Ale reborn on a tough UK beer market

By Chris Mercer

- Last updated on GMT

Related tags Greene king Brewing Beer Britain

Britain's middleweight brewing sector has continued to motor along
nicely over the last few months, to the dismay of real ale
campaigners who see Britain's small-time brewers melting into the
history books.

Acquisitions of smaller rivals and strong brand marketing have helped Wolverhampton and Dudley Breweries (WDB) increase beer sales by five per cent to £41.9m in its first half.

The rise almost matches a seven per cent beer sales rise for WDB rival Greene King in the full year up to 23 April 2006.

Both results show that Britain's ale market has continued to grow and develop within a shrinking UK beer sector.

WDB said Britain's beer market had recoiled another two per cent over the last year, yet the group had increased market share on both on and off-trade by 7.6 per cent.

Not everyone is happy, however. Britain's Campaign for Real Ale (CAMRA) group has watched rather helplessly as another year of deals and growth by middle market ale firms has eaten into Britain's rich heritage of small-time, real ale brewers.

CAMRA protested unsuccessfully when WDB took over Cumbrian brewery Jennings last year. There was unhappiness too when Greene King bought Belhaven in Scotland.

And last week, CAMRA again announced its disappointment that another middling brewer, Young's, had decided to close its Ram Brewery in Wandsworth; ending 425 years of brewing on the site.

"Another great brewery that has produced fine beers for hundreds of years is lost in the name of progress,"​ said Steve Williams, CAMRA's London director, lamenting that another brewery, Fuller's, was now the only "substantial real ale brewer left in the nation's capital"​.

But, the middle market brewers say they are securing the future of Britain's ale traditions in a pressured and intensely competitive market.

Young's, which has been reviewing its business for some time, said closing its flagship Wandsworth site was necessary for just this purpose.

The group has set up a joint venture with Charles Wells Brewery to brew its beers at the Eagle Brewery in Bedford. Young's hopes the increased effciciency from this move will help it to protect margins from soaring input costs.

There is evidence that consolidation in the ale market has strengthened the hand of middle market brewers.

Their flagship ales, including Old Speckled Hen, Abbot Ale and IPA for Greene King, and Marston's (especially Smooth), Old Empire and Banks's for WDB, have continued to outperform the UK beer market.

Old Speckled Hen became Britain's biggest selling premium beer in the off-trade last year, an important achievement considering 40 per cent of beer in the UK is now sold through supermarkets.

Newly acquired brands also performed well. Greene King said in a trading statement that volumes of Belhaven Best, which came with its takeover of Belhaven, were up 8.6 per cent.

And WDB's Cumberland Ale, which it has owned since buying the Jennings brewery last year, grew by more than 12 per cent.

WDB added that its takeover of Burtonwood, Jennings and English Country Inns last year had already brought savings of £6m annually, not to mention more pubs to sell its beer brands in.

There will perhaps never be a concrete answer to the dispute over who safeguards Britain's ale traditions. For the moment, however, it seems consolidation and clever branding have at least given the ale market a new lease of life in a difficult environment.

Greene King will announce its full, preliminary results on 4 July.

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