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25-01-2019, 11:00
Visit The Pub Curmudgeon site (http://pubcurmudgeon.blogspot.com/2019/01/turning-japanese.html)
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There was shock news this morning when it was announced that Japanese brewers Asahi were buying Fuller’s brewing business for £250 million (https://www.thisismoney.co.uk//money/markets/article-6631283/London-Pride-maker-Fullers-strikes-deal-sell-entire-beer-business-Japans-Asahi.html). Fuller’s will retain their pub estate and enter into a long-term supply contract with Asahi. It’s fair to say this came as a complete bolt from the blue and hadn’t been even hinted at by any commentators on the industry. It’s also surprising in that the major international brewers, with the exception of Molson Coors and Sharp’s, had in recent years largely turned their back on the British cask beer sector.
Asahi already own the Meantime brewery in London, and a number of brands including Grolsch and Peroni, but they aren’t major players in the British beer market, so the deal doesn’t really raise any competition concerns. From a purely financial point of view, it is entirely understandable that the directors said yes to an offer it was hard to refuse.
However, it is disappointing news in that it represents a further blow to vertical integration in British brewing. This has historically been a key factor in establishing distinctive identities between different pubs. If you don’t have any stake in brewing, then the temptation is inevitably going to be to stock the same popular beer brands that all your competitors have, thus overall reducing the amount of choice available to drinkers. This was well summed up by Tandleman here:
Vertical integration is the very soul of many brewing businesses. It is a glue that holds them together. Want to see what will happen to Fullers? Look at Youngs.
— Tandleman (@tandleman) January 25, 2019 (https://twitter.com/tandleman/status/1088721877051281408?ref_src=twsrc%5Etfw) The track record of vertically integrated businesses that have sold off their breweries to concentrate on running their pubs is a distinctly mixed one. Young’s is still in business as an independent company, but whatever happened to Boddingtons or Eldridge Pope? And the company loses its distinctive USP and just becomes just another business running an estate of pubs that must be ripe for merger or acquisition. What is there that distinguishes a Young’s pub in the customer’s eye from a Stonegate or M&B one? Brewing is something that is in the blood, while being a landlord of pubs is just another way of making money.
While the future of the Fuller’s brewery is secure for the time being, there must be a question mark over its long-term survival given that it occupies a prime piece of West London real estate. And there’s another brewery located about 60 miles to the north that I’m sure would have some spare capacity to fit the Fuller’s beers in if they asked nicely...
There will also be questions about the future of the Gales beer brands, and of the Dark Star brewery in West Sussex that Fuller’s bought only recently.
More... (http://pubcurmudgeon.blogspot.com/2019/01/turning-japanese.html)
https://3.bp.blogspot.com/-5J2uH8tkDxU/XEr2LRpEOUI/AAAAAAAAGhw/MPazUdD8-5cGnmocUoyxKEWXaxuK76t4gCLcBGAs/s200/fullers%2Bales.jpg (https://3.bp.blogspot.com/-5J2uH8tkDxU/XEr2LRpEOUI/AAAAAAAAGhw/MPazUdD8-5cGnmocUoyxKEWXaxuK76t4gCLcBGAs/s1600/fullers%2Bales.jpg)
There was shock news this morning when it was announced that Japanese brewers Asahi were buying Fuller’s brewing business for £250 million (https://www.thisismoney.co.uk//money/markets/article-6631283/London-Pride-maker-Fullers-strikes-deal-sell-entire-beer-business-Japans-Asahi.html). Fuller’s will retain their pub estate and enter into a long-term supply contract with Asahi. It’s fair to say this came as a complete bolt from the blue and hadn’t been even hinted at by any commentators on the industry. It’s also surprising in that the major international brewers, with the exception of Molson Coors and Sharp’s, had in recent years largely turned their back on the British cask beer sector.
Asahi already own the Meantime brewery in London, and a number of brands including Grolsch and Peroni, but they aren’t major players in the British beer market, so the deal doesn’t really raise any competition concerns. From a purely financial point of view, it is entirely understandable that the directors said yes to an offer it was hard to refuse.
However, it is disappointing news in that it represents a further blow to vertical integration in British brewing. This has historically been a key factor in establishing distinctive identities between different pubs. If you don’t have any stake in brewing, then the temptation is inevitably going to be to stock the same popular beer brands that all your competitors have, thus overall reducing the amount of choice available to drinkers. This was well summed up by Tandleman here:
Vertical integration is the very soul of many brewing businesses. It is a glue that holds them together. Want to see what will happen to Fullers? Look at Youngs.
— Tandleman (@tandleman) January 25, 2019 (https://twitter.com/tandleman/status/1088721877051281408?ref_src=twsrc%5Etfw) The track record of vertically integrated businesses that have sold off their breweries to concentrate on running their pubs is a distinctly mixed one. Young’s is still in business as an independent company, but whatever happened to Boddingtons or Eldridge Pope? And the company loses its distinctive USP and just becomes just another business running an estate of pubs that must be ripe for merger or acquisition. What is there that distinguishes a Young’s pub in the customer’s eye from a Stonegate or M&B one? Brewing is something that is in the blood, while being a landlord of pubs is just another way of making money.
While the future of the Fuller’s brewery is secure for the time being, there must be a question mark over its long-term survival given that it occupies a prime piece of West London real estate. And there’s another brewery located about 60 miles to the north that I’m sure would have some spare capacity to fit the Fuller’s beers in if they asked nicely...
There will also be questions about the future of the Gales beer brands, and of the Dark Star brewery in West Sussex that Fuller’s bought only recently.
More... (http://pubcurmudgeon.blogspot.com/2019/01/turning-japanese.html)