Ambition fuelled by faith in portfolio

"An elegant solution" was the reaction of Alistair Darby, head of Wolverhampton & Dudley's beer and brands, when Young's announced it would be brewing in Bedford with Charles Wells.

So it's not without irony, then, that the new team at Wells & Young's Brewing Company have their sights firmly set on leapfrogging Darby's W&D to join Greene King as the two super-nationals dominating the free-trade market.

Ambitious, yes. But Nigel McNally, managing director of the merged brewers, is convinced he has the speciality portfolio and the marketing resource that his customers require to succeed with today's more discerning drinkers.

McNally, who was formerly Charles Wells' marketing director, has spent the past two years on an evangelical mission explaining why speciality beers are the way forward for retailers. With Young's beers at his disposal - classic ale, of course, being part of this speciality category - he now sees an even bigger opportunity.

"Customers want a range of beers, rather than just one lead performer. And they like a one-stop shop, rather than a plethora of different suppliers. Plus, they like a category-management approach to beer and ale. These are all things we can give them."

The full range on offer at Wells & Young's allows McNally to claim that they are, "the only brewery in the UK to have a balanced portfolio of specialist beers in both ales and lagers", with names such as Corona, Red Stripe and Kirin sitting alongside Young's Bitter, Young's Special and Bombardier, several of which are "fastest-growing" in their class.

This is clearly a strong hand to play, and Wells & Young's has an equally impressive set of marketing data to help customers maximise the best range and combination of these brands.

It's also committed to major investment in supporting its "drive" ales, planning to spend £2m above the line on Bombardier in the next year, and a similar figure on Young's Bitter and Young's Special.

So the company has big plans, and a fully-staffed and

well-resourced sales force to put them into action. But doesn't such a reliance on real ale make Wells & Young's vulnerable to the relentless decline in this market, which has accelerated sharply for many ale producers in the past 18 months? McNally says no. Instead, he sees a major opportunity.

"Ale is still very relevant to pubs. It's a huge differentiator against the off trade, and it's worth £4.5bn at retail, with almost nine million barrels consumed every year. Cask ale is performing better than keg, and showing signs of returning to growth as the nationals gradually pull out altogether."

Throw in the demographic trends towards higher disposable incomes among the over-45s, and you also get

the potential for price uplift that every ale brewer and licensee craves.

Says McNally: "People at Bedford asked us, when we were considering the merger with Young's brewing side, 'Why get deeper into real ale?' But we believe that the market will continue to consolidate into two main players - us and

Greene King."

Yet it wasn't just the potential of ale that attracted Charles Wells to the merger. With such a heavy exposure to contract brewing, through its deals with Red Stripe, Kirin and Cobra, and its sales and marketing partnership with Corona, the company could never feel completely in control of its destiny.

Now that it owns 60% of the Young's brand, that insecurity is greatly reduced - an elegant solution, indeed, but to Wells' problems as much as to Young's.

With the sad news of John Young's death last week, and rumours that Young's might soon be subject to a bid, there must also be speculation that its stake in the new brewery could at some stage be bought out by its new brewing partner.

But that's for the future. First, McNally and his team need to deliver on the plans they've been hatching for nearly a year. Like some mythical beast of old, the eagle and the ram must now fly. The signs suggest it will soar excitingly.