Come together

Growth by acquisition remains the driving force behind the licensed trade, says Hamish Champ on The Publican Newspaper's 30th Birthday.

This year has proved to be yet another year of intense activity on the mergers and acquisitions front in the UK's pub and brewing arenas, a trend that can be traced back several years.As belts tighten in the pub and brewing sectors and the battle to eke out decent margins and pare back costs continues to be waged, there is little surprise that the big players are getting bigger and the smaller ones, well, they're either battening down the hatches or, like Essex-based brewer Ridley, realising some value while they still can and upping sticks altogether.

Fears are being voiced daily for the survival of the country's heritage - aka traditional boozers and proper beer - but the economics simply won't sustain the "dried hops round the door" image that many love so much. It's sad, but it's also true.

Acknowledging the role the country's regional brewers such as Fuller's, Shepherd Neame and Brains play in the fabric of today's industry, there's no getting away from the rapid growth of the country's two largest "super regionals", Greene King (GK) and Wolverhampton & Dudley. They have ambitious targets and the commercial will to achieve them.

While the UK's brewing giants including Scottish & Newcastle seek to turn out new and innovative product lines to sustain growth, GK and Wolves have adopted aggressive expansion programmes designed to deliver growth, shareholder value and traditionalist opprobrium in equal measure; buying pubs, brewers and (one might think) almost anything else not nailed down.

One industry expert recently suggested that unless the smaller regional brewers did sale and leaseback deals on their estates and pooled their production facilities sooner rather than later, by the time they realised this is what they ought to be doing it would be too late and the ball should be in any suitors' court. It is a daunting but not wholly unrealisable prospect.

Meanwhile much is being made of the role being played by private equity groups in the pub sector. While we have been here before, once again venture capitalists appear to be awash with cash and looking for safe homes - eg property assets - in which to invest it.

The high street in particular and the industry in general are seen as bankers by those, such as relative newcomer Robert Tchenguiz, who come armed with a gameplan of indeterminate length and a few million pounds to spend.

They will have their work cut out turning around tired brands, but failure is not an option.

Shareholders in Enterprise Inns and Punch Taverns have meanwhile seen their investment rocket as both groups vie for the title of the UK's biggest pub operator. With the churning of the bits of an acquisition they don't want there's been plenty for the likes of Admiral Taverns and others to pick up.

Such a performance has been helped by the current view that leased equals good, managed not so good, although Mitchells & Butlers are doing their best to show that leasehold estates haven't got it all their own way - what happens to Spirit Group in the coming months is wide open. Like many aspects of the sector, the arguments for and against either model are often cyclical in nature.

Finally, the prospect of the current mega pub operators 'sub-letting' the task of running the sites they own is one that some are beginning to consider. What this means for new entrants is open to one heck of a question...

During the last 30 years we've regularly reported on government involvement - some might say "interference" - in the industry. Still, legislators have kept a close eye on our business for centuries. We outline below some of the key changes to the law as it has related to pubs and brewing going back to Elizabethan times...

• 1495:​ The first Act of Parliament affecting the trade is set out, handing oversight of the quality of ale to Justices of the Peace
• 1552:​ Pubs are licensed for the first time
• 1627:​ Act introduced stating those guilty of selling beer without a licence and unable to pay the resulting fine are to be whipped
• 1751:​ Gin Act is passed, designed to increase duty and reduce gin-related deaths. Hogarth's famous engraving, Gin Lane, illustrates the damage gin does to society
• 1830:​ The Beer Act abolishes duty, removes the need for a JP licence and closes pubs between 10pm and 4am. Pub openings mushroom
• 1834:​ A second Beer Act allows the creation of "off-licences"
• 1853:​ Rising incidences of drunkenness prompt foundation of the UK Alliance for the Suppression of Traffic in all Intoxicating Liquors
• 1886:​ Irish brewer Guinness floats on the London Stock Exchange and raises £6m, investing much of this in new and existing pubs
• 1914:​ As the First World War grips Europe, Lloyd George's government introduces the Defence Of The Realm Act empowering JPs to limit the hours a pub could open and close outlets where this was thought necessary
• 1955 - 1972:​ During this period there is a marked concentration of pubs in the hands of the 'Big Six'; Allied, Bass Charrington, Courage, Scottish & Newcastle, Watney Mann and Whitbread.
• 1971:​ The Erroll Committee recommends flexible opening hours be introduced, and pubs should be encouraged to cater more for children
• 1976:​ The Licensing (Scotland) Act restores Sunday opening for pubs in Scotland for the first time since 1856
• 1987 - 1989:​ Monopolies & Mergers Commission enquiry sits. Findings include that no brewer has a tied estate greater than 2,000 pubs.
• 1988:​ Pubs allowed to open from 11 'til 11
• 1990:​ Beer Orders introduced
• 1995:​ Sunday afternoon closing is abolished
• 2002:​ Beer Orders rescinded
• 2003:​ Licensing Act transfers responsibility for issuing alcohol licences from magistrates to local authorities, relaxing opening hours
• 2005:​ Mainstream media rails against "24-hour drinking".