Demise of British brewers to foster global dynasties

The brutal truth of market forces could see the demise of the great British brewing tradition as Interbrew increases its share of the industry.

One of the great joys of globalisation is watching Britain selling off the family silver. I say it’s a joy – I know others consider it tragic – because every industry and institution that falls into foreign hands means that some powerful British vested interest is eroded in favour of internationalism.

And since hardly anywhere else on earth has the ridiculously anachronistic class structures under which Britain still labours, it has to bring fresh hope that we’ll be dragged kicking and braying into the 21st century.

Our car industry has now gone and, while mass production is commercially more significant, probably the greatest symbol of our departure will be the first BMW-manufactured Rolls-Royce. True, BMW has given us back Rover (in a way), but only because it’s at death’s door.

The utilities were privatised and water and railway companies are now significantly under French ownership. The British music industry has gone abroad and even the jewel in our music-box, EMI, is merging with Warner.

The walls of the City of London long ago fell to the siege from Wall Street, Japan, Germany and Switzerland, and the proposed iX joint-venture between the London Stock Exchange and the Frankfurt-based Deutsche Borse marks the death knell of British self-interest in London as a global financial centre.

There really is little left for powerful British families to keep to themselves and by which to declare themselves truly posh. No wonder at Ascot and Goodwood these days the most exclusive enclosures are occupied by rich foreigners. Entry always was on corporate tickets, of course, but the British pretended that, like the horses they owned and watched in the old days, it was about blood and breeding.

Royalty, too, have always been into corporate hospitality, if not corporate sponsorship, whether issuing Royal Warrants to their favourite gin distiller or having Mohammed Fayed of Harrods fund their polo tournaments. The Royal Family is, of course, largely immune to the transfer of great British institutions into foreign hands, since it is largely of German descent.

But one industry has lasted longer in powerful British-family hands than others, largely because its product has been confined to these shores by dint of being too unattractive to foreign tastes. I mean the British brewing industry and specifically the brewers of bitter-beer, which I quite like, having been brought up on it, but which I do see is a repellent, warm, brown concoction with bits floating in it to anyone from abroad.

In this context, last week’s concurrent announcements that Whitbread has sold its brewing interests abroad and that Bass intends to do so is, in nationalistic terms at least, highly significant. It leaves only Scottish & Newcastle as a major, UK-based presence in British brewing, with 30 per cent of the market.

With old, landed families such as the Whitbreads in charge, the British brewing industry was one of the great industrial bastions of our 20th century class system. Its godfathers were commonly – if that’s the right word – known as The Beerage. This industrial mafia wielded significant political power, given its employment strength and its influence over the thirsty working classes for three-quarters of the last century.

As a self-protective cartel of the Establishment, The Beerage was an enemy of Thatcherism. The lady herself’s faithful lieutenant, Lord Young, was famously “minded” in the Eighties to break up the tied-house monopoly of the major brewers. His interventions eventually led to the 1989 Beer Orders, the closure of pubs and hastened the sale of brewing interests, without noticeably improving consumer service.

It’s always worth recalling that Margaret Thatcher’s administration played a significant role in destroying the British brewing industry as we knew it, especially when the grand Baroness makes a spectacle of placing a hanky over a model British Airways tail-fin in apparent flag-waving support of all that is “British”.

But, in fairness, it’s really the brutal truth of market forces that has broken British brewing. Britain has failed over the past decades to convince drinkers that the warm, brown stuff is nicer, or even as nice, as lager. It’s little wonder, then, that the lager brewers of the world, such as Interbrew and Carlsberg, have ended up in charge.

Whitbread is ending 258 years of brewing with its &£400m sale to Interbrew of Belgium. Bass is putting it about that it expects to raise &£2.2bn for its brewing interests. As I said here in March (MW March 9), it is more likely to be &£1.8bn. In a buyers’ market, it’s difficult to see an auction taking it much over &£2bn.

But the really interesting aspect of this sale is that Interbrew has taken a significant, but not a knock-out, stake in British brewing. And it’s fascinating that Bass should go out of its way to announce its intentions, albeit alongside interim financial results, on the day of the Whitbread sale. Could it be that Interbrew knows something about the future of the Bass deal?

No doubt both Bass’s and Whitbread’s brewing interests would sit prettily together for Interbrew, if the regulators wore it. But, in any event, the demise of British brewing coincides with the birth of truly global brewing groups. There is much to be played out yet.

I’m just hoping that the new global dynasties that have replaced the old national ones keep bars open – somehow dot-com pubs don’t work for me.

George Pitcher is a partner of issue management consultancy Luther Pendragon

Latest from Marketing Week

PLEASE SIGN IN OR REGISTER. IT'S FREE, QUICK AND EASY!

Access Marketing Week’s wealth of insight, analysis and inspiration that will help you develop as a marketer and leader.

Register and receive the best content from the only title 100% dedicated to serving marketers' needs.

We’ll ask you just a few questions about what you do and where you work, so we can make Marketing Week more relevant to you.

Register now

THE BEST CONTENT

Our award winning editorial team and columnists will ask the biggest questions about the biggest issues on everything from strategy through to execution to help you navigate the fast moving modern marketing landscape.

THE BIGGEST ISSUES

From the opportunities and challenges of emerging technology to the need for greater effectiveness, from the challenge of measurement to building a marketing team fit for the future, we will be your guide.

PERSONAL AND PROFESSIONAL DEVELOPMENT

Information, inspiration and advice from the marketing world and beyond that will help you develop as a marketer and as a leader.

Dedicated to developing your skills and helping you achieve marketing excellence. Find guidance on leadership, professional development and the latest industry jobs.

Having problems?

Contact us on +44 (0)20 7292 3711 or email subscriptions@marketingweek.com

If you are looking for our Jobs site, please click here