Carlsberg and Marston’s – what next?

Quite often (and annoyingly) with London Drinker, a big story breaks as soon as we have an edition completed. This time it was the ‘joint venture’ between Carlsberg and Marston’s. Looking back, I see that I have mentioned Marston’s problems in every edition for over a year so this came as no surprise. According to the Morning Advertiser, negotiations started as long ago as November 2019 and were completed in February, before ‘lockdown’.

First up, a short history lesson. The company that is today called Marston’s was originally Wolverhampton & Dudley Breweries, best known for Banks’s beers which it brews at the Park Brewery in Wolverhampton. The Dudley part was Julia Hanson & Sons which closed in 1991. W&DB acquired Marston’s of Burton on Trent in 1999 and decided to rename the whole company Marston’s eight years later. Presumably they thought that Marston’s name gave them more credibility. Marston’s subsequently took over the following local breweries but to date has largely left them to operate independently:

  • 2005 Jennings, Cockermouth, Cumbria.
  • 2007 Ringwood Brewery, Ringwood, Hampshire.
  • 2008 Wychwood; Witney, Oxfordshire.

In 2017, Marston’s purchased the Eagle Brewery in Bedford from Charles Wells. As part of the package they also acquired the following brands: Bombardier, Courage Best and Directors, McEwans and, of course, Young’s. Marston’s also own the former Thwaites brands, Lancaster Bomber and Wainwright, which are brewed at Wolverhampton.
There are two additional important historical considerations. At their brewery in Shobnall Road, Marston’s have the last remaining Burton Union set which they use for brewing Pedigree for the local trade. This is a priceless piece of our brewing heritage and, whatever else happens, this must be preserved, and preferably kept in use. Similarly, Marston’s have also been brewing Draught Bass at Shobnall Road under contract for AB InBev. We do not want to see that iconic beer lost either.

Carlsberg, founded in Copenhagen, Denmark, in 1847 by J C Jacobsen, is a multinational operation. They did not start brewing outside Denmark until 1966, their first overseas venture being in Cyprus. Their flagship brands are Carlsberg, San Miguel and Kronenbourg but there is no room here for the full list of what they brew and where. Their activities in the UK are centred on their lager brewery in Northampton. They also own the Tetley’s brand (they have a call centre in Leeds) and, in 2017, they ventured into the craft beer market by acquiring the London Fields Brewery.

There are existing links between the two companies. Marston’s brew Tetley’s Mild, Bitter and Gold at Wolverhampton under licence for Carlsberg, although the independent Leeds Brewery contract brews Tetley No. 3 Pale Ale.

The joint venture will be called the Carlsberg Marston’s Brewing Company (CMBC) and will be owned 60% by Carlsberg and 40% by Marston’s. Carlsberg will have three seats on the board and Marston’s two, with current Marston’s Chief Executive, Ralph Findlay becoming non-executive chairman. Carlsberg are reportedly injecting capital of £300 million in to the project. The chief executive of CMBC will be the current CEO of Carlsberg UK, Tomasz Blawat, who explained that the attraction for Carlsberg was access to Marston’s pub estate (the agreement includes a supply deal) while Marston’s would be free to concentrate on their pub estate.

Mr Findlay confirmed that Marston’s, who had debts of £1.39 billion at the end of September 2019, will become a ‘focused pub operator’. Marston’s had planned to reduce the debt by continuing their programme of pub sales but the funds generated by the creation of CMBC will ease the pressure somewhat and Mr Findlay added that he didn’t have ‘any plans for material disposals at this point’.

The obvious question is what interest will a global drinks operation have in the smaller parts of Marston’s portfolio. CAMRA’s chief executive, Tom Stainer, commented, “If this joint venture goes ahead, we would see further consolidation of the brewing industry into just a few large, international players – to the detriment of our national brewing heritage, consumer choice, the diversity of beer in pubs across the country and the access to market for the small, independent brewing industry. CAMRA wants to see Carlsberg and Marston’s protect jobs and protect pubs, as well as to resist any brewery closures or moves that would see existing beers losing their identity, or regional character, as part of a merger.” Mr Blawat told the Morning Advertiser that ‘One of the greatest strengths of the Marston’s business is its portfolio of regional brands that are brewed locally. It will remain important to the joint venture that we continue to have a local brewery for consumers of these brands. Ultimately, Carlsberg Marston’s Brewing Company will have complementary international, national and regional beers and brands to offer to pubs and beer drinkers.’

Happily, the local press reported that brewing started again at Jennings on 10 July. Either way, the control of large part of the UK brewing industry has left national ownership, as also happened with Fuller’s and Greene King.

The deal is expected to be completed in September but requires the approval of Marston’s shareholders first. Happily, although there is the usual mention of ‘synergies’, no job losses are mentioned – so far.

In an interview with the Evening Standard on 26 June, Mr Findlay said that he expected 85% of Marston’s 1,400 pubs to reopen on 4 July but while there would be enhanced hygiene and ‘social distancing’, there would be no plastic screens or personal protection equipment (PPE). In an interview with the Daily Mail the next day, he maintained that issues such as PPE and contact details were ‘requests’ from the Government and not rules and that there was a ‘degree of grey area and flexibility of guidance that is very helpful’, allowing licensees discretion over implementation. As regards PPE, he said, “It’s important to me for pubs to look like pubs and not like hospitals because if they do, people won’t want to come here.” PPE would however be provided for those staff who wanted it for ‘their own peace of mind’. On contact details, he said that the company would not force drinkers to hand over their details. Instead they would leave pens and paper for customers to fill out their details if they wanted to, meaning that it was ‘voluntary information’. Some customer details would still appear on their on-line booking system however, which would be made available for ‘Test and Trace’ purposes.

Stop press: having originally written to the Competition and Markets Authority (CMA) on 25 June to express its concerns, CAMRA’s Chief Executive, Tom Stainer, wrote again on 13 July. He commented, “Since the day that it was announced, CAMRA has raised serious concerns about the proposed Carlsberg Marston’s Brewing Company and choice for beer drinkers, pub goers – and over the future of British beers, brands and breweries. We wrote to the CMA back in June and asked them to investigate. We were surprised to be told that it wasn’t a matter for them, and that we should talk to the EU Commission instead. We don’t understand why the CMA does not seem interested in investigating something that will clearly have an impact on choice of beer on the bar in pubs. The CMA exists to promote competition for the benefit of consumers; therefore it is disappointing that they are seemingly disinterested in investigating something that will have potentially anti-competitive effects on the UK beer and pub market. It is vital that the CMA steps up to the plate, thoroughly investigates the proposed joint venture between Marston’s and Carlsberg, and helps to ensure there is fair competition, access to market for brewers, and decent consumer choice when it comes to beer and pubs up and down the country.” There is some interesting news about the CMA here.
Tony Hedger