Still brewing for Britain

The year 1698 was peppered with some pretty colourful events. In France, a vintner by the name of Dom Pierre Pérignon was perfecting a special cork stopper to give his bottles of white wine some added fizz, while in Russia Peter the Great was busy imposing a tax on beards in an effort to dissuade the local male population from "copying Asiatic customs".

Meanwhile, somewhat nearer to home, what we know today as Shepherd Neame was being established in the small Kent town of Faversham.

Moving with the times

Proudly claiming to be the UK's oldest brewer, the modern-day version of the business is keen to play up its heritage, as evidenced by one of its bottled beers called, unsurprisingly, '1698'. Then there's the nod towards more recent history via its famous Spitfire cask ale, originally produced in 1990 as a one-off to celebrate the 50th anniversary of the Battle of Britain, but now a core element of the brewer's output.

But while heritage and tradition are vital to a company such as Shepherd Neame, chief executive Jonathan Neame recognises these attributes must be balanced with the demands of today's fast-moving pub market.

He points to the group's recent licensing deal to brew the iconic Japanese beer Asahi, as well as

sponsorship deals, such as its tie-up with the Udderbelly venue at the Brighton Festival Fringe. Then there are the brewer's irreverent campaigns for some of its beers. As well as the German-baiting adverts for Spitfire, there were the 'Near the knuckle' posters for Bishops Finger, which

left little to the imagination and earned a rebuke from the Advertising Standards Authority - doing Shepherd Neame's profile no harm at all in the process.

Back in fashion

The brewer wasn't always deemed to be at the cutting edge, however. "Some 15 years ago the accent was on style bars. Our pubs were seen as traditional, and traditional meant boring, old-fashioned and under-invested," Neame says.

Nowadays this view is changing. Neame firmly believes the consumer is moving back towards more traditional pubs, many of which have improved their offer considerably - Shepherd Neame's included.

The group has spent a lot of

money upgrading its 376-strong estate, and sold the pubs it believes added little to the operation. It has also invested a reported £6.7m since 2003 in improving the brewery's capacity and distribution.

In addition, it has invested in its environmentally friendly and energy-efficient production facilities - the annual output of which is around 207,000 barrels of beer, split 50:50 between its own and licensed products. A further £1.6m has been spent on or earmarked for its cask packaging and new bottling facilities. Environmental plaudits have subsequently been bestowed, with Neame keen to point to his company's ISO14001 environmental management certification - Shepherd Neame is

the only UK brewer to have one, apparently.

"As far as brewery technology is concerned, there's no doubt that investing in these areas has a quick payback," he says. "Our new keg plant has reduced energy consumption, our new cask plant will do the same and overall energy usage and noise will drop significantly."

Putting Kent back on the map

As well as modernising its processes, Shepherd Neame is aware of its role in the county known as the Garden of England. "Ten years ago the perception of Kent, notably by those who lived here, was limited," says Neame. "But now we're seeing a definite sense of change. With various investment programmes across the county, as European businesses invest here on the back of the high-speed rail link and so on, people are proud to be associated with the place again.

"Plus we did some research within that and found we were seen as an integral part of the local identity. That includes the brewer's relationship with the raw materials it uses, many of which it sources from the surrounding area."

Intriguingly, in a recent research project Shepherd Neame found that while consumers liked organic products - its bottled Whitstable Bay is brewed using organic ingredients - they scored fairtrade goods much higher. "Organic is seen as a luxury for those who can afford it, while fairtrade is good ethics that everyone can buy into," notes Neame. "But more important than either is buying locally and putting money back into the local economy. The sustainability of local beer has kudos."

But how aware - bothered, even - is the consumer when it comes specifically to Shepherd Neame's green credentials and its commitment to the local economy? "What we're trying to do is genuine and we hope this effort comes across to the consumer," says Neame. "The research suggests that we are making a difference, but I couldn't honestly say to you how big that is at the moment. The corporate world is trying to catch up with the green agenda, but it's important that it's economically sensible and it's not just PR.

"With energy costs as they are, getting on with it makes sense. But you should only shout about it if you can back it up with results."

The brewer's commitment to green business values and corporate social responsibility, which includes its responsiveness to local issues - isn't a collection of tree-hugging concepts. "We're doing this because it's good business practice," says Neame. "If it makes a subliminal difference to the consumer in the way they make their choices then we'll sign up to that."

Banging the drum

When he's not steering his own business Neame bangs the drum for responsible drinking strategies and, as chairman of the British Beer & Pub Association's Duty Rate Advisory Panel, joined-up thinking on the subject of liquor taxation.

Pubs have had a hard time, while the problem of binge-drinking is one he considers to be as much a matter of perception as of reality. "We have a problem with alcohol consumption in the UK, but part of the issue relates to the fact that we have one of the lowest definitions of what constitutes binge-drinking. You also have to ask what is safe drinking, since the level of what is regarded as 'safe' varies across the region."

A bit of 'across the region' planning wouldn't go amiss, Neame suggests. "There's currently a debate about common labelling," he says, "and if you want common labelling standards you have to define what a unit of alcohol is. It's got to be the same across the EU. Which it isn't currently."

Unsurprisingly, given his BBPA role, Neame points the finger at the duty authorities. "If we can get some sense into the debate about a common alcohol strategy, then logic would suggest a fairer regime for beer versus wine, where strength is growing but duty isn't, and a fairer regime for the on-trade - with appropriate responsibilities and penalties if you screw up." Get these areas sorted and one "could well see a very vibrant pub industry in 10 years from now", Neame believes.

The evolution of premium

Meanwhile, the growth in the popularity of speciality beers can only be grist to Shepherd Neame's mill, says Neame, especially as the national brewers grapple with capacity issues. Having a premium brand will be key, he argues, but the parameters of 'premium' have changed. "The consumer wants more choice, but what was considered to be the premium five years ago has become the everyday brand. What they now consider to be premium is not defined by ABV but by brand image," he says.

"We're very optimistic about Asahi. For a company of our size and scale it is very encouraging. We're not purely an ale brewer, plus the consumer is looking for more choice, and choice at the top end of the range."

Here lies the key to the industry's future prosperity, Neame believes, one driven less by consolidation and more by what the consumer wants.

"We're seeing a trend towards sustainability, local sourcing and a swing back to more traditional pubs. As an industry we've been a