The all seeing eye - secret to Brulines' success

Brulines has gone from strength to strength with its dispense monitoring system.

While 24-hour CCTV cameras may pull in the audiences for Channel 4's Big Brother, it's not something that would go down well with the average publican.

Derrick Collin (pictured)​ decided widescale surveillance would be a rather expensive and impractical solution when he suspected that some of his tenants were buying outside the tie.

Over 10 years ago, he gave up a career in the nuclear and offshore oil industries to run a 30-strong pub group, Thornaby Leisure, which he had bought from Newcastle Breweries.

"Within a very short period of time I found I was losing money," Derrick said. "The business was disappearing but I couldn't understand why."

He finally carried out secret surveillance outside one of his pubs and, after a few days, a van turned up and delivered an extra three-and-a-half barrels of beer. After doing his sums, he realised that illegal wholesalers could be depriving his whole estate of between 150,000 and 200,000 barrels a year.

"I saw that the options for the industry were to stand someone outside every pub in Britain, put cameras in the cellars or to quantify what was being dispensed out of every font," he said.

With a background in engineering, the third option was the most promising. He developed an electronic draught information system (EDIS), which would automatically monitor beer as it was dispensed.

He formed Brulines, based in Stockton-on-Tees, to produce and supply the systems and, in 1995, EDIS was put on the market and the orders started to trickle in.

"The pub industry loses £1bn a year through fraud," Derrick said. "There's a lot of stealing, especially with the widespread use of temporary staff.

"It had become an accepted part of the business. Pub companies couldn't believe it when someone came along and said they could stop it stone dead.

"They were just taking two or three systems at a time, but then they began to realise its value."

The first major order, for 150 systems, came from Inn Business Group, the former tenanted pub company, followed by increasingly large orders from Punch Taverns and Pubmaster. Suddenly demand was greater than could be handled.

"We didn't have the infrastructure to handle any further growth of the business, so we put a block on orders to make sure we got it right first," Derrick said.

"I wanted to accelerate the organic growth of the business and expand by acquisition within the same market to build up our services."

Derrick was put in touch with the directors of a cash shell called Comprehensive Business Services (CBS) which was looking to buy a growing company providing services to the licensed trade.

Brulines reversed into CBS, which was already listed on the stock exchange's alternative investment market (AIM), in December 1999, with Derrick retaining a controlling interest.

Since then, its customer base has been swelled by thelikes of InnSpired, Whitbread, Enterprise Inns, Pub Estate Company and Commer, and it now supplies over 4,000 pubs.

Derrick believes there are likely to be more opportunities from the conversion of over 2,000 managed houses to tenancies and leases by pub groups such as Voyager, Enterprise and Laurel."This is the time when the illegal wholesaler will move in," Derrick said. "With managed houses, they have a unique opportunity to put Brulines in before conversion."

The core product is EDIS2, which is primarily a policing tool for a pub company to monitor beer dispense at its tenants' pubs. The information is recorded by a secure system in the outlet and sent to the company's head office.

But Derrick has been keen to develop the technology further and at the Pub & Bar show in London last September, CBS unveiled EDIS3. This provides real-time information on beer dispense to licensees in their pubs as well as head office, linked via the internet.It can gauge the impact of promotions or TV advertising on particular beers through the day, which is likely to appeal to suppliers.

At present, the Brulines systems are only in use in about 40 managed houses, but EDIS3 will open up new markets. Derrick also expects its products to be launched in Europe by next year and internationally within the next two years.

After making a small profit of £70,000 in its first year, Brulines earned CBS pre-tax profits of £564,103 in the year to March 31, with a record annual turnover of £3,434,304.

However, this was down from the previous year, partly because recent changes in pub ownership have led companies to defer orders.

CBS has launched a strategic review to come up with new ideas to iron out this "lumpiness" in the business and identify more stable income streams. One solution has been to start renting its systems to pubs rather than selling them, guaranteeing a steady flow of cash.

It is also eager to offer new services in the licensed trade such as data management, EPoS, credit control and stocktaking.

With Brulines in seven per cent of pubs, Derrick is confident that market penetration can be expanded to at least 20 per cent.

Alongside Derrick, there is a new management team after the departure of founder chairman Henry Edwards. Bill McCosh, the former chief executive of Mansfield Brewery, has become chairman while Paul Handley, also from Mansfield, has joined as finance director for the group and commercial director for Brulines.

"The infrastructure is there now," Derrick said. "But, while Brulines is unique and we are market leaders by far, we don't want to be arrogant or complacent."