How Breal plans to make Black Sheep 'centre of excellence'

Since being acquired by the Breal Group​ in May 2023, the Yorkshire-based firm has benefited from more than £1m in investment, enabling the business to build a new brewhouse including new tanks plus expand its botting and canning lines.

Black Sheep Brewery​ executive director Jo Theakston told The Morning Advertiser (MA)​ there has been a “huge amount of positive change” in the past 16 months.

He continued: “We’ve become self-sufficient in our entire production from grain to glass and we've really been able to accelerate that through the acquisition.

“The new brewhouse gives us massively increased flexibility in what we can brew and we have a good set up now to develop and brew beers that need different hopping regimes and ways of fermenting if we want to.”

Breal​ CEO Mark Williams added the group has planned to inject a further £600k into Black Sheep Brewery before the end of March next year in a bid to build the brand on a “national” scale and make the Furby Road brewery a “centre of excellence”.

Support programme 

“I can envisage a Furby Road plant with significantly more warehousing space [in the future] and significantly more packaging lines for [Breal].

“We fully expect to be able to do contract packaging for other brewers in the not-too-distant future and becoming a centre of excellence for all the breweries [in our portfolio],” he told The MA​.

However, the upcoming legislative changes around packaging were “not particularly welcome”, Williams said, as many of Black Sheep’s products are currently distributed in glass bottles.

Williams continued: “In the next 12 to 18 months, we will need either another canning line or a much larger canning line to replace the one we have. It goes without saying people aren't going to be happy with paying the tax on the glass that they will have to, and neither do we.

“It's going to drive us more quickly into metal, which, from an environment point of view, is a sensible move anyway, but it's just going to happen much quicker than we'd anticipated.”

Black Sheep’s executive director also detailed plans for the firm to offer more support to pub customer’s with PoS material, including 3D pump clips, signage and uniform for pub staff, as well as an increased focus on championing cask quality.

Theakston said: “Alongside front-end support, we want to build a programme where licensees have our support in terms maintaining the quality of cask in their outlet and we can support them with best practise.

“It's been a tough few years since Covid and many pubs have faced a perfect storm. The [number of pub closures] tells me something's wrong. It's not sustainable any longer.”

“Pubs continue to have a really tough time out there and there's still a lot of closures on a weekly basis.

“It's important we support those good operators with really good high quality products which help to engage consumers. That's what we're trying to do and that in turn supports the pubs that are still out there.”

Looking to the future, Williams explained Breal planned to grow its estate and has continued to look at opportunities within the market, adding pubs are the “backbone” of the business.

“The group itself is still in a loss-making position, which we expected. But is definitely less loss making then we budgeted for and heading towards profitability within the next six months.

“It is tough out there. There's an enormous amount of competition, but with the range and quality of our products [alongside] more agile delivery, we are doing better than we'd anticipated”, he explained.

Ahead of the upcoming Budget next month, Breal’s CEO implored a reduction or freeze to duty costs was “essential” to foster the brewing sector​.

He said: "It’s not just a thing to have but given the turmoil in the market today, it is essential.

Compounding the problem 

“It's a difficult market for a pub owner, particularly smaller pubs. They squeezed on all fronts, energy prices, minimum wage increases, duty increases. It’s a tough market.

“We're investing in and continuing to grow our brewing group. But of course, as you grow, the duty increases and the more we have to pass onto the pubs. It becomes more painful.

“It's been a tough few years since Covid and many pubs have faced a perfect storm. The [number of pub closures] tells me something's wrong. It's not sustainable any longer.”

Theakston added any increase to duty in the Budget on Wednesday 30 October would further “compound” the issue.

The executive director continued: “The inflationary and cost increases that everyone's seen in the last couple of years have slowed down or plateaued to a certain degree, but they're not going down.

“This then translates to much higher prices across the bar, which for consumers who aren't getting paid particularly more, it means their occasion to go out and themselves is potentially reduced.

“If you're adding more duty to that then it’s just compounding the problem and it wouldn't drive any more [revenue] for the for the Government because people simply won't be going out, they won't be spending.”