Staying independent

When Young & Co moves out of the Ram Brewery site in Wandsworth later this year and into new offices by the Thames in the same South London borough, passers-by might well see a thumping great 'Not For Sale!' sign stuck into the lawn in front of the building.

The company probably won't go that far, but following last year's disposal of the brewery site - Young's home for centuries - and the death of long-time chairman John Young, many suspected the Wandsworth-based company would soon be swallowed up by a predatory rival. Recent press speculation - quoting unnamed rival companies saying they'd "love" to own Young's pubs - has done little to dampen the ardour of conspiracy theorists.

Predictably, this is not how the company's senior management sees things. Sitting in the brewer's soon-to-be redundant boardroom in the Ram Brewery, Young's chief executive Stephen Goodyear is adamant as regards the company's future: it is simply not up for grabs.

We've heard this sort of rallying cry before from companies which have undergone an upheaval, only for those who have uttered such 'they shall not pass' sentiments to subsequently announce a deal to sell out to a bigger group. But Goodyear sticks to his guns.

"We have transformed the business in the past 12 months and we are extremely confident going forward," he says. There will be much emphasis on premiumising the Young's pub offering and "avoiding doing what everybody else does".

The brewing connection

Nevertheless, after all the group has been through you can't blame people for arriving at the conclusion that Young's would soon go the way of Gales, Hardys & Hansons, Ridley's, etc, ad nauseum.

With Young's valued at around £400m, a cracking pub portfolio and the sense that it had departed brewing for good - a misnomer since it now has a 40 per cent stake in a brewing joint venture with Bedford brewer Charles Wells - it would be an easy assumption to make.

Certainly in other situations, changes of this scale have heralded the attentions of would-be suitors. But despite ceding beer production to a former rival in a provincial town miles away, Goodyear stresses that Young's is still a brewer through its 40 per cent stake in the venture. "We are not just a pubco," he states. Going forward, he says the Young's deal with the Bedford-based Charles Wells means it retains its commitment to brewing cask ale as well as owning a quality estate of pubs.

"We still brew beer. The presence of Young's ales in pubs illustrates our commitment. We've a new media campaign for our beers launching in May with the tag line 'Urban Retreat'.

"And we've got a sizeable share in a new business, Wells & Young's Brewing Company (W&YBC), which will see an annualised profits rise of £2.5m," he says.

And in spite of the move away from Wandsworth, Young's doesn't plan to remove the famous Ram symbol from its signage or glassware.

"The ram is a part of what we are and it would be silly to remove it," Goodyear says.

Costs of the joint venture have come in at around £8m, and Young's has invested £10m into the arrangement. However, savings are envisaged going forward. According to Young's finance director Peter Whitehead "the joint venture is making more profits than our brewery operation was before".

Meanwhile, an investment programme in its pubs, together with acquisitions funded in part by proceeds from the £69m sale of the brewery site to property developers Minerva, will take the retail side of the group onwards and upwards.

Family affairs

One potential spanner in the works, family shareholders who might lose interest in proceedings and look to sell their portion of the family silver, has also been addressed. Goodyear's team is determined to keep such investors informed of and close to what's going on at the company. "We had a meeting of both Young's and Charles Wells family shareholders recently and it was a great success," he says.

Retaining the interest of family and other investors is pretty straightforward, adds Whitehead.

"The trick is to underpin the share price with plans for the company. Our independence relies on us running the company better than anyone else," he says, pointing to the shares currently trading around the £33 mark, just a quid or so short of their 12-month high.

"We're in this for the long term," says Goodyear. "We always have been and we still are. Some tough decisions have been taken during the last year or so, but we've done nothing that we need to castigate ourselves about."

One of the more painful decisions, aside from leaving a centuries-old home and the provenance it contains, was reducing the workforce from 300 to around 90.

But after pain comes progress. The new head office will bring various arms of the business under one roof.

According to retail director Patrick Dardis this will precipitate "a new culture at Young's. The change will engender a new buzz and identity at the company. We want to focus our energies on how we are different".

Changes to the estate

Part of this shift will be reflected throughout the pub estate, where investment in the group's managed pubs has driven a more contemporary, modern look, while Young's is aiming to convert more tenancies over to leases to drive profit performance.

"Traditional tenancies don't tend to attract entrepreneurial types," says Goodyear, "and of course [leases] benefit us from a higher rental income."

This doesn't mean its tenancies are being left to wither on the vine. A three-year long refurbishment programme has already commenced, while mystery visits are being introduced to improve service standards. Young's has already initiated regular, independent mystery visits to a number of leading bar and restaurant venues in London, the findings of which will be used by the company to judge its own progress at the premium end of its business.

New pubs in developments on the south bank of the Thames and significant overhauls in a number of key sites also lend credence to Young's claim that it is moving forward.

Some would argue that such a new culture has been a long time in coming; that Young's had a fuddy-duddy image which needed overhauling. With the Ram brewery site earmarked for sale more than three years ago, cultural change was always on the cards and Goodyear says the Charles Wells deal has played a role in the shift.

"Strategically and mathematically, the joint venture is the best option for this company," he says.

"There is equal treatment for our beers and we want number one brands in our pubs, which this venture delivers. And we believe that W&YBC will go on to be a much bigger success than it is currently."

Considering the heritage issues, Goodyear notes "the feedback has been positive".

The addition of brands such as Courage, recently acquired from Scottish & Newcastle, will help the process of forging this success, Goodyear believes. "There's still a lot of growth to be had despite the decline in the beer market. Courage beers will have their go again," he says.

More such deals will be done when the opportunities arise, he adds, while pub purchases - individual or package - will be assessed as and when they arise. And with tens of millions of pounds from the Ram site sale available to spend, Young's is undoubtedly in an envious position for its size.

So the ram struts on. For now…