Greene King heralds UK real ale resurgence

- Last updated on GMT

Related tags: Greene king, Beer

UK brewer Greene King has shown how the right mix of a few flagship
brands and ownership of various pub chains can make real ale a good
money spinner in Britain, despite diehard opposition, writes
Chris Mercer.

Greene King said turnover rose 33 per cent to £732.6m for the year ended 1 May. The increase was spurred by the group's acquisition of Laurel's 432 pubs last autumn, but a significant contribution also came from its big real ale brands.

The big three - IPA, Old Speckled Hen and Abbot Ale - have undergone serious brand-building over the last few years, and the move seems to be paying off.

An average sales rise of five per cent from these three helped Greene King's brewing division to a 5.2 per cent sales rise, up to £111.6m. The brewer also said its own-brewed volume grew by three per cent over the year, against a two per cent decline in overall market volume.

IPA has subsequently replaced Tetley's Bitter to become the number one cask beer brand in the UK, while Old Speckled Hen continued as the top premium ale brand sold by multiple retailers, and Tesco is now signed up as a Greene King customer.

Datamonitor​ analyst John Band recently told BeverageDaily.com​ that Greene King's positive results "show that it is possible to market real ale as a premium drink. Young people are beginning to see these brands as upstream and innovative, in the same way as they do Belgium beers."

But, Greene King's rise has brought criticism from real ale defenders that it is stifling the diversity of Britain's traditional beer. Such criticism has increased since Greene King announced last week it would buy brewer and pub-owner TD Ridley and Sons for £45.6m.

"This acquisition follows hot on the heels of the takeover of Jennings by Wolverhampton and Dudley in June. A new generation of national brewers has been created and is a threat to consumer choice,"​ said Mike Benner, chief executive of the Campaign for Real Ale (CAMRA).

"Greene King has stated this morning that it intends to close the Ridleys Brewery in the autumn. It is difficult to believe that Greene King will continue to brew Ridleys IPA for long as it clashes with its own IPA,"​ said Benner.

Even so, Greene King seems to have successfully turned around a product traditionally labelled as an 'old man' drink through deft financial management and good branding.

"The brewery at Bury St Edmunds continued to run at maximum efficiency and is currently at 95 per cent capacity on a two-shift system. Running the brewery in this way means we do not have to resort to lower margin contract brewing,"​ said Greene King chief executive Rooney Anand.

"Capacity can be increased when necessary and at minimal cost. We have planning permission for additional fermenting vessels and we have started to run trials on the introduction of a third shift,"​ he said.

Greene King's net profit rose from £28m to £39m.

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