Micros doing it for themselves
Stop the presses and hold the front page. The pub sector is forging ahead with a zingy new business model — people are calling it vertical integration.
It's simple, but brilliant. Brew your own high-quality beer, sell it in your own high-quality pubs and pocket lots of lovely extra margin.
Joking aside, it's remarkable how quickly this idea is catching on again. I have counted just short of 200 microbrewers who also run pubs, many of whom have popped up in the past few years.
The Government's Progressive Beer Duty (PBD) regulations are having a hugely beneficial effect. Many of the 700-plus microbrewers out there who are enjoying brewing tax breaks have decided it makes sense to pick up some of the retail margin benefits of opening pubs. Not surprisingly, their passion for brewing beer translates into a passion for selling it in pubs. Take Keith Bott's Titanic Brewery, now running absolutely first-rate pubs in and around Stoke that are leased from the far-sighted and progressive Everards which allows him a good deal of tie-flex to sell his own beers.
And there are operators travelling in the opposite direction. Michael Thurlby, who for my money is one of the UK's very best pub retailers, has started brewing for his eight pubs in the south Lincolnshire area. Likewise, top Norfolk pub operators Cliff and James Nye have begun brewing at Brancaster's Jolly Sailors and are supplying their own mini-estate of three pubs.
It's one of those real win-win situations. A microbrewer who chooses to run a pub has a unique selling point that takes advantage of all the trends heading in the direction of localism and provenance. An imaginative tenanted pub company sensible enough to restructure the tie in the right way gets a committed and passionate tenant. It even works for a cask-ale brewer like Everards. Now Batemans has cottoned on and is trialling the "Everards model" in Norwich.
Other larger tenanted pub companies are starting to see how this might work (Meantime Brewery boss Alastair Hook reports he is being offered individual sites in London by them). A microbrewer with a pub estate tells me he is benefiting from the sale of pub freeholds by large tenanted pubcos, picking up sites for little more
than £100,000.
Last week, the Morning Advertiser organised, in conjunction with the Society of Independent Brewers, Miller Brands UK and subsidiary support from Everards, the first SIBA Pub Retail Conference. The passion and commitment of the 90 or so microbrewers who attended was palpable and made for a first-class day of discussion. Here, among the microbrewers, is another great area of retail innovation, a great shot in the arm for pub differentiation. Let's not forget, too, that the microbrewers are doing a deal of good for beer itself, stimulating consumer interest in the whole category.
