Marston’s chief executive Ralph Findlay has told M&C Report that the acquisition of Daniel Thwaites beer division will help it strengthen its position in the north west of England.
Yesterday Marston’s announced it had bought Thwaites’ businesses that sell beer to pubs, wholesalers, supermarkets and exports. As part of the deal Marston’s enters into a long-term exclusive agreement to supply all beer, wine, spirits and minerals to Thwaites’ pub estate.
It also takes on Thwaites brands Wainwright Golden Ale and Lancaster Bomber.
Findlay said the two companies already had a relationship through Marston’s license to brew beers for Thwaites since January of last year.
He said: “It is good for us geographically because the north west is an area we have been keen to expand our presence in and we have been steadily doing that for a number of years. Thwaites is one of the major operators in that area so this provides us with a great opportunity.
“It’s also entirely consistent with developments in the beer market and our approach to those, which has meant us investing in regional beers and premium beers as the public’s interest in those has increased.
“This is a developing market, which we expect to grow further and this deal puts us in a very good position for that.”
On potential cost savings as a result of the deal, Findlay said: “We are taking on their sales channels and distribution so there are some opportunities for synergies. We estimate that at £1m per year. There will be small number of changes to headcount but we are not envisaging significant change. I anticipate we will bring the Thwaites people into our business because they are the ones that have built this business up. We think there are further opportunities for those people within an enlarged company.”
He said Marston’s would continue to work on new products within the portfolio. On the subject of whether the Thwaites beers would be rebadged as Marston’s, he said: “They are likely to remain as Lancaster Bomber and Wainwright. We don’t envisage any change there.”
He said he agreed with comments made to M&C Report last week by Jonathan Adnams, who said the pub trade has to adapt to the rise in drinking at home.
He said: “There has been an inexorable rise in the amount of beer being consumed at home as opposed to in the on-trade. There are many reasons for that but one is the change of usage by customers of a pub – with people now much more likely to visit a pub to eat food and as a consequence drink less but choose a higher quality product. That has been a key part of our brewing strategy over the past decade, recognising that trend and focussing on premium products with a decent margin.
“I think that trend is likely to continue because there is certainly more growth in the eating out sector. For beer that trend towards less volume but higher quality will continue.”
Findlay said he was comfortable with the debates over the pubs code, which received Royal Assent last week.
He said: “Franchised agreements are not the same as tenancies and I think it was very useful that in explaining the definition to the House of Commons, the minister Jo Swinson explained some characteristics including that they don’t pay rent and that their profitability is not affected by the price of beer charged to them. Both of those are true of Marston’s franchise agreements.
“To exclude franchises from the market rent only option is very sensible. Had they not done so we could have been in the position where, with people like Starbucks starting to sell alcohol, you would have a coffee shop selling alcohol not included but a pub selling coffee forced to comply.
“I am content with where it has been left because I think in explaining what constitutes a genuine franchise, the minister has been clear enough to give guidance. “
