Hardys perennial

Mark Stretton visits Nottingham's Hardys & Hansons and finds that first impressions can be deceiving.

"Define Hardys & Hansons," I ask.

"We are a forward-thinking, progressive regional brewer," managing director Tim Bonham proudly beams. "Everything we do is about quality and longevity."

"Sounds familiar," I think. "Heard that one before," I think.

The fact that the brewery, somewhere outside Nottingham, isn't exactly a flurry of activity and the reception and office décor seem to predate the war (The Crimean War) made me suspect otherwise. "Another sleepy regional brewer," I think.

That was the first impression.

But a closer look and a few hours spent viewing the estate left a completely different one. Sleepy may have been the case a decade ago but in recent times Hardys has transformed itself into a thinking man's brewer. "This company was built on coalmines - miners would drink pint upon pint everyday," says Tim, 50. "Now there are about three mines in all of Nottinghamshire."

The company has had to react to its changing environment. Realising that the future was not entirely wet-led it built a sizeable food business. About 32 per cent of takings in the managed business now come from food.

Much of the estate was built in the post-war reconstruction of Nottingham but latterly Hardys has focused on new builds and greenfield sites. "There are very few regional brewers with the balls to spend £2m on a new build," says Tim. "We did the first one in 1992 and it was a huge success." The company has built or acquired 26 large-scale pubs since.

In 1991 Hardys took the decision it did not want high-street sites. "The City was continually questioning it," says Tim, who previously ran Whitbread's London pub business. "Everyone was doing very well on the high street but I knew how fickle the market could be. The customer base is fickle, the sites are leasehold, subject to upward-only rent reviews and with a mere whiff of a downturn, trade falls by 10 per cent."

The 250-strong estate (170 tenanted, 80 managed) is compact, stretching from Barnsley in the North down to Wellingborough in the South. The company is close to its customers. Anecdotal stories of Hardys running particular pubs successfully where other operators - national operators - had failed previously are numerous.

The Dog and Topper in Nottingham used to be a rundown site with a drug problem taking £1,000-a-week. A dramatic transformation ensued, with a new offer aimed at students (complete with Monopoly-board dancefloor), and the pub now takes considerably more.

A string of promotions, menus, and offers available to tenants as well as managers reveals a strong set of retail skills.

"We didn't think wine sales were as good as they should be," says retail director Jonathan Webster, 41, "so we sourced a red and a white from an Italian vineyard and put them in every pub priced at £4.99. We are now the vineyard's biggest customer."

In the past four years the company has grown sales from £38.5m to £64.8m and operating profits have soared from £6.9m to £12.3m. The financial performance of the business is beyond question but it has not been achieved by cutting corners or milking pubs. "We don't always have to think solely about the City," says Tim. "We are a public company but because of the family shareholding we can take a long-term view. Many decisions made by other companies are short-term, made to keep the share price up."

"We think our pubs will be around in 100 years," adds Jonathan. "We therefore make investments designed to endure - quality is the key. Our pubs aren't just boxes with different brands inside. I'm fairly confident you would not find a pub estate like this with too many other operators.

"People think we are what we were 10 years ago and probably associate Nottingham with whippets and flatcaps and bog-standard community boozers." In its accounts, the company does not breakdown its sales and profits from the three operations, which would suggest brewing beer is more a labour of love than anything else. "We wish to be perceived as a forward-thinking regional brewer," says Tim. "It doesn't take Einstein to work out that we make more from the pubs, but the brewing is profitable and it gives us our identity. It is part of our history and a key part of the business. Everybody loves to love a regional brewer."

The company has made strides to ensure that all three parts of the company are independent and profitable. As well as making its own clutch of brews the company undertakes contract brewing on behalf of several nationals. "It isn't terribly profitable but it makes a contribution and uses up some overheads," says Tim.

There is no intention at Hardys to make lager.

"Carling's marketing budget is around £30m - half our turnover," he says. "If consumers are bombarded with Carling and Stella messages how are you going to convince them to drink something else?".

Undeniably, there are some very old parts to the Hardys business, like its flagship pub Ye Olde Trip to Jerusalem. Situated at the foot of castle rock in Nottingham, it claims to be the oldest pub in Britain. It was originally a resting place from where knights and men-at-arms made their onward journey to the channel ports to join Richard the Lionheart's crusade to the Holy Land. Records of the tavern date back to 1189.

The cellars, which are actually in old caves in the rock face below Nottingham Castle, used to house convicted criminals awaiting the short journey to the gallows. A cursed model ship sits in a glass case. It is never cleaned because legend has it the last three people to do so all died in mysterious circumstances soon after.

The historic pub yields many stories and the owners are quite proud. So proud in fact that Hardys will launch a beer called Olde Trip, a 4.3 per cent ABV premium brew, in March.

Coinciding with the launch is a new corporate image for Hardys. The brewer's beers are currently made under the name of Kimberley - the place just outside Nottingham where the breweries were established in 1832.

Until now, the Hardys & Hansons name was well known in the beer industry and in the City, but barely registered with the consumer. "We feel that we have changed so it's time the branding changed," says Tim.

"The perception was of an old-fashioned brewer with some pubs."

The new image comes complete with a new logo courtesy of James Knowles Ritchie, the consultant that has worked with Häagen-Dazs ice cream and Bacardi. "We gave them a blank sheet of paper backed up by a brief of where we wanted to be in terms of aim, vision and culture," says Tim.

The new signage will be overtly applied to the brewery, all of the managed estate, and some of the tenanted. Pubs must meet a quality grade before they get the Hardys name. "The biggest mistake in pub branding is when the internal experience does not match the external expectation," says Tim, "you just end up bastardising the brand."

So is the company not proud of all of its tenanted pubs? "We can all say that our tenanted estates are up to speed but I doubt it's true anywhere in the country," says Tim.

"We are investing in our tenanted pubs but you can't do everything at once. There has to be a cash-flow consideration." Hardys is moving into 10-year lease agreements. As pubs are refurbished, they will be re-signed.

Tim says the company does have real relationships with tenants and lessees. "Partnership is the most hackneyed word in the pub industry," says Tim. "I read with interest all the stuff about partnerships.

"We take a lot of trouble to get the balance right - to make sure there is enough left in the business to keep the tenant happy."

So, there is still a lot to do but quite a bit has been achieved. Big