While I was mildly surprised by this move - after all who, these days, can get too taken aback by breweries being sold - but what did surprise me more than a little was the reaction from some. "Sellout" cried Roger Protz, the doyen of British beer writing, along with several inaccuracies which he later corrected:
J Mark Dodds, a well known - pub campaigner wrote grumpily in response to comments:1. Shocked and saddened to hear that @WellsBrewery have sold to @MarstonsBrewery . Another family brewer sells out.— Roger Protz (@RogerProtzBeer) May 18, 2017
You will also see a pertinent and useful quote from Melissa Cole. More of which later.@MelissaCole @RogerProtzBeer @petedrinks @BoakandBailey For the edification of the ignorant could you please outline under what circumstances a sell OUT is NOT a sell out? Thanks in anticipation.— J Mark Dodds FRSA (@JMarkDodds) May 19, 2017
So why did Charles Wells sell a large part of their business? The most likely explanation is a low margin volume business of declining brands, a cut throat market where the company was too small a player against others such as Marstons, Greene King, Carlsberg and Heineken who can cut margins to the bone to get business. If you look at what is being sold, Young's is relatively small beer - pun intended - and in Scotland, most people won't touch McEwan's products with a bargepole. The Courage brands are more or less dead in the water and even the mighty Bombardier is hardly the legend it used to be. That leaves supermarkets and the free trade, both of which are low margin and highly competitive. I'm guessing the family looked at it all and judged that the real, lasting and tangible value of the business is in the pubs they own. The value of a portfolio of brands which they likely saw as decreasing value assets, was something they could and should sell while the going was good. In a dog eat dog world, they decided to rationalise for a more secure future.
Despite what people reckon, most family brewers who are still in the game know their onions. They haven't survived this long without knowing what is what and understanding their place in the brewing world. In their heart of hearts that they know they can't compete any more on a nationwide basis. The future of family brewing, to a large extent, relies on doing what you do best - local pubs and local beer. To survive hard headed decisions have to be made. We have seen McMullens and Thwaites retrenching and this, to me, seems almost like a mirror of the Thwaites situation and Thwaites are doing very nicely at the moment, with their new brewery, servicing only their pubs, being built as I write. If Melissa is to be believed and I have no reason to doubt it, the Wells brewery itself may need, shall we say, considerable attention. That's another other reason to think about a different business model, but sadly, it does cast considerable doubt about the long term future of brewing on the current site, though Marstons do have a pretty good track record of keeping breweries they buy going, so there is hope.
All in all, looking ahead and considering the options and the market, I can see why a family led board came to the conclusion they have. Large scale brewing has its place, but competing on price in such shark filled waters is a nil sum game for Wells and they have realised it. They tried it and it didn't work out. By building a smaller brewery and concentrating on their pubs, they are safeguarding their core pub business, while realising assets which are only likely to fall in value. Reverting to vertical integration with just pubs and a brewery is how they started in the first place. I don't call that a sell-out, but a sensible business decision in a difficult brewing world. They have sold well and and main assets and income stream are protected.
Going back to where they started may or may not secure Charles Wells' future, but one thing is for sure. Soldiering on unchanged was just as risky and being family owned, the future is still in their hands.
I am sad for the employees though. I know from personal experience how loyal to the owning family they tend to be. That would have been a tough call for Wells.
Marstons are clearly number one in the super regional game now. Greene King and Marstons are now the sole brewing giants outside the multi nationals.