News - Midlands
That's the way to do it
The pub as hero." Now there's a cracking idea we can all warm to. Most of us get sentimental about our local - good ale, good food, good ambience. And those feelings are exactly why Punch Taverns has become Britain's biggest pub owner.
"Take that pub over there," says Adrian Fawcett, pointing across the town square in Warwick. "It's also one of ours, but its feel and clientele are completely different from the one we're in now. That's how it should be.
"Industry deregulation has meant choice because pubs have more freedom on what they stock and how they look. We have to offer diversity, because that's what consumers increasingly demand."
To underline the point, we meet at the Rose & Crown in Warwick. What was until recently a rather dingy drinking den has become a gastro-pub that attracts all ages and both sexes.
You are never far from a Punch pub. It owns some 9,600 boozers up and down the land, the result primarily of a very aggressive acquisition policy that has seen the Burton-on-Trent-based group acquire rivals like Spirit, InnSpired, Avebury and Pubmaster faster than a regular can get to the bar as last orders are rung.
In just three years, Fawcett and his colleagues have built Punch from a £3600m to a £32.2bn company.
Before Punch he was with brewer Bass, rising from the brand's marketing director to group managing director of its operating companies. He oversaw the £32.3bn sale of the business to Belgian giant Interbrew in 2001 and the subsequent £31.18bn disposal of its Carling subsidiary to US brewer Coors in 2002. He then became Interbrew's corporate vice president of operations and head of its mergers & acquisitions activity.
Small wonder Punch was keen to bring him on board - and small wonder judges at the 42 Under 42 sessions were unanimous in awarding Fawcett, Punch's 37-year-old chief operating officer, the award for Best Large Business.
Indeed, Fawcett's standing was so high, that part of the judging was over in minutes. "What he's achieved at Punch has been incredible," said one judge.
Not that, if you were stopping for a quick jar on the way back from the office, you would notice. While Punch is a big name among the Midlands' business community, its street presence is near invisible.
That, says Fawcett, is deliberate. "It's the idea of the pub as the hero, not the Punch brand," he says. "People want to go to their local.
"It's the opposite of a Yates's Wine Lodge, for example, which has a McDonalds strategy where people buy consistency and confidence. There's a role for Yates's because you can have one in every town. For us it's far harder because we have so many pubs."
Many of Fawcett's ideas can be traced back to two companies he worked for early in his career - Ford and Mars. As a Ford sales planning manager he got an understanding of how to handle a multi-site sale retail operation.
But his ideas on marketing were formed at the confectioner rather than the car maker. While Ford's ethos worked on progression - you move from Ka to Mondeo as you become wealthier - at Mars the emphasis was on promoting individual brands - Snickers, Mars Bars et al - rather than the parent company.
This is the route Punch Taverns has taken. Little promotion of Punch and instead emphasis on promoting the individual pub to its local community. Rather than imposing a one-size-fits-all strategy on drinks and dxe9cor, retailers are left to decide how to position and run their pubs. Punch sees its role as a landlord who is also a drinks supplier, marketing consultancy and general helpmate.
The only exception are the 1,800 Spirit pubs which Punch acquired for £32.8bn at the start of this year. The plans are to keep Spirit, also based in Burton, slightly apart from the rest of the group and maintain its tradition of running managed pubs rather than leased ones.
Meeting Fawcett is as much a course in sociology, history and anthropology as it is in business. He says the sector has to change and diversify because that is what its customer base is doing.
Again he points around to the Rose & Crown. Once there would have been working men consuming a limited selection of beers, lagers and greasy bar snacks. Now enjoying the sunshine are ladies who lunch, a few grey-hairs whose pension funds did rather well, a couple of foreign travellers and a smattering of business people.
Fawcett says: "We've a population whose wealth is increasing and is spending more on leisure, particularly experience.
"We see more people visiting pubs but less frequently. It's a wider cross section, going perhaps every two to three weeks. They are becoming far more selective, so we have to become more appealing."
The internet is proving to be a boon for the pub trade. Fawcett says the growth in home working means people are increasingly looking for a place to meet - socially and for business - and that can be the pub.
"We're here having a business meeting, which is now acceptable," he says. "Ten years ago, if you'd said: "I'm working from home and meeting a client at my local', people would've thought you were swinging your lead."
But how far can Punch keep expanding? Pub chains are forbidden from holding more than a quarter of the market in any one petty sessions area - one of the reasons the group has disposed of some pubs almost as quickly as it has acquired them.
Technically, Punch could own 15,000 of Britain's 60,000 pubs. But considering the group wouldn't want half of those - wrong location, style etc. - Fawcett reckons the group's ceiling is about another thousand.
Nor is there much opportunity of exporting Punch's business model. Britain's form of pub ownership is near unique - those in other beer-drinking nations tend to be owner-managed. For example, the biggest chain in Ireland is a glorious five bars.
So the emphasis is on getting more out of the estate at roughly its current size. More food, more events, more children - expanding the diversity of its offering and turning the pub into a centre for its community.
And there is the opportunity of improving the estate. Punch makes two offers a year to every pub it fancies, and if it then finds it has too many in one area, it can sell the least profitable.
Fawcett says that at its core, Punch is more a property group than a pub owner. "Even if all we did was pay off our borrowings, in 28 years, this company would be worth £35.9bn," he says.
"If I buy a pub, return on investment is about 25 per cent. If we pay all our debts off it'd save 6 per cent interest, or give it to the shareholders at 1.5 to 3 per cent. What would you do?"
"Take that pub over there," says Adrian Fawcett, pointing across the town square in Warwick. "It's also one of ours, but its feel and clientele are completely different from the one we're in now. That's how it should be.
"Industry deregulation has meant choice because pubs have more freedom on what they stock and how they look. We have to offer diversity, because that's what consumers increasingly demand."
To underline the point, we meet at the Rose & Crown in Warwick. What was until recently a rather dingy drinking den has become a gastro-pub that attracts all ages and both sexes.
You are never far from a Punch pub. It owns some 9,600 boozers up and down the land, the result primarily of a very aggressive acquisition policy that has seen the Burton-on-Trent-based group acquire rivals like Spirit, InnSpired, Avebury and Pubmaster faster than a regular can get to the bar as last orders are rung.
In just three years, Fawcett and his colleagues have built Punch from a £3600m to a £32.2bn company.
Before Punch he was with brewer Bass, rising from the brand's marketing director to group managing director of its operating companies. He oversaw the £32.3bn sale of the business to Belgian giant Interbrew in 2001 and the subsequent £31.18bn disposal of its Carling subsidiary to US brewer Coors in 2002. He then became Interbrew's corporate vice president of operations and head of its mergers & acquisitions activity.
Small wonder Punch was keen to bring him on board - and small wonder judges at the 42 Under 42 sessions were unanimous in awarding Fawcett, Punch's 37-year-old chief operating officer, the award for Best Large Business.
Indeed, Fawcett's standing was so high, that part of the judging was over in minutes. "What he's achieved at Punch has been incredible," said one judge.
Not that, if you were stopping for a quick jar on the way back from the office, you would notice. While Punch is a big name among the Midlands' business community, its street presence is near invisible.
That, says Fawcett, is deliberate. "It's the idea of the pub as the hero, not the Punch brand," he says. "People want to go to their local.
"It's the opposite of a Yates's Wine Lodge, for example, which has a McDonalds strategy where people buy consistency and confidence. There's a role for Yates's because you can have one in every town. For us it's far harder because we have so many pubs."
Many of Fawcett's ideas can be traced back to two companies he worked for early in his career - Ford and Mars. As a Ford sales planning manager he got an understanding of how to handle a multi-site sale retail operation.
But his ideas on marketing were formed at the confectioner rather than the car maker. While Ford's ethos worked on progression - you move from Ka to Mondeo as you become wealthier - at Mars the emphasis was on promoting individual brands - Snickers, Mars Bars et al - rather than the parent company.
This is the route Punch Taverns has taken. Little promotion of Punch and instead emphasis on promoting the individual pub to its local community. Rather than imposing a one-size-fits-all strategy on drinks and dxe9cor, retailers are left to decide how to position and run their pubs. Punch sees its role as a landlord who is also a drinks supplier, marketing consultancy and general helpmate.
The only exception are the 1,800 Spirit pubs which Punch acquired for £32.8bn at the start of this year. The plans are to keep Spirit, also based in Burton, slightly apart from the rest of the group and maintain its tradition of running managed pubs rather than leased ones.
Meeting Fawcett is as much a course in sociology, history and anthropology as it is in business. He says the sector has to change and diversify because that is what its customer base is doing.
Again he points around to the Rose & Crown. Once there would have been working men consuming a limited selection of beers, lagers and greasy bar snacks. Now enjoying the sunshine are ladies who lunch, a few grey-hairs whose pension funds did rather well, a couple of foreign travellers and a smattering of business people.
Fawcett says: "We've a population whose wealth is increasing and is spending more on leisure, particularly experience.
"We see more people visiting pubs but less frequently. It's a wider cross section, going perhaps every two to three weeks. They are becoming far more selective, so we have to become more appealing."
The internet is proving to be a boon for the pub trade. Fawcett says the growth in home working means people are increasingly looking for a place to meet - socially and for business - and that can be the pub.
"We're here having a business meeting, which is now acceptable," he says. "Ten years ago, if you'd said: "I'm working from home and meeting a client at my local', people would've thought you were swinging your lead."
But how far can Punch keep expanding? Pub chains are forbidden from holding more than a quarter of the market in any one petty sessions area - one of the reasons the group has disposed of some pubs almost as quickly as it has acquired them.
Technically, Punch could own 15,000 of Britain's 60,000 pubs. But considering the group wouldn't want half of those - wrong location, style etc. - Fawcett reckons the group's ceiling is about another thousand.
Nor is there much opportunity of exporting Punch's business model. Britain's form of pub ownership is near unique - those in other beer-drinking nations tend to be owner-managed. For example, the biggest chain in Ireland is a glorious five bars.
So the emphasis is on getting more out of the estate at roughly its current size. More food, more events, more children - expanding the diversity of its offering and turning the pub into a centre for its community.
And there is the opportunity of improving the estate. Punch makes two offers a year to every pub it fancies, and if it then finds it has too many in one area, it can sell the least profitable.
Fawcett says that at its core, Punch is more a property group than a pub owner. "Even if all we did was pay off our borrowings, in 28 years, this company would be worth £35.9bn," he says.
"If I buy a pub, return on investment is about 25 per cent. If we pay all our debts off it'd save 6 per cent interest, or give it to the shareholders at 1.5 to 3 per cent. What would you do?"