The English Beer Revolution

On entering the director's boardroom of Charles Wells there is no escaping the beady eye of the man who founded the Bedford brewer in 1846, the great-grandfather of the company's current chief executive Paul Wells.

As he stares down from his 19th-century portrait, one can't help wondering what the old boy would have made of events during the past year that have propelled the company into another realm of brewing capacity and sales potential. One suspects he'd approve wholeheartedly.

After all, the family-owned and operated group is thriving, and following its brewery merger with South London's Young's Brewery last year appears set for the future.

True, the future for many a regional brewer is uncertain, and yes, Charles Wells' name certainly crops up in conversations revolving around brewery consolidation.

But those focusing on premium and speciality products are in the ascendant. And besides, what regional brewer's name isn't thrown into the consolidation hat these days?

The merger that resulted in Wells & Young's - owned 60/40 in Charles Wells' favour - was not without controversy. Given the heritage of the famous Young's Ram brewery in Wandsworth, beer purists were worried for the continuity of some much-loved brands. Such concerns are behind both parties now, with doubters won over by what Wells describes as "a huge effort" from the brewery teams of both companies to match the beers seamlessly.

Velvet revolution

It appears that the past 12 months have served as a kind of 'velvet revolution' for Charles Wells, with both its brewery and pubs benefiting.

A flurry of investment in the brewery - around £12m-worth - has been aimed at catering for the production of famous names such as Young's Special and Waggledance, coupled with meeting the challenge that adding a swathe of well-established brands to an existing mix brings.

A new warehouse near its main brewery site in Havelock Street in Bedford, plus refurbishments and additions to its brewhouse - including new vessels, raw material handling, cask racking and bottling lines - have had the mark of the merger on them.

"For us, the past year has seen the finishing off of a blizzard of projects," says Wells. "Most of the new elements have been Wells & Young's-related," he adds.

The venture's beers are now available in both groups' pubs, around 400 sites, plus a wider network of free-trade customers. In some areas of Southern England, Bombardier - the self-proclaimed 'beer of England', complete with St George & the Dragon imagery - and Young's Bitter have even reached levels of near-ubiquity normally associated with the UK's larger regional brewers. The group's acquisition from Scottish & Newcastle of Courage's Best and Director's brands earlier this year was yet another coup, taking production at Havelock Street to around 200,000 barrels annually.

Having gone all out to accommodate the Young's operation in its Bedford base, Wells & Young's is now gearing up for the coming year, with a view to raising the stakes in marketing both its cask ales and speciality lagers such as Kirin Ichiban under managing director Nigel McNally, who is described by Wells as "a world-class marketer". Campaigns for the coming 12 months will be unveiled in the near future, he adds.

The 'Young's effect' has not only impacted Charles Wells' brewing operation; it also coincided with a new era for the group's pub estate. The group no longer operates managed pubs, preferring the business-focused - and, it has to be said, cost-friendly - aspect tenants and lessees bring to the party.

Acknowledging the shift towards tenanted sites, Wells says the move out of managed houses late last year came "in order to run them better".

Charles Wells will 'partner up' with managed operators, such as Mercury Inns, which runs the food-led Park Inn pub in Bedford.

"Operators like these are key to what we're trying to do, and we're developing our pubs in harmony with these people," Wells says.

The shift away from managed was not just driven by a desire to be leaner, Wells stresses, although it would have clearly played a part. "We want to get licensees to think about new approaches to the business," he says, pointing to initiatives such as 'Profit On A Plate', an online toolbox that is designed to help the company's licensees improve both the quality and profitability of their pubs.

Anthony Wallis, the pub division's managing director, "has given us a new sense of purpose, stimulated a raft of changes to our estate, and together with sales & marketing director Peter Wells has created a climate where people can see concrete changes happening to our pubs", adds Wells.

A pub's image

Yet there's more to this vision thing than mere branded edicts. Wells sets store by the physical image a Charles Wells pub presents to the world. "Marketing a pub is absolutely crucial and much of that is done from the first impressions you get when you stand outside," he says. The group has 'signage guidelines', and tips on stuff like 'kerb appeal'.

"We don't go for one corporate identity with our pubs," Wells adds. "I hate the word 'brand'. I prefer 'concept'."

One concept Wells is keen to push is the 'Speciality Beer House', a tenanted pub model that focuses on a wider range of cask ales than is normally available in its estate. The brewer currently has two such pubs, including the 'flagship' Bedford Arms in the centre of town. The freedom - and encouragement - given to tenants of these pubs to offer a more diverse range is coupled with a rent that is typically 25 per cent higher than is the case elsewhere in the estate.

Such initiatives are "part of an overall plan to help our licensees to think like a customer," Wells says, "to get a marketing plan rolling for each pub, to grade up and to offer more information about the products they are selling. We talk to them, engage with them and get to know what their perspective is on their business and their customers."

The financial goal for the estate is to see average net profit per pub hit 12 per cent of turnover by 2010, a target Wells says is "not far off being achieved". Meanwhile, the corporate 'gold star' has been to hit £10m net profit in the 10 years from 1998 - "and we hit £9.9m in eight", Wells notes.

Like every other pubco in the country, Charles Wells has been hit by both the smoking ban and lousy weather in recent months. Pub trading before and since the group's September year-end has been "fairly flat", Wells concedes. Investment in smoking solutions of around £3,000 per pub has yet to be truly tested, although some of the group's pubs have been 'milking' customers recently from nearby venues that have no outside space, he says.

Beerwise, Wells is "pleased with where our brands are", and confident - as one would expect of a regional brewer of cask beers - that ale has a future.

"The Wells & Young's deal rebalanced the company," Wells says. "Before we were more towards beers brewed under licence. Now this has changed, and while we're perfectly happy brewing under licence, the balance has shifted more in favour of our own brands."

It might be obvious, he says, but "having combined brewers, we're better off than we were before". Old Mr Wells would no doubt approve.