of brewers like Belhaven in Scotland and SA Brain in South Wales which have a strong national, and thus regional, identity."

This regional underpinning is the philosophy which infuses almost every aspect of the marketing and development strategy at Shepherd Neame.

Jonathan's hobby of beekeeping cropped up while discussing local sourcing of produce for Shepherd Neame's 310-strong, mainly tenanted, estate. At first, honey-making seems an odd sideline for this smartly suited and obviously highly-driven businessman. But it sits neatly with Shepherd Neame's policy of sourcing as much produce for its business as possible from the agriculturally rich heartlands of Kent.

Faversham brewed beers such as Master Brew bitter and Bishops Finger use local hops and barley and have earned protected geographical indicator status, guaranteeing their Kentish provenance.

The company makes a feature of sourcing as many of its food ingredients - including fish, meats, fruit and vegetables - as it can from local suppliers. The brewer then takes this to its logical conclusion by promoting food and beer matching in the pubs in its estate. It has engaged the services of TV chef Phil Vickery - a local Folkestone boy - to oversee this initiative.

These are all moves which Jonathan says cost more initially but pay back in terms of customer approval and promoting tourism. To this end, Shepherd Neame has also been developing its accommodation offering, aiming to match national hotel chains with character-filled accommodation in its pubs.

And while the pub estate reaches far to the west of its Kentish heartland, Shepherd Neame's major property investments are in the north of its home county.

The company has already taken on four new sites this year at an average of £2m a piece and Jonathan confirms that a total figure of between £15m and £20m is currently earmarked for investment in developing further "large scale outlets" with four in the pipeline in new communities being built in North Kent.

"There are 60,000 new homes going into North Kent and although these may not all be built until 2015, or even 2020, this suits our long term commitment to the region," he says. "There are still a lot of opportunities in Kent," adds Jonathan. "The new rail link will be beneficial for both the county and our business, as will the continuing shift of London to the east."

Shepherd Neame is a long way ahead of the fuddy-duddy image which still lingers around some of the regional brewers and this modern image is something Jonathan is naturally keen to promote.

However, when he talks of marrying tradition with innovation this well-worn phrase has a ring of truth about it. After all, before Jonathan's great grandfather bought the Faversham brewery four generations ago, the family had been local hop growers with a long history of farming the land in Kent.

Sheps facts​

• Established 1698, Shepherd Neame is the oldest working brewery in Britain
• The Neame family bought the Faversham brewery four generations ago
• Against a declining ale market, it grew its Spitfire brand by over 10 per cent last year and grew total beer sales by three per cent
• The mainly tenanted pub estate has fluctuated between 350 and 375 pubs in the past 10 years with an average purchase and disposal of 10 pubs a year
• Last year Shepherd Neame invested £6.4m, both in a new keg beer plant opposite its existing brewery and a new 6.5 acre warehouse and distribution centre on the outskirts of Faversham
• The company has earmarked £15m to £20m for new build opportunities in the "North Kent development corridor", with four sites already under development and a further four in the pipeline
• Turnover is likely to top £100m for the current financial year.