the future of british brewing: strategies for survival

The future of British brewing:strategies for survivalChris Lewis*Nottingham Business School, The Nottingham Trent University, Nottingham, UK

$ Globalization is gradually affecting the brewing industry, though at a slower pace

than in other industries. The recent consolidation within the industry, and exits

from it, are principally the result of two factors:

(1) the strategies of major British brewers of developing a market for brands they

did not own, therefore doing the work of their competitors for them; and

(2) the London stock market’s recent preference for Internet industries, coupled

with a view that government regulation stifles growth in the highly vertically

integrated UK beer industry.$ National level competition is no longer viable in this industry. To be successful,

major companies must own international brands.$ Opportunities remain for family-controlled smaller firms that are immune from

stock market pressures or micro-breweries with good products and strong brands.

Copyright # 2001 John Wiley & Sons, Ltd.

Introduction

The announcement (Buckley, 2000) of thesale of the breweries of two of Britain’slargest and longest established brewingcompanies (Whitbread and Bass), coupledwith the spate of consolidation and industryexits among smaller companies, may givethe impression that the British brewingindustry is in terminal decline. In fact, asimilar situation can be found in many partsof the world. As Haddock (1999) pointedout, brewing profits have been fallingworldwide as competition increases, andglobalization is affecting an industry thatlong seemed immune to its effects. Is thefuture of the industry, therefore, entirely

that of global domination by a few players,or do strategic opportunities remain forsmaller firms in the sector?

This article reviews the strategic aspectsof the British brewing industry in its globalcontext. It begins by considering factorscharacteristic of the industry from theeconomic, strategic and marketing perspec-tives, before appraising aspects unique tothe British industry. Changes in the regula-tion of the British industry and the strategicresponses of management during the 1990sare then analysed and strategies for survivalare considered.

*Correspondence to: Chris Lewis, Nottingham Busi-ness School, Nottingham Trent University, ChancerBuilding, Burton Street, Nottingham, NG1 4BU, UK.E-mail: [email protected]

Brewing profits havebeen falling

worldwide ascompetition increases

Strat. Change 10: 151 – 161 (2001)DOI: 10.1002/jsc.525 Strategic Change

Copyright # 2001 John Wiley & Sons, Ltd. Strategic Change, May 2001

General dynamics of brewingindustries

Economies of scale

The brewing industry is often considered aclassic scale-economy industry. Unit produc-tion costs fall rapidly as the scale ofproduction grows. Opinions vary as to theminimum efficient scale point, the point atwhich further increases in production nolonger reduce unit costs, but it is generallyagreed to be between one million and fivemillion hectolitres (Brouwer, 1988). Fromthis point of view, all but the largestbreweries in Britain and Europe are belowthe minimum efficient point. However, thecosts of transporting a product that is 95%water mitigate against single, large nationalplants. Nevertheless, size gives a consider-able cost advantage that can be passedforward to the distributor or retailer inlower prices. In some countries (e.g. Ger-many), governments discriminate in favourof smaller breweries by operating a slidingscale of duty for beer. This means thatsmaller breweries pay less duty per hecto-litre than larger ones, offsetting to someextent the economies of scale in productionof the larger companies.

Differentiation

Cost is, of course, only one factor in asuccessful business strategy. Porter (1985)distinguished two principal sources of comp-etitive advantage: lowest cost and differ-entiation, with either a broad or a narrowfocus. Low cost through economies of scaleis only a contributor to profit if a goodmargin is achieved through an appropriateselling price. Value is added to breweryproducts through differentiation of tangibleor intangible aspects of the product. Thismight be a beer of consistent or exceptionalflavours, a different method of dispense orintangible brand values added througheffective positioning and communication.As De Chernatony and McWilliam (1990, p.198) noted:

In the beer market there are onlymarginal differences between brands,yet on branded product testing, consu-mers claim far greater differences, due tobrand personalities.

Vrontis (1998) also argued for the impor-tance of branding in the brewing industry.The service element, in terms of efficientand responsive delivery and technical back-up, is also an important factor in competi-tive advantage.

Porter (1985) argued that firms shouldavoid becoming ‘stuck in the middle’between these two forms of competitiveadvantage. Though his model has had itscritics over the years, the brewing industryfits it well. National companies enjoy lowerproduction costs and can invest their profitsin national advertising to enhance theirbrand values. Small brewers can use theircraft-based manufacture, tradition and scar-city value as differentiating factors. Regionalbrewers, however, are not usually largeenough to enjoy full economies of scale inproduction, distribution and marketing.Equally, because they dominate theirregion, they do not have the uniqueness ofsmall brewers.

Globalization

Benson-Armer et al. (1999) pointed out thatglobalization in the beer industry has pro-ceeded at a much slower pace than in manyrelated businesses. In the soft drinks sector,the top four players share 80% of the worldmarket. In the beer industry, the top four

Value is added tobrewery products

throughdifferentiation of

tangible or intangibleaspects

152 Chris Lewis


only share 20% of the global market and thelargest (Anheuser-Busch) derives 85% of itssales from its home market (USA). This issurprising when one considers that, as aproduct or commodity, most beer world-wide is extremely homogeneous. Beerexports were common from the 18th cen-tury, but in most cases they were replacedlater by locally brewed beers. Internationalbrands did not begin to have large-scalepresence until the last quarter of the 20thcentury. There are a few brands that cannow be considered global: Heineken (Hol-land) is sold in 170 countries, and Carlsberg(Denmark) and Corona (Mexico) is sold in140 countries. In many countries these arebrewed under licence, and in some casesthe product is adapted.

As British brewers resisted the lager beerrevolution of the 19th century, it is notsurprising that their international growthwas limited to exports and that they con-centrated on their home market. Guinness(Ireland) has claims to be a global playerwith its black stout, and it has similarambitions for its Harp lager brand. OfBritish brewers, only Bass took advantageof the recent opportunities in central andeastern Europe and in China.

MacDonough (1994) saw globalization asinevitable, not because it is technologicallydriven (there have been few technologicalinnovations and these have not been expen-sive to develop) but because it is opportu-nity driven. Taking a US standpoint, he sawglobal tastes standardizing around thelighter, blander American beers, ratherthan those of Europe. Haddock (1999) sawglobalization as driven by the need forconsolidation in a relatively low-profitindustry. Benson-Armer et al. (1999)argued that, as economies of scale becomeless important (as most new breweries areat least one million hectolitres), intangiblesources of competitive advantage such asbrands and market knowledge will befurther developed and specialization willbecome essential. The key markets forgrowth are expected to be those with an

increasing population and a large potential— Asia, China and Latin America.

This article now considers the specialcharacteristics of the British beer industryand market.

UK brewing industry characteristics

Domination of on-trade sales (pubs,clubs, bars)

The UK is unusual in the proportion of beersold for immediate consumption (on-sales)in pubs, clubs and bars, compared to take-home sales (off-sales) from supermarketsand specialist alcoholic drinks shops. Theproportion is now some 70% on-sales(Mintel, 2000a), the highest in Europe,with a slow but steady move towards off-sales. Therefore, on-sales are still crucialstrategically for effective distribution andmarketing of beer in Britain, though off-sales are increasingly important.

Vertical integration

In common with Germany, but unlike mostEuropean countries, the British brewingindustry is heavily vertically integrated.

British competition law permits breweriesto own public houses and other retailoutlets for beer and to ‘tie’ the outlet bypermitting only their own beer to be soldon the premises. This vertical integration isthe source of most government concernsover the supply of beer, culminating in theMonopolies and Mergers Commission(MMC) investigation of 1986–89 and theresultant Beer Orders, whose effects areexamined below. A subsequent EuropeanCommission investigation did not add anyfurther restrictions (Crompton, 1998). The

The British brewingindustry is heavily

vertically integrated

The future of British brewing 153


strategic advantage of the ‘tied’ outlet tobrewers is clear, since it enables guaranteeddistribution of beer and permits a near-monopoly to be gained if a brewery is ableto buy up and tie all the outlets in a town orarea. Local brewers, as well as nationalones, have benefited from the tie. For thesmall brewer, it offers the ability to avoiddirect competition, to guarantee sales at acertain level and to optimize productionefficiency. For the larger brewer, it can offerconsiderable control over the on-trademarket.

Products

The third characteristic of the British brew-ing industry that needs consideration is theproduct range. Traditional top-fermentedBritish beer, either as ‘ale’ or ‘stout’,dominated the market until the 1970s andthe ‘lager’ revolution that swept Europe inthe 19th century passed Britain by. Duringthe 1960s, however, a series of mergersproduced national-scale brewers whodecided to promote lager beer as well asale, establishing a series of national brands(Millns, 1998). Most lager brands werelicensed from foreign brewers. Smallerbreweries also developed lager brands butwere unable to match the national promo-tional campaigns of the larger brewers. Mostaccepted defeat and returned to brewingtraditional ales. The ‘real ale’ revival, spear-headed by the consumer group Campaignfor Real Ale (CAMRA), which was founded inthe early 1970s, undoubtedly enabled thesurvival of many smaller breweries. Theshare structure of these smaller breweries,many of which were family-owned or domi-nated, also assisted their survival. Never-theless, the number of breweries in Britaindeclined from 304 in 1963 to 94 in 1993(Millns, 1998), in spite of more than 100new entrants to the market in the form ofsmall breweries capitalizing on the upsurgeof real ale. However, lager brands nowaccount for some 66% of the market(Mintel, 2000b). The recent severe declinein sales of ale (Mintel, 2000a) poses a

considerable threat to the smaller brewersthat depend upon them, though the declinemay be temporary.

Domination of domestic companies

The former domination of ale in the UKmarket, coupled with vertical integration inthe industry, help to explain the lack ofinternational ownership of the companiesin the British brewing industry until the1980s. Foreign companies found it difficultto penetrate the UK market without pur-chasing a major brewing company, andmany saw the UK market as requiringspecialist local knowledge or as a regionalbackwater. Courage (now part of ScottishCourage) belonged first to Elders then toFosters (Australia), Carlsberg owns its sub-sidiary brewery in the UK and Anheuser-Busch has brewed Budweiser at its ownbrewery in London since the mid-1990s.However, foreign ownership was still insig-nificant until the sale of the brewing inter-ests of Bass and Whitbread.

In the same way, foreign lager brands,though they take an increasing proportion ofthe British market, have built their sharealmost entirely through licensing dealsinitiated by the British breweries. Carling(of Canadian origins) whose European rightsare owned by Bass, is now positioned firmlyas the most British of brands, but otherforeign brands have maintained someaspects of their country-of-origin in thebrand character. Wood (1998), discussingelements of market power, argued thatbranding is a neglected but importantaspect. She noted that British brewing com-panies were relatively weak at global level,since, with the exception of Guinness, alltheir owned brands were domestic in focusor scope, while all their international brandswere licensed from foreign firms. Therefore,major British brewing companies have beenvulnerable because they have built a marketin Britain for brands that they did notown and have failed to grow to a scale

154 Chris Lewis


where they would be difficult to acquire in ahostile bid.

Strategies for success pre-1989

Until the MMC investigation of 1986–89,growth for UK brewers came from mergerswith, and acquisitions of, other brewers to

gain national scale in production andmarketing. This enabled them to formlarge retail estates that could be tied to thebrewery’s products. They also dominatedthe fast-growing supermarket off-salessector and developed or acquired off-saleschain stores. For smaller brewers, excludedfrom much of the off-trade by their inabilityto compete on price or national coverage,growth came likewise from mergers andacquisition of other small breweries or fromthe occasional acquisition or building offurther public houses. But the reluctance ofmagistrates to grant new public houselicences because of public-order concernsrestricted the opportunities for new build-ing of pubs.

Diversification

Most brewers were not, by 1989, single-industry businesses dominated entirely bybeer. The diversification fashion of the1960s, stagnant beer sales and the desire toavoid Levitt’s (1960) marketing myopia bytaking a broad view of their business meantthat all national and many regional brewershad diversified into related businesses suchas hotels and other leisure activities. In thelate 1980s, therefore, brewers had altern-ative businesses to develop if the prospectsfor the beer industry waned.

The Monopolies and MergersCommission report of 1989 and theBeer Orders

The MMC report in 1989 was highly criticalof the industry, concluding that a ‘complexmonopoly’ existed that restricted trade.Unlike previous reports into the industry,however, it proposed major changes inlegislation to tackle the issue (Crompton,1998). After a well-orchestrated campaign ofpublicity and political lobbying by thebrewers, the government was persuaded towater-down the proposals but brewersowning more than 2000 pubs were requiredto dispose of, or free, half of the pubs theyowned beyond the 2000 limit. In the case ofthe largest brewer (Bass), this meant that itcould retain some 4500 out of 7400 pubs. Aguest beer rule, allowing pub tenants to sellone ale from another brewery, was alsoapplied only to these larger brewers(Crompton, 1998).

Strategic choices

During the process of the investigation,some companies had already prepared forthe worst. Bass had divided its brewing andpub-owning sectors into separate businessunits (Bass Brewing and Bass Taverns) inorder to be able to react promptly to anymajor changes in legislation. All other majorbrewers had also examined their businessesclosely. What they found was that profits inthe pub business were much higher than inthe brewing business. Pubs were increas-ingly selling food (more profitable thanalcoholic drinks) and a broader range ofdrinks and had not been mere outlets forbeer for many years. The old strategy forgrowth was now untenable. As there was nolonger any possibility of growing the tiedestate, and as there was little advantage tobe gained from further acquisition of brew-eries without their tied estates, the expecta-tion in the London stock market was thatthe largest brewers would choose to con-centrate either on brewing or on managingtheir retail estates.

Until the MMCinvestigation, growthfor UK brewers came

from mergers andacquisitions



Strategic responses

Of the ‘big six’ brewers, however, four atleast (Allied, Bass, Scottish & Newcastle andWhitbread) decided to stay in both brewingand pub ownership for the time being.Though it cost them dear, the reduction oftheir tied-house estate had some beneficialeffects. They took a hard look at the profit-ability of each outlet and began a process of‘churning’ their estates by which theyacquired or built larger and more profitableoutlets and disposed of smaller ones. Scot-tish & Newcastle, the smallest of the sixwith little over 2000 pubs, was able todispose of a few pubs and thus avoid theguest beer legislation. The remainingnationals formed alliances with otherbrewers to offer guest beer lists to theirtenants.

A key point of the ‘guest beer’ rule wasthat it was meant to give greater choice tobrewery tenants who wished to offer awider range of products. The solution forthe major brewers was to abolish tenanciesaltogether. Already many of the brewers’most profitable pubs were managed bybrewery employees rather than operated byindependent tenants. Now tenants weregiven notice to accept new and much moreexpensive long leases of 10 to 20 years, orquit. Most of the profitable houses weretaken into direct management, and the needfor ‘guest’ beers was largely avoided.

The pubs that needed to be disposed ofwere sold in blocks to new buyers. In manycases, these were former managers of thebrewery concerned that formed new busi-nesses to run the pubs and signed newsupply agreements with the brewery thathad formerly owned them. In other cases,where formerly owned houses had beenfreed from the tie, they were re-tied by loanties instead of property ties. The end resultwas that the major brewers’ share of themarket actually increased from 78 to 84%within four years (Crompton, 1998). Thelarger pub chains became important inde-pendent players in the industry but tendedto favour the largest brewers that had the

strongest brands and could offer the deepdiscounts the pub companies required.

Two of the major brewers decided on adifferent approach. Grand Metropolitan (ahotels and leisure group that had longoutgrown the brewer Watney Mann &Truman) and Courage agreed an exchange.Courage took over Grand Metropolitan’sbreweries, and Grand Metropolitan tookover Courage’s tied houses. The tied houseswere formed into a separate company calledInntrapreneur, jointly owned by the twocompanies. Former tenancies were againconverted to leases. A ten-year supply dealwas agreed between the two companies,although the Office of Fair Trading reducedthis to seven years. Though an innovativestrategy, the Inntrapreneur deal was not agreat success. (Crompton, 1998). The twocompanies had quite disparate aims. Cour-age needed to sell as much beer as possiblethrough the pubs, and clearly this dependedon reasonable pricing of the product atretail level. Inntrapreneur was now effec-tively a property company, however, depen-dent on getting the highest rents possiblefrom the leaseholders. As a result, leaseswere much more expensive than previoustenancies. Lessees raised the price of beer totry to cover their costs, but this only drovethe drinkers away. Many lessees went bank-rupt and the pubs closed, affectingCourage’s sales even more. The experimentwas over by 1995.

The big brewers’ strategic responses thuslargely circumvented the Beer Orders. Theirmarket share increased and beer prices roseconsiderably. The consumer gained onlyinasmuch as the ‘guest beers’ rule didincrease choice and at least briefly openedup new opportunities for the smallerbrewers. Larger regional brewers were lar-gely unaffected, though they took theopportunity to acquire some of the pubsthat came onto the market.

The acquisition conundrum

The MMC had also rejected a proposedmerger of Courage and Scottish & New-

156 Chris Lewis


castle in 1989, giving a clear signal that thegovernment was unlikely to allow furtherconcentration of the largest players. There-fore, when Scottish & Newcastle made atake-over bid for Courage at the end of theInntrapreneur adventure in 1995, it wasexpected that the acquisition would beblocked, as it would give the new company30% market share. However, the trademinister made no referral to the MMC. Basslost its position as the largest brewer to thenew combine; assuming that there werenow no limits to permissible acquisition,Bass bought Allied’s brewing division, Carls-berg-Tetley. However, government approvalwas delayed by a general election, and thenew Labour trade minister rejected the deal.Bass had to be content with second place,learning the hard way about the politicalnature of competition decisions.

However, regional brewers could stillcontinue the process of merger and acquisi-tion to acquire more pubs or breweries, aslong as they did not breach the 2000 publimit. As a result, acquisition activity contin-ued at regional level throughout the 1990s.

International opportunities

If domestic expansion was problematic, the1990s saw unprecedented opportunities forinternational expansion. Privatization pro-grammes in central and eastern Europe andthe opening up of China to foreign invest-ment brought great opportunities. MostBritish companies, however, were reluctantto risk capital in either region. Only Basstook the plunge, acquiring Prague Brew-eries and setting up a joint venture atGinsber in north-east China. British brewerswere clearly hampered by their domesticfocus and lack of international experiencebeyond exports. Bass’s Czech acquisitionperformed quite well, and with furtheracquisitions the company gained 16% ofthe fragmented Czech market, though SouthAfrican Breweries acquired the Pilsen andRadegast breweries and thereby marketleadership. Bass’s Chinese joint venture

was not a success and the company decidedto sell its interests there.

The stock market and the brewingindustry

It became apparent during the 1990s thatbrewing was no longer an attractive industryto UK investors. It was seen by many as staid

and in long-term decline, in spite of goodperformances by individual companies. TheMD of Wolverhampton & Dudley Breweriessaid (Protz, 1999) after his company’sacquisition of Marstons:

The City thinks I’m mad to have threebreweries. In fact the City thinks I’mmad to have any breweries at all. Onebroker told me to get rid of all mybreweries and then he’d have a look atmy share structure.

The major brewers were strongly diversi-fied, and Bass’s acquisition of Holiday Innsin 1994 was a symbol of its new interna-tional ambitions. The problem was notnecessarily the profitability of brewing. Toa considerable degree, divisionalized comp-anies in the brewing business can show upprofit where they wish within their divi-sions. A low transfer price for beer wouldresult in a more profitable pubs division,while a high price would increase brewingprofits. Although profits were not spectacu-lar in the 1990s, they were steady andusually in growth, unlike other consumersectors derated by investors because offalling profits. The share prices of majorbrewers such as Scottish Courage and Basswere described in the Financial Times

During the 1990s,brewing was no

longer an attractiveindustry to UK

investors



(Wilman, 1999) as

… in the doldrums, at steep discounts tothe market and almost impervious toany good news about the sector.

Wilman (2000a) saw the problem not just asinvestors’ preference for new Internetindustries but also as a dislike of therestrictions implicit in the companies’ ver-tical integration since the Beer Orders.

Faced with such stock market hostility,the three leading brewing companies tookstrategic steps in different directions. InMarch 2000, Scottish Courage acquiredFrance’s number one brand, Kronenbourg,from the BSN group, becoming a majorEuropean player at a single move (Wilman,2000b). In May, Bass announced the sale ofits breweries. Bass’s move was not surpris-ing and indeed can be seen as the result ofpressure from the City, though it may alsohave been swayed by the loss of its leadingposition in the UK to Scottish Courage.Whitbread also sold its breweries to Inter-brew (Wilman, 2000c).

Survival factors and the future

This review of the British beer industry inthe last decade may give the impression thatthe industry is in terminal decline and isuntenable for most firms. To demonstratethat this is not the case, survival factors forsectors of the industry and some examplesof successful strategies are reviewed.

For the major public companies the keyissues are economies of scale in production,distribution and marketing, strong brandsand a strong international position. ScottishCourage’s purchase of Kronenbourg exem-plifies this approach. There remains the taskof convincing the City that the industry isworth investment. So far, the steep falls inthe shares of ‘dot.com’ companies have notbrought a renewal of interest in consumercompanies such as brewers, which offermuch more stable investment. It is notablethat the largest brewing companies in

Europe (Carlsberg, Heineken and Inter-brew) are not publicly owned companiesbut private family-dominated companies(Carlsberg has a type of charitable status).It is difficult to imagine a major PLC such asScottish Courage buying back its shares andwithdrawing from the stock market. ButBritish managers must sometimes castenvious glances at their European neigh-bours’ freedom from pension-fund pres-sures.

For medium-sized regional brewing comp-anies, the temptation to expand to nationalscale (just below the 2000 pub limit)through acquisition will be great, in orderto gain appropriate scale economies andmarket coverage. Wolverhampton & DudleyBreweries adopted this strategy in 1999 byacquiring two other major regionals, Mar-stons and Mansfield. Arguably, the companyis now close to national scale, since Mar-stons brands have near-national distribu-tion. But Wolverhampton & Dudley mayhave overstretched itself; following theseexpensive acquisitions and poor profit fig-ures, it was the subject of a take-overapproach from a private equity firm (Botts)in August 2000 (Blackwell 2000). If success-ful, it is expected to split pubs frombreweries and dispose of the latter. It isdoubtful, therefore, whether any companycan achieve national scale in brewing andretailing and retain City interest other thanfrom predators, since it would simply putitself in the position that Bass and Whit-bread found untenable.

The smaller family-owned regionals (e.g.Fullers, London) that retain family controlcan continue to grow by the acquisition ofnew outlets, churning of existing stock andimprovement of products and services. Anysuch company without family control of theboard is vulnerable to investors’ demandsfor increased shareholder value. Morrells(Oxford) ceased to exist when the profes-sional management that the family hadbrought in decided that there was moreshareholder value to be gained from asset-stripping the company and selling its land

158 Chris Lewis


in the centre of Oxford than in continuingto produce and retail beer (Protz, 1998).Few smaller regionals have strong marketpositions, but Joseph Holt (Manchester)benefits from a low-price strategy aimed atmature urban customer segments that mostbrewers neglect but that, unlike the youthsegment, are both long-lasting and brand-loyal.

For the micro-breweries, in spite of thedecline of the cask-ale segment comparedwith a few years ago, the prospects appearto be quite good. Though small firms inmost sectors have a lower survival rate thanlarge ones, the survival rate for micro-breweries is good. The recent decline insales of ale has hit (or indeed beengenerated by) the nationals, and manysmaller brewers have seen increased sales.The hard core of CAMRA supporters (mem-bership over 60 000) keeps interest alive inthe smaller players. Unlike many industries,brewing is still relatively craft-based, withlittle technological innovation, so micro-breweries have low start-up costs. An exten-sion of the guest-beer legislation to pubchains might open further opportunities tothem, and a progressive duty system, allow-ing smaller brewers to pay less duty perbarrel, would also help. Research showsthat micro-breweries with a reputation forquality, such as Mallard (Nottingham), canstill attract unsolicited orders from theremaining free houses, rather than beingforced to dedicate themselves to pursuingsales (Cruse, 2000). Those that own or renta few outlets can guarantee sufficient salesto maintain their position. The Small Indep-endent Brewers Association (SIBA) nowadvises against new brewery start-upsunless at least one outlet is owned (Cox,1999). The marketing activities carried outby CAMRA for micro-breweries (beer festi-vals, inclusion in the annual Good BeerGuide, newsletters, local branch activity)will also help them to survive.

A different route is that taken by theWychwood Brewery. From very small begin-nings in 1983 the company has expanded to

a tied estate of 36 pubs, but its success isdue to the range of bottled ales with strongbranding and design that have enabled thecompany to win shelf space in major super-markets (Evans, 2000). The bottled take-home segment, though crowded, offersgood opportunities to micro-breweries.The spectacular growth of the Internet inthe last few years may enhance theseopportunities. Among the key advantagesoffered by the Internet to small firms is theability to side-step distribution channels anddeal direct with consumers (Quelch andKlein, 1996). Although transport costs forhome delivery make it difficult to competewith supermarket shelf prices, the opportu-nities for co-operation in this area may leadto the establishment of firms handling manybreweries’ products for home-delivery, justas they do currently for on-trade distribu-tion. Strong branding will be the key tosuccess in any such development.

Conclusions

The time has long passed when publichouses were merely ‘the brewer’s shopwindow’ and ale dominated alcohol sales.The recognition of the higher profits to beachieved through concentration on themanagement and development of a public-house estate has led both large and mediumcompanies to abandon brewing. Yet some-one still has to brew. The strategy of the

former national brewers, which concen-trated on the domestic market and pro-moted foreign lager brands brewed underlicence, has proved to be short-sighted,though it cannot be blamed for the loss ofinterest on the part of investors in those

The strategy of theformer national

brewers has proved tobe short-sighted



companies. Viable size for the larger com-panies is no longer national scale. Largefirms that take on the challenge of theacquisition of successful international lagerbrands should be successful, though theCity will remain a problem rather than asupport. Medium-sized family firms pro-tected by their share structure will surviveas long as they can ignore shareholders’demands for higher profits and maintainfamily unity. Small breweries offering high-quality ales with clear branding also haveviable opportunities.

Biographical note

Chris Lewis is a Senior Lecturer in theDepartment of Strategic Management &Marketing at the Nottingham BusinessSchool. He teaches international marketingand international business on in-company,postgraduate and undergraduate pro-grammes. As a member of the InternationalBusiness Centre (and former Head), he isclosely involved in the School’s interna-tional strategy and liaison with Europeanpartners. His research interests are centredon the international brewing industry andon cross-cultural aspects of marketing.

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