Intent on finding a hearty meal and a warming ale, Lisa Miles tracks down three of the region's brewers for a pie and a pint and puts the world to rights
Choosing a pub for lunch with three brewers is a complex task that requires much in-depth research of hostelries and their various liquid refreshments. In search of neutral territory, the cosy surroundings of Sam's Chop House in Manchester seems a suitable choice.
Unfortunate then that of the three desired names - JW Lees, Joseph Holt and Moorehouse's - Sam's was only serving the former. But putting all other allegiances aside, the diners struggled on manfully to tot up seven pints of JW Lees Bitter. This is what Working Lunch was made for.
With pint in hand were Tom Dempsey, operations director at Manchester's Joseph Holt, JW Lees managing director William Lees-Jones and David Grant, managing director of Moorehouse's, the Burnley-based brewer that specialises in imaginatively named beers such as Pendle Witches Brew.
The camaraderie is palpable. Not only will they drink each other's beer but North West brewers reside peacefully together in a regional market for which they have a shared passion.
"At JW Lees we sell our beer all over the country and internationally to anyone that wants to buy it, but we only market our beers in the North West," explains Lees-Jones. "Because beer is such a big industry, being a regional brand is fine for us. If you were to go round every pub in the North West, 85 per cent of the beer sold is from the big international brewers and I wouldn't want to compete with Moorehouse's or Holts for the remaining 15 per cent. I'd rather go for the 85 per cent and ask what we can do that's better for the rest of the market. If Carling's going to spend £320m to £330m nationally promoting its brand, it would be stupid to try and compete on the same platform."
Enthusiastic about beer to his core, Grant adds: "More is shared in the North West than in other parts of the country. We do tend to speak to one another more frequently, brewer to brewer. Any northern brewer would do virtually anything to help out another."
This passion stems in part from the companies' long histories. Joseph Holt's was founded in 1849 and current chief executive Richard Kershaw is the great-grandson of the founder, the son of a weaver. William Moorehouse started by producing mineral water in 1865 and, after a turbulent century, was saved from oblivion by Manchester businessman William Parkinson in the late 1980s. And the family of retired cotton manufacturer John Lees has been brewing since 1828.
Holt's history included a period as a listed company but, as Dempsey explains, it was taken private in 2003 "to secure the long-term future of the brewery for the next generation, driven by belief in the company, in cask beer and in the brewery business".
Fifty years ago Lees-Jones' grandfather bought out the usual diverse array of shareholders that builds up over the decades in a family business. "If every now and then the ownership comes into one pair of hands then the vision can be defined," says Lees-Jones. "Most of the breweries that make it into the financial pages do so because of stupid family arguments between people who aren't very interested in brewing beer.
"Each of our companies has helped to keep the spirit of brewing alive. What does JW Lees mean, not just to the family, but to the people of Middleton, the people who work at the brewery, the people that drink our beer? It's a very complicated relationship. We get letters every day from people who have an emotional, rather than a rational, relationship with the brewery."
The legacy created by the companies' ambitious founders and leaders has created a culture and a sense of community around the breweries and their pubs.
"People who drink the beer in our pubs drive past the brewery every day, they know a number of characters who work in the brewery," says Grant. "People take a pride in the fact that the brewery is part of the local environment."
Dempsey attributes the brewers' success stories to this vertical integration. "If we're running a pub and it's our beers in there, the reputation comes back to the brewery," he says energetically. "We've got to make sure we're producing a range of beers for our pubs that we can be passionate about. The passion in that vertically integrated system is why we are all still going."
This history and a commitment to reinvestment has allowed all three businesses to grow. But anyone entering the industry at this stage should be cautious.
The government's progressive beer duty (PBD) - which allows reduced rates of excise duty to brewers whose annual production does not exceed certain levels - was designed to stimulate and encourage growth for the business of cask-conditioned beer. This has brought both positive and negative effects.
"The brewers like ourselves that have enjoyed PBD, that have been around for a long time, have been able to use that money to reinvest back into plant machinery and jobs," says Grant. "But you get smaller operations that are just coming into being now to make a quick buck because they're under the threshold and are only paying half duty. The quality of the beer can be inferior and they will sell to anybody just to sell their five barrels a week. They don't affect us too much yet, but if there are too many of them it will drive down the quality of cask ale."
And for anyone hoping to create a vertically integrated pub and brewing business, the prospects are bleak. "When you bear in mind that the average pub changes hands for about £3500,000, building a vertically integrated brewery that owns pubs takes a long time," says Lees-Jones.
All three brewers are looking to expand their pub portfolios, but are critical of the overinflated price of freehold property. And pubs for sale often come along in huge tranches. The bigger companies will buy hundreds at a time, while the family brewers are only looking for a handful of viable businesses for long-term investment.
Large groups such as Enterprise Inns and Punch Taverns hit the headlines for securitising their premises and revenues in billion-pound deals, but Lees-Jones believes this model is not sustainable. "There will come a point, not too far away, when the music will stop. There are probably 5,000 to 10,000 pubs in the UK that are not profitable businesses and the speculators have overinflated the value of these pubs," he says.
"The smoking ban coming in on 1 July 2007 could be the tipping point for many. We've seen two high-profile bankruptcies with London & Edinburgh and Provence. My prediction is that they will be the first of a long stream. The number of pubs is going up and up, but there is less beer being sold in pubs every year and the cost of being a business keeps going up."
But the subject that really gets this trio on the attack is supermarkets, with their pile "em high, sell "em as a loss leader at Christmas approach to beer. Drinking tasty bottled ales at home will continue to be a rare treat unless the retail giants start treating our brewers better.
All three sell beer through North West produce champion Booths. "If the high street retailers had the same philosophy over their packaged ales as Booths do then I'd trade with them," says Grant. "Why should we pay to put our beer on the other supermarkets' shelves? That is virtually what it comes down to.
"The cost of glass is huge, packaging is phenomenally expensive and the marketing cost is high. Then some supermarket turns round and says: "Stop packaging in twelves, start packaging in eights, because that's all we'll take off you.'"
JW Lees is taking a proactive approach and plans to roll out its Willoughby's wine and spirits merchant into a series of shops in the North West this year, speciality wine stores of 3,000 to 4,000 sq ft that will also sell beer, spirits and soft drinks. "We will run that business in the same way we run our managed houses," says Lees-Jones. "We will have a fabulous store, competing against the supermarkets, Oddbins, Majestic Wines.
Most of the beer sales will be our own brands, but it will be a retail, standalone business."
But bottles aside, cask will always be best, insists Dempsey. "Family brewers are more and more the custodians of cask ale, which is part of our heritage," he says. "There are plenty of great bottled beers around, but there's something definitive about cask ale."
In a region famed for offering the cheapest pint in the country, North West beers have a strong following that Dempsey likens to football fanaticism and Lees-Jones compares with the drive to buy local food from local farmers. But Grant thinks that the brewers could be doing more to push their brand. "If you look at what the wine producers have done in France, they've pushed all their wines across the world. We've never done that with beer," he says. "The drinking public maybe don't appreciate their heritage drink as much as their French counterparts might do their regional wines."
Their passion for the region, the communities they serve and the beers they brew, will continue to make these three businesses unlikely acquisition targets - they've been saying no for too long.
"If we put our company up for sale tomorrow, there would probably be a dozen serious contenders, but we've been telling people for such a long time that we're not interested that no one approaches us," says Lees-Jones. "The notion of being the person running a 178-year-old business is one of stewardship rather than one of making a quick buck. With the opportunity to run this business comes the obligation to leave it in a much better shape for the next generation."
Also in: March 2007
-
For art's sake
It is often reported that creative people lack the means or business acumen to make money from their wares, but is this really the case? asks Joanne Birtwistle
-
Introducing Plan B
Contrary to most reports, the supercasino wasn't the only game in town for Blackpool. The seaside town is coming out fighting, finds Neil Tague