Better Thwaites than never

Five years ago, the top brass at Daniel Thwaites realised they had to change or atrophy. Now they're set for an exciting future. Tony Halstead reports When employees of Daniel Thwaites raise their glasses to celebrate the brewer's 200th anniversary in four years' time, the toastmaster will undoubtedly reflect the company's proud tradition of producing cask ale as well as noting the transformations that have taken place recently. The Lancashire-based family-owned independent remains proud of its origins, set amid the backdrop of the industrial, working class, north west, where its flagship Thwaites Bitter and Mild have refreshed numerous generations of drinkers. Yet, when the flags and bunting are raised for the bi-centennial celebrations, there will also be the chance to salute how, in less than a decade, the company has changed its beer portfolio. Bitter and Mild still remain, but the appearance of Thwaites Smooth, premium-strength cask ale Lancaster Bomber and the arrival of German lager brands Warsteiner and Kaltenberg have totally transformed the perception of the company and set it on course for an exciting future. The new brand line-up has rescued Thwaites from the role of being a backwater regional brewer and enabled it to occupy the position of the UK's seventhbiggest beer producer. Sales director Brian Jenkins remembers only too well the day he realised Thwaites had to change or consign itself to the brewing doldrums. He recalls: "We were sat in a Thwaites pub in the Lancashire countryside not too long after I joined, when one of us remarked that out of nine draught brands on the bar only two were actually produced by us. "There was only Thwaites Bitter and Mild to actually give a clue that we were in one of our own tied houses. The realisation hit us that we were, in effect, virtually a two-brand company and from that time on we knew things had to change." Jenkins and the remainder of the brewery management team realised that the future no longer depended on the company supplying the top-selling national lager brands and ciders to the exclusion of everything else. "We decided that if our tied pubs wanted to offer customers a point of difference, and if we wanted to grow our free trade business, we had to deal with new names and give drinkers an alternative." June 1998 saw the first tentative steps into the German beer market when a deal with one of the country's leading brewers, Warsteiner, was formalised. The 4.8% abv premium lager brand, which had previously been supplied into the UK by ex-brewer Gibbs Mew, proved an instant hit in Thwaites' accounts. A new national sales team was set up to sell Warsteiner and accompanying Thwaites brands into the pubco and free-trade sector. Five years on, Warsteiner has won a wealth of new business for the company, with sales currently topping the 25,000 barrel mark, and with half of the volume sold outside the brewer's Lancashire heartland. The link with Warsteiner eventually led to the taking on of another German brand, Kaltenberg, a 3.8% abv session beer that is now brewed under licence in Blackburn to the strict Reinheitsgebot German purity laws. Previously, Kaltenberg had been supplied into the UK by Whitbread, but when the company was acquired by Interbrew two years ago, its owner, Prince Luitpold, was only too keen to join forces with Thwaites in a new brewing and supply deal. The two German beer brands are now playing an increasing role within the brewer's tied and free-trade businesses, providing drinkers with distinct alternatives to national brand names. In 1995, Thwaites had succumbed to industry trends by producing its own nitrokeg beer ­ Smooth. Over the past eight years, Smooth has enjoyed a meteoric rise and now stakes the claim of being the UK's leading smooth regional beer brand. Sales are currently around the 40,000 barrels-a-year mark. This autumn sees the launch of a new £500,000 advertising campaign featuring antiques show television presenter David Dickinson who takes over from the brand's original motivator, Coronation Street's Ken Morley. Jenkins is at pains to stress that the brewery has not forsaken its cask-ale roots, despite the national downturn in real-ale volumes. The introduction of Lancaster Bomber, which was acquired from former family brewer Mitchells, has given the company's cask-ale business a boost. Jenkins observes: "Bomber has been a terrific bonus for our cask-ale sales and has proved a terrific winner in what is a difficult market. "Real ale is still tremendously important to us and despite the huge success of Smooth and the big impact that Warsteiner and Kaltenberg have made, cask remains a key part of our overall portfolio." Jenkins says the mainstay of the current strategy has been to ensure that the company brews or controls key brands in every sector of the beer market. "We still list the likes of Carling and Carlsberg and customers are free to make their choice, but we want to provide a unique point of difference with a choice of beers and lagers that sets us apart from the mainstream." As if to emphasise the point, a new wheat beer ­ Konig Ludwig, brewed by Kaltenberg ­ has now joined the portfolio, together with Kingstone Press Cider, which has enjoyed instant success, and already accounts for 30% of the company's cider volumes. "More than 25% of our lager sales now come from own brands, which underpins our new strategy. We are keeping the mash tuns going and retaining jobs in the brewery, which is one of Blackburn's biggest employers," says Jenkins. The company is planning a £4m marketing spend on its brands this year as it continues the transformation from a homely regional to leading UK industry player. In 2007, they will be raising a glass and saying "cheers" to the company's founder, Blackburn-born excise officer Daniel Thwaites, but there will undoubtedly be a few toasts to the Germans as well, as they are clearly helping to keep one of Lancashire's most cherished institutions alive and well. Premier brands for prestige accounts Three key brands, all acquired by Thwaites in the last five years, are leading the brewer's sales charge into the pubco and free-trade arenas. "Premier brands for prestige accounts" is how national on-trade sales manager Tony Baumann describes the role now being played by Warsteiner, Konig Ludwig, Lancaster Bomber and a complimentary range of cask ales, including seasonals. Baumann believes the attraction of these quality brands is not the only reason for Thwaites' growing success in the free-trade market. He says the three are providing a vital point of difference for licensees and drinkers in pubs where they are stocked. "Drinkers are becoming more discerning and are seeking out pubs that give them something different. These brands are giving the opportunity for accounts to have more of a unique selling point because, in many respects, they are relatively new names to the on-trade consumer. "I am not convinced that consumers necessarily focus on those outlets that stock the big, national, household-name beers," he says. Baumann says brands such as Warsteiner are likely to be stocked in outlets that are allowed to choose from a wide portfolio, which includes some imports. "Warsteiner competes at the top of the market with complimentary brands such as Konig Ludwig and Lancaster Bomber and are combining to give us a strong consumer offering." He continues: "I believe we are seeing the arrival of a new sub-category sector of premium lagers with consumers, in particular, becoming much more aware of the provenance and heritage of brands. Success is starting to come in high profile outlets around London and the south east, which is a key area. However, all brand owners want a slice of the premium end of the market.