MCA talks to Marston’s chief executive Ralph Findlay and managing director of Marston’s Beer Company, Richard Westwood, on the back of this morning’s significant announcements for the group. They talk about the opportunities presented by the £55m acquisition of Charles Wells, including the chance to diversify into lager production. Findlay also discusses the group pub acquisition also announced this morning – and funded by the same £79m placing as well as the rebalancing of its investment plans; its approach to accommodation and the need for modest price rises in the pub sector.


The group announced this morning that it had placed a total of 57,600,995 new ordinary, raising proceeds of approximately £78.9m to fund the £55m acquisition of the Charles Wells beer and brewing business and a package of seven pubs.

Charles Wells acquisition

Findlay said Marston’s had approached the Wells family directly and secured exclusivity on the deal as a consequence. He said the deal was attractive to Marston’s on a number of fronts – with complementing geographic footprints, strong brands and giving Marston’s the ability to move into lager production.

Findlay told MCA: “It’s an exciting portfolio of brands and with Estrella Damm in particular we feel we can add a lot to its distribution by putting it into our own estate, with our premium pubs and our extensive free trade network. It’s a premium beer and I see as positioned similarly to Peroni. There’s a lot of growth potential there.”

He added: “This acquisition brings with it a large lager brewery, which we don’t currently have. It also has a canning line which carries out work for other breweries. We were on the verge of committing a £6m investment on a canning line in Burton-on-Trent, which will no longer be necessary.”

In terms of the geographical opportunities, Findlay said: “In the free trade we are already present in the London market and the south east and we have brands like Brakspear and Hobgoblin which do particularly well there. I think bringing in the Courage and Bombardier and Young’s brands in will give us a better platform to grow in the London free trade.

“In recent years we have invested over £50m in pubs and lodges in Scotland and we had been looking at the potential for setting up a free trade business there, because it’s an area where the market is significantly driven by the free trade. The McEwans brands will give us a platform to do just that.”

Westwood told MCA: “Charles Wells have become experts in their handling of world lager brands, going back to Red Stripe and Corona. We at Marston’s have been relatively slow on that particular journey. Bringing in that expertise on that world beer agency brand front was a key element in the attractiveness of this deal.

“Also, we tend to underplay the importance of the breweries themselves. Our other five breweries are virtually at capacity and we were beginning to scratch our heads as to what to do. With Charles Wells we have a fair amount of headroom for growth.

“Although we have brewed a lager in the past we have never had the technical capability to brew a traditional lager so the opportunities that may open up in the future is really quite big.”

On lessons learnt from previous brewery acquisitions and integrations, Westwood said: “Something we learnt long before the Thwaites acquisition and which we again showed with that deal, is the importance of not doing too many things in haste. When it comes to customer relationship especially. This process is about getting the integration right rather than completing it quickly and making sure all our customers are fully aware of what the strategy is. There is obviously a business need to get moving on integration but it’s important not to leave your staff or your customers behind.”

Pub deal

As well as the Charles Wells acquisition, Marston’s also announced it had reached agreement to acquire seven pubs to enhance its Destination and Premium estate for a consideration of £13m with a refurbishment investment of £3m.

Findlay said the deal was with a national operator and that the deal made strategic sense for both sides. He said five would go into the Destination arm, with two going into Premium. He said the pubs are mainly based in the Midlands and the south of England. Whitbread is among the operators rumoured to be the vendor.

Findlay said that going forward, he would “continue to look at acquisitions that meet our criteria”.

New sites

Findlay said that there would be a “modest rebalancing” of Marston’s investment plans going forward that would see it open more lodges and premium bars, but slightly fewer pub restaurants. The current plan for the 2018 growth rate lists 15 pub restaurants, 10 lodges and up to five premium bars.

The group is also increasing the size of its lodges with a 100-bedroom site planned for Ebbsfleet in 2018.

Findlay said: “Lodges is something that has been growing pretty steadily over the last few years. We did three in 2015, five in 2016, we will do eight this year and we are expecting 10 next year.

“We have chosen locations with a good mixture of business and tourism traffic. When we started we were doing 30 bed lodges, that has moved up to 40 bed lodges and they will be on average 60-bed lodges in 2017, including the 100-bed lodge in Ebbsfleet.”

On the focus for growth in Premium bars, he said: “Revere was originally set up because we recognised that we had strong sites in good areas but where we didn’t have a premium offer and therefore weren’t optimising the full potential of the pub. We started building new sites 18 months ago. We have steadily become more confident in that offer.

“We expect to do about five a year across the UK. Those will probably be acquisitions. There will be scope for conversions as well but it is harder to predict numbers in that regard.”


The accommodation offer has been one of the strongest areas of growth for Marston’s in recent years. The group opened three lodges in H1, taking the estate to over 1,000 rooms.

Occupancy rates are currently at around 80% while room rates are on average £69.95, which Findlay said was purposely towards the top end of the lodge market.

He said the group had just completed a revamp of its online reservations systems which he expected to streamline a process, which currently sees the majority of bookings coming through third parties.

He said: “We have found the offer is strong. It competes at the top end of the lodge market and the combination of that plus a really good pub is an extremely attractive one. We have found it adds between £3k and £5k a week to pub turnover.”


Findlay said Marston’s was proud to have pioneered the introduction of franchise-style agreements in the pub sector and said it remained the company’s intention to convert the bulk of its Taverns business to the model and over time it would continue to review the feasibility of rolling out the franchise model into the Destination estate.

He said: “There is huge potential there but I think our focus for the moment is on improving the offer to franchisees. That is where we will see the biggest return right now.

“What we are seeing is that our performance in our Taverns estate is still leading the market and I think the franchise offer is a part of that.”


Findlay said: “I do think the pub sector is in a good place at the moment given what is being talked about in terms of consumer squeeze and that is because of the affordability factor.

“I have talked before about the potential for modest price increases. We have done that in a careful way over the past year. It’s very important that if you are going to put up prices you ensure that the quality and the service is high enough to do that. We have been broadly flat on volumes and pricing has been up c2% in the first half.”


On the future potential for M&A activity, Findlay said: “We will continue to explore opportunities in pubs and brewing. We have looked at most of the pub deals that have been on the market over the past few years. We do have a very clear benchmark in terms of the returns we get from new builds so when we appraise these sites together with the refurb capex we put in we are basing that on the return on capital we would get if they were new-build sites. Sometimes that means we don’t win because the returns weren’t good enough. In the case of the most recent acquisition, one of the reasons we were able to acquire this package is that we are one of the few companies that can operate across destination, premium, food-led or wet-led.”

Estate make-up

The first-half saw the size of the Destination & Premium estate exceed that of the Leased.

As of 1 April, Marston’s operated 1,557 pubs – with 818 in the Taverns division, 374 in Destination & Premium and 365 in Leased.