Breweries and brands: Marston's wins again

Midlands-based Marston's moved to buy the Refresh brewery last week. The deal means Marston's has now acquired three breweries in recent years. Nigel Huddleston reports

Marston's has said it is committed to the full portfolio of Refresh UK's ale brands and its brewing site at Witney in Oxfordshire, after its acquisition of the company last week.

The purchase follows the pattern of previous acquisitions of Cumbrian brewer Jennings in 2005 and Ringwood of Hampshire last year.

In both cases, the acquired company's breweries and brands were kept intact, contrary to the prevailing industry trend of stripping out spare capacity and cashing in the land on which breweries stand.

Refresh is an oddity in the modern beer world in that it has no surplus capacity, and has actually farmed out brewing and bottling to meet demand.

One of those third parties was Marston's, which helped start talks with Refresh chief executive Rupert Thompson.

"It certainly enabled us to talk about the business to Rupert," says Marston's Beer Company managing director Alistair Darby, "but when I first spoke about the possibility of a partnership he said he had no interest in selling it."

Though the terms of the deal are undisclosed, one analyst has suggested a figure of £10m to £11m, for a company with pre-tax and interest profit of £1.1m and a turnover of £24.9m in the year to last May.

The deal gives Marston's Hobgoblin ale and other brands from Refresh's Wychwood stable, plus Brakspear, which Refresh brought back to Oxfordshire from exile to some acclaim from the Campaign for Real Ale in 2003.

Premium portfolio

Refresh's portfolio includes Mann's Brown Ale, Green Goblin cider, which it makes in partnership with Thatchers, and the UK distribution deal for Löwenbräu German lager.

"The portfolio is really a complementary fit," says Darby. "It's a really interesting and exciting range of premium brands, by which I don't mean strong beers, but fashionable brands with a great image.

"Brakspear Bitter is a really classy premium beer, and Hobgoblin and the Wychwood range have a very anarchic approach and are different from anything else we've got."

Refresh UK was established by former Morlands executive Rupert Thompson from a management buyout of Ushers of Trowbridge in Wiltshire. It really started to take off when it bought Wychwood two years later along with the Hobgoblin brand.

The company has become one of the leading producers of organic beer, making the Duchy Original beer for the Prince of Wales as well as its own brands. Darby said this had been an attraction to Marston's.

"About a year ago my marketing director said to me that the two things we didn't have in our portfolio were a bottle-conditioned beer and organics — Ringwood gave us the first and this has given us the second."

Wychwood has become a significant player in the take-home market, but had untapped potential in the on-trade, since it exited the pub business. "We've got over 2,500 pubs. A lot of them sell cask beer and will be interested to get hold of the range. We're stronger in free-trade sales.

"We've also got 40 beer-quality technicians who can go into pubs and support people in serving cask ale, which Refresh also hasn't had."

Takeovers without cost savings are like gin without tonic, but Darby insists that closing the Witney brewery is not on the menu. "We believe breweries like Jennings, Ringwood and Witney are absolutely at the heart of their business.

"What we've said to people at the moment is that we haven't got any views on the nature of changes that will happen.

Establishing strategy

"We're not going to stand here on day two and make snap decisions about the business, but obviously it would be naive to think that everything will stay unchanged. It's got a really good group of people in brewing and in sales and marketing, who have really been at the heart of the success.

"After everything that's gone on with moving the Brakspear brand back to Oxfordshire, it would be commercial suicide to undo it."

Marston's won't be significantly stretched financially, but it will have to convince investors that its brand rather than property-focused strategy is sound at a time when the ale market is in decline. Further acquisitions shouldn't be expected soon.

"We've got to make this work first," said Darby. "I'm a believer in never say never, and, clearly, if another beer out there became available that fitted the strategy then we'd look at it.

"But we've already got the best range of cask beer in the country — we could not add another brand for another 10 years and still never run out of things to do."

Refresh by numbers

£24.9m

Turnover in the year to last May

£1.1m

Pre-tax profit

25%

Growth last year