Right move

Hemmed in by some of South West London's busiest roads, traffic swirling around its island site in Wandsworth, the future of Young & Co's cramped Ram brewery had long been the subject of intense speculation. Despite the inevitability of a move, when Young's finally announced it was to sell the site and up sticks to merge with Bedford-based Charles Wells' brewery there were still cries of 'foul' from some industry-watchers.

The Campaign for Real Ale (CAMRA), spoke of its "disappointment" at the decision. Acknowledging Young's couldn't remain at the Wandsworth site, CAMRA expressed the futile hope it could have found an alternative local home for the production of ales such as Young's Bitter, ESB and Waggledance.

Tradition and heritage are highly emotive bedfellows, and while the deal was a private affair between two companies intent on a mutually beneficial arrangement, it had clearly stirred many passions. As head of one of the country's leading family brewers Paul Wells remains all too aware of the provenance question. But he argues the deal mirrors those of a century or so ago, when small brewers merged to form stronger entities.

"You don't see this sort of deal any more. Breweries get bought and closed, rather than merged. But get-togethers like this are nothing new. A host of established names existing today are the result of mergers like the one we are putting in place," he says.

Many people hoped that if it couldn't find a local alternative that the Wandsworth brewer would at least seek a like-minded partner, where interests converged and the future could be better faced by a combined entity. When the announcement finally came, John Young, the brewer's long-serving chairman, said the decision to sell the site was taken "with some reluctance", but he echoed the words of chief executive Stephen Goodyear, who noted the bringing together of "two complementary businesses with unrivalled brewing heritage". Both group's pubs certainly stand to benefit from the increased range of products available.

Timetable-wise, an agreement was first mooted last autumn and firmed up in principal by the end of last year. The new arrangement - Wells & Young's, a 60/40 joint venture in favour of the Bedford brewer- has a "compelling logic" about it, says Mr Wells. "It takes both us and Young's to new places in the market and gives us a tied estate of 470 pubs straightaway. The Young's beers broaden our portfolio and we complement them. They have the fastest growing standard bitter [Young's] and we have the fastest growing premium bitter [Bombardier]."

With the ownership of the new entity skewed 60/40, the arrangement gives the Bedford brewer the leading edge, although Mr Wells stresses the word 'merger' as often as possible. Existing brand assets and future opportunities had been assessed by teams of external consultants, he says, who came to the conclusion his company should have the "upper hand" in any deal. "There are more brands on our side, plus we've got the brewery site," he says.

Young's additionally paid £10m to bring its stake in the new enterprise up to 40 per cent, while Mr Wells says he is "happy with 60 per cent, since this reflects our value".

With extra products to brew and planned extensions to the Eagle Brewery expected as Young's brewing equipment is transferred north, the future has a promising air. The scope of the deal and the wider range of products gave the Wells' off-trade operations a boost, and it is hoping to see benefits through its pubco clientele. "It's easier to talk to retailers now with the portfolio that we have going forward. We will be very keen to do pub deals with the likes of Enterprise Inns and Punch Taverns," he says.

With "an improved choice of specialist ales and lager", Mr Wells says the deal was initially of more interest to the off-trade, "where we've seen fantastic growth. It's about putting the right questions to the likes of Tesco - for whom we're the number two beer supplier - and looking at how we can improve its business via managing our products better."

Upheaval is inevitable, with employee talks on-going. "We would like to get as many people up here from Wandsworth as possible. We're aiming to create 50 new jobs and where there are redundancies we hope we will be able to find them jobs elsewhere. As far as strategy goes, it's a work in progress."

He's less expansive on likely savings from the merger, saying only that they will be substantial, leading to "a bigger war chest for marketing". Not for acquisitions? "We have the financial ability to buy more pubs but it's problematic finding them at the right price," he adds.

So while the closure of the Ram brewery in September will be a sad affair for traditionalists, an interesting future beckons for both companies and cask ale lovers alike.