Initial stages of Hydes' restructure prove successful

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Manchester family brewer Hydes is well into its five year plan to restructure the business. Mark Ludmon looks at the initial successes of the...

Manchester family brewer Hydes is well into its five year plan to restructure the business. Mark Ludmon looks at the initial successes of the scheme.

Chris Hopkins took over as chief executive of Hydes' Brewery three years ago. Now he's working behind the bar in one of the pubs and stacking kegs in the brewery.

But his time pulling pints is not a surprising career move. It's one of the company's ideas for improving internal communications and helping the workforce to understand the business from top to bottom.

The job shadowing scheme has seen area managers come under the wing of stock-takers and distribution workers join up with the freetrade sales team.

"In the past, Hydes was a very traditional company," Chris explained. "We have had new people come in while others have been here a long time, which is a good combination.

"We have now got a better understanding of the business across the workforce so that everyone knows that they have a contribution to make."

Chris came to the business from Whitbread and Scottish Courage, where he was business unit director in charge of the on-trade. While he may be an outsider, Hydes is one of the few remaining regional brewers that is still owned and managed as a family business. The board still has chairman Chris Hyde and finance director Adam Hyde, while members of the family own 60 per cent of the shares. Unlike other family brewers, such as Fuller's and Young's in London, it has resisted the temptation to weaken their control by floating on the stock exchange.

The business dates back to 1863 when Alfred and Ralph Hyde acquired a small brewing operation from their grandfather, Thomas Shaw. At one time, it was spread across three sites in Manchester - in Audenshaw, Ardwick and Rusholme - but it came to its present home in Moss Side in south Manchester in 1899.

William Hyde, who headed the company at the time, began acquiring pubs and this was continued by his sister Annie, who ran the business for 56 years until 1972.

While it was under her control, she added the name of one of the company's beers to rechristen the brewer Hydes' Anvil.

One of the first decisions made under Chris Hopkins was to tighten up the corporate branding by dropping the "Anvil", which is no longer part of the beer portfolio.

It was part of a five-year programme to restructure and reposition the business, which is well under way.

However, the management is still committed to making sure Hydes remains a vertically integrated private company in family hands.

In its results for the year to April 1, turnover rose by 17.6 per cent to £16.6m and pre-tax profit before exceptionals by 17.2 per cent to £2.25m. It marked a fourth year of double-digit growth in operating profits.

It has been churning its estate over the past year. It showed it was flexible enough to sell its café-bar and restaurant, MasQueVida, in Alderley Edge, Cheshire, after it had been open for only two years. The site is now in the hands of Edwina Lilley, the founder of Est Est Est restaurants and now chief executive of website, therestaurantgame.com.

"We felt there were too many players in that market for moving it onward," Chris admitted.

Although it is concentrating on more traditional pubs, it still has the high street bar Breeze in Peter Street in central Manchester and the award-winning Corbans pub and restaurant in Hale Barns, Cheshire.

The estate is now made up of 34 managed houses with 32 tenancies. Last year, it bought five new managed houses and it expects to continue expanding at that rate, supported by debt funding of £10m from the Royal Bank of Scotland.

The most recent acquisitions took it to Nantwich in Cheshire, Leek in Staffordshire and, for the first time, almost into Liverpool with a pub in Prescot.

"We wondered how a Manchester brewer's name would go down in Liverpool but the beers have gone down extremely well there, which is quite encouraging and has given us confidence," Chris said.

It has also secured its first outlets in Stalybridge in east Manchester, including Q which is listed in the Guinness Book of Records as the shortest name for a pub.

While it still has a handful of wet-led male boozers, Hydes has been spending record sums on developing an estate of quality traditional pubs.

Last month, it unveiled its modern slant on the community local at the Coach and Four, formerly the New Inn, in Wilmslow, which offers stylish décor and an upmarket menu.

Marketing director David Safiruddin explained that it was developing a sharper retail approach without going down the road of branding.

"We make sure each pub is tailored to its local market and try to make them all as different as possible," he said.

He has been involved in developing food within the estate, which has led to the development of three core menus from bar meals and a mass-market offer to four pubs with dedicated restaurants.

With plans to build 33 rooms next to its new Wilmslow pub, Hydes is also looking at developing accommodation as a further income stream.

Other initiatives for driving growth in the pubs include the incentive of the Hydes Oscars, in which the top licensees go to Cannes, France, for the finals and the winners go to the real Hollywood Oscars in Los Angeles in March 2002.

One of the biggest drivers of growth for Hydes has been its freetrade, with direct customers scattered from Chester and Wrexham in north Wales to Staffordshire, Leeds and Blackpool, Lancashire.

Over the past three years, freetrade barrelage has risen from less than 2,000 to up to 20,000, which includes listings with wholesalers The Beer Seller and Classic Drinks as well as pub groups Inn Partnership and Enterprise Inns.

"Because of our size, we can show more interest in smaller outlets than the majors," Chris said. "We can deliver service that is as good as, if not better than, other major players in the market, and add the personal touch."

Because it is an integrated business, Hydes can offer freetrade customers extra support with running their pubs, which can extend to its own pub managers providing advice.

It offers brands specifically for the freetrade, including Brewery Bitter (ABV 3.5 per cent) nitrokeg and Kält lager (4.4 per cent). Sales of its nitrokeg mild Black - which looks strikingly like stout in publicity material - were up by 47 per cent in May and June this year.

While its portfolio includes standard Hydes Bitter, Mild and Light, the biggest push is behind its premium ale, Jekyll's Gold (ABV 4.3 per cent).

"Our ambition is to have Jekyll's Gold as a national brand as a long-term challenge, and we are making in-roads into that," David said.

Backed by poster campaigns, Jekyll's Gold was up by 58 per cent year-on-year in May and June while Hydes Bitter also showed growth at 18 per cent.

"We now have a brand for every category," David said.

In November, it completed a project to increase capacity at its brewery from 45,000 barrels to 60,000. With facilities for producing everything from ale, keg and nitrokeg to lager, it is building up a strong contract business.

Production has been particularly boosted by off-trade volumes, with listings in Sainsbury's, Safeway and Booth's off-licences. It has developed a special bottled ale just for the off-trade, Manchester's Finest (ABV 4.7 per cent), which has proved a surprise hit with Manchester United fans in Japan.

With the brewing and retail sides of the business in good health, Hydes plans to follow other larger brewers to split the two profit streams.

"We have made sure the two parts of the business are independently viable and successful and contributing to the bottom line," Chris explained. "We don't want the retail side to be carrying the production side.

"We now have two businesses heading in the right direction."

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