Brands of gold - S&N profiled

Mark Ludmon profiles Scottish & Newcastle, one of the licensed trade's biggest companies.

Bob Ivell has just arrived back from checking out one of Scottish & Newcastle Retail's latest developments. The third City Limits will be a complex of bars and restaurants, including a new outlet in the Quincey's American diner chain that it bought with Greenalls Pubs & Restaurants just before Christmas 1999.

What makes this different from the other City Limits developments in Croydon and Milton Keynes is that it is in Spain, in Alcobendas on the northern outskirts of Madrid.

It's not a surprising move for Scottish & Newcastle (S&N) which is now one of Europe's biggest brewers after taking over France's Kronenbourg last year along with Belgium's Alken Maes.

Although the Kronenbourg business includes a 60-strong chain of franchised bar-restaurants in France under the name of Tavernes de Maître Kanter, S&N is not about to roll out Chef & Brewer across Europe.

"With Kronenbourg, there are exciting opportunities for S&N to develop the on-trade business in mainland Europe, but it doesn't necessarily mean opening managed houses," Mr Ivell said.

S&N Retail has plenty to keep it busy in the UK. It has spent the past 18 months integrating Greenalls' 765 pubs and restructuring the estate. In January, it announced plans to transfer 180 managed houses to lease and sell another 740 so it could focus on pub-restaurants, branded pubs and bars and large traditional pubs with higher turnover, quality and margins.

Once the disposals are completed within the next few weeks, the retained estate will be made up of about 1,450 managed houses and 1,200 leased outlets within S&N Pub Enterprises - which includes 650 free-of-tie pubs run under management contracts for the Royal Bank of Scotland.

It now has a portfolio of concepts, some of which are being steadily rolled out and others that can be plucked off the shelf if the right sites come along.

Rat & Parrot, which was once one of S&N's main brands, has fallen out of favour. No new sites have been opened for some time and many of the 60 bars are earmarked for a revamp. Two Rat & Parrot developments in Norwich and Manchester's Printworks have become a new concept, Norwegian Blue.

Mr Ivell stressed that it was not just a reference to the breed of dead parrot in the Monty Python sketch.

"We wanted to create a modern bar with the clean, crisp environment of Scandinavia, focusing on products such as clean, crisp vodka," he explained.

However, it is turning its back on some of its own brands. The Mediterranean De:alto restaurants are being sold as part of the 740-strong package while the Old Orleans chain is also up for sale.

But S&N continues to roll out its Bar 38 café-bar (pictured)​, which is in 15 locations, and has quietly been developing the Eerie Pub Company chain bought as part of Thistle Inns in 1997. The horror-themed pubs, which feature gothic décor and blood-curdling screaming in the toilets, expanded last month with a new outlet, the Bell, Book and Candle, in the City of London.

It is also holding on to some of the best high street brands from Greenalls, such as Squares, Via Fossa and Baja Beach Club.

Strategy and marketing director Jeremy Blood said: "They are brilliant businesses, but we recognise that they only work if you have the right site. We are looking for locations but we will wait for the right ones to come along. That is a change in approach for us."

S&N Retail also continues to invest in food pubs, after passing the 100 barrier in the expansion of its Chef & Brewer estate. From Greenalls, it has about 40 Henry's Tables and 75 Millers Kitchens. The latter is being moved on with more modern, brighter décor and improvements to food, aiming to make them more adult-oriented while still being child-friendly.

With investment in kitchens and training, food sales continue to be developed throughout the whole of S&N's estate - only about 50 of its pubs are not judged to be suitable for selling food. Recent initiatives include introducing pizzerias within pubs in Hove, East Sussex, and Putney, London.

S&N has been investing in community locals for some time through the roll-out of the John Barras & Co format to about 150 pubs. This year will see further expansion for John Barras plus about six additions to the 72-strong alehouse format T&J Bernard - both of which retain individual pub names while having other brand consistencies.

But, according to Mr Ivell, the market is shifting back to unbranded traditional pubs which make up nearly half of its estate at present.

"It's probably an area we haven't invested in as heavily as we could because we have been focused on growing numbers and developing the high street," he said. "Our strategy is to focus back on those. Customers still think of traditional pubs as a bit smoky and uncomfortable, but we want to change that."

After the disposals, about half of S&N's managed estate will be branded, but Mr Ivell believes that the most important factors for a pub's success are its atmosphere and staff.

"A lot of the traditional values of the pub have been lost in all the paraphernalia and hype of branding," he said. "People got carried away with branding. In all the research we do, consumers say they go into pubs because of the atmosphere and comfort factor.

"It comes down to simple values of giving people good service and an environment they like, whether it's a high street bar or a traditional pub."

Mr Ivell said the nearest that S&N had to a genuine retail brand was its quality budget accommodation, Premier Lodge, which has common design, furnishings and colour schemes across all 120 sites.With all the changes taking place, S&N Retail has worked on improving internal communications - a challenge for a company that employs 32,000 people in the retained business. One initiative is to make everyone from area manager to managing director work in a pub for at least four days every year.

Sales within the retained estate were up by 7.5 per cent in the six months to the end of April and like-for-likes sales were up by 1.8 per cent, including ones that had received investment.

Mr Ivell said: "We have focused on getting the business into shape and, now we have come out the other side, we are confident we have done the right things to move the business forward."