Why we sold Refresh

It was entirely predictable that the decision by Rupert Thompson to sell Refresh UK to Marston's for an undisclosed fee would be viewed in some quarters as yet more evidence of the corporatisation of UK brewing.

The Refresh boss was, as he put it, "prepared for the brickbats to fly" following Marston's recent acquisition of the Witney outfit, which brews the renowned Hobgoblin ale as well as a range of beers under contract for third parties.

Comments that the reported £10-15m deal was "another nail in the coffin" of the industry and represented an attempt to "ignite the consolidation" of the sector were not surprising, least of all to Thompson, formerly of Morlands, which Greene King acquired a decade ago.

"A sale involves a loss of independence and a lot of people don't like that," he says.

Interestingly, however, a number of those posting comments on thepublican.com​ took the view that such was the Midlands brewer's track record when it came to buying smaller outfits such as Ringwood and Jennings that Refresh probably couldn't be in better hands - or, alternatively, it could have been far worse.

Thompson does not see the sale being a case of Marston's swallowing up an independent; instead he believes it provides both parties with opportunities to extend their reach into existing on- and off-trade markets.

Close relationship

"We had a close relationship anyway through our contract brewing deal, plus we looked at what they had done with the likes of Ringwood and Jennings," he says. "It was immediately apparent that they did what they said they would do with those businesses. They walked the talk."

Thompson says Refresh "can help Marston's raise its profile in the off-trade, particularly in supermarkets, where we were previously the number three in premium bottled ales. Combined, we're now number two. And Marston's can help our on-trade exposure through its pub estate and freetrade customers".

The decision to sell was not taken lightly, Thompson says, but Refresh had gone as far as it could with the resources available to it.

In 2007 Refresh generated £24.9m of turnover, up 1.3 per cent, with operating profits up 40 per cent to £1.08m, thanks to reduced distribution and administration costs.

Pre-tax profits of £890,000, up 113.4 per cent, were boosted by significantly lower interest costs.

"Good progress has been made in the past four years," says Thompson. "We've doubled profits, got costs down, we've got highly successful brands. But to take the business to the next level would have required the kind of self-generated cash resources we simply don't have," he says.

Pre-empting the accusation that he didn't get the best price for the company, Thompson explains the rationale for not throwing it open to all comers: "If we had done that we'd be unlikely to accept anything other than the top offer and the top offer is not always the best for the future of the company, its people and its brands.

"It might be OK for some, but it wasn't for us. And anyway a fair price should be achievable if both sides understand the business."

The decision to sell was not driven by the run-up to changes to capital gains tax rules, he adds. "The decision to move the business forward in this way was taken and once that's been decided you want to get on with it as quickly as possible."

Short-sighted

Marston's decision to continue with the brewery in Witney, Oxfordshire, may dismay some in the City, but analysts' enthusiasm for buying up breweries to close them down is short-sighted, Thompson believes. "The City will say there are too many breweries out there," he says, adding that the extent to which analysts focus on synergies represents "a simplistic analysis and a disservice to investors".

"Yes, you merge a brewer and save a few quid a barrel, but what you also do in the process is give a good kicking to the community in which it operates and its brands. The value of the Refresh brewery is a fraction of that of its brands. Hobgoblin has a great identity, one based around it being craft-produced."

Thompson's enthusiasm is matched by Marston's chief executive Ralph Findlay, who sees in the deal great scope for building awareness across the country for the Witney brewer's products.Marston's made an official approach several weeks ago and the deal was finally signed and sealed at 4.30am on April 3.

While both Thompson and Findlay have stepped back from completely ruling out any job losses among the 50 Refresh staff, the future of the operation effectively looks assured.

And what now for Thompson? Six months of integration work looms, but his entrepreneurial drive is unlikely to be suppressed for long. "I'm naturally disposed to being independent," he says.

"I love building businesses and brands and I'm interested in products and product differentiation." In other words, he'll be back, as one US actor-turned-politician once put it.