| Beer, Craft Beer, Fuller's, London, The Business End

Fuller Love: The Beery Heart and the Head for Business

Fuller’s is selling its beer portfolio to Asahi. The commercial logic of this is undeniable. The issue is, many of us place sentimentality above commercial logic. 

And Vintage Ale. And Dark Star, And Cornish Orchards.

As someone who (a) loves beer and (b) also aspires to being seen as a level-headed commentator with a degree of insight into the market, whenever something like this happens I have two reactions: the emotional and the analytical. Sometimes they match up with each other. Other times they don’t.

So let’s get the emotional reaction out of the way first: when I saw Asahi trending on my Twitter timeline on Friday morning, and then clicked on it to see what it was about, I was fucking gutted. People asked me for my reaction on Twitter. The editor of Imbibe phoned me to see if I had a comment on it. An email thread of beer writers asking if anyone knew before the announcement or had any hot take on it spiralled through my inbox. And I had no words at all. I felt a bit stupid. The thing was, I didn’t understand it. 

I don’t want to sound too melodramatic: it wasn’t like a bereavement or anything. It was more like, imagine you have two mates. One of them is a bit lairy and is often asked to keep it down in the pub. The other one is quiet and thoughtful and one of the sweetest people you know. And one day, someone says, “Hey, there was a ruckus in the pub last night. The police were called and your mate was arrested.” 

“I’m not surprised. He probably had it coming,” you reply. “You know what he’s like.”

“No, not him,” the person says. “Your other mate! The quiet, nice one.” 

The offence is the same. But it feels worse because of who did it. Fuller’s don’t owe me anything, nor do they have any obligation to anyone else. But I had an idea in my head of the kind of company they are – entirely of my own creation – and just like it was for many people when Beavertown did their deal with Heineken, that idea now seems tarnished. Like I said, it’s an emotional reaction. It’s pointless trying to pick it apart, analyse it or argue with it – it’s just how I feel.

Now, given a day or two’s thinking time, here’s the rational reaction: one, it was probably as inevitable as it was surprising. And two, it’ll probably be OK.

Why was it inevitable? Because it’s part of the pattern. A few years ago, I was invited to be part of a panel for a Q&A session at a Greene King management awayday. There was me, and a bunch of serial entrepreneurs, City analysts and financial people. I was asked to speak first. I was doing the Cask Report at the time, and I spoke about how cask ale was looking good and that meant Greene King were in a good place if they stuck with it. And everyone else on the panel said, “Why are you talking about beer? It’s irrelevant. This is a property company, a retail company. That’s where all the money is. The brewery is just a distraction.”

If you’re only looking at the money side of things, this is inarguable. In the early nineties, when the Beer Orders mandated that breweries could no longer own thousands of pubs, every one of the ‘Big Six’ brewery conglomerates that had dominated British brewing since the sixties eventually decided to sell off the beer and hang on to the pubs (which is why we’re in the extraordinary position of not one of the top ten beer brands in the UK – one of the world’s greatest brewing countries – being owned by a British company.)

Beer is in long-term decline and brewing is a low-margin business. Pubs are property, and property is worth a lot of money. Pubs also sell a lot more than beer – as a sector, they now make more money from food than drink. If you had to choose to give up one or the other, only the most sentimental of brewing companies would choose to stick with beer. 

Of course, Fuller’s were not forced to choose between one or the other. They’re well below the limit for the maximum number of pubs a brewer can own. And yet they decided to dispose of the brewing business anyway. 

From what I can understand from off-the-record chats, very few people in the business had any inkling of this happening. Not only were they not told, they were always under the impression that the board at Fuller’s were indeed very sentimentally attached to the brewing business. Ever since Young’s sold its brewing operations and shut its brewery in Wandsworth in 2006, there has been speculation that Fuller’s would – or even must – do the same. The received wisdom among the upper echelons of the business was that the families of Fullers and Turners who still occupy many board positions wouldn’t want to face the ignominy of turning up at their boxes at Twickenham, Lords, Glyndebourne or wherever and have to introduce themselves as ‘shopkeepers’ rather than brewers. I guess they’ve swallowed their (London) Pride on that score. 

I’m writing this blog post in a newly opened Fuller’s pub. Like every Fuller’s pub that’s been opened or refurbished in the last few years, it’s magnificent. We hear a great deal about pub closures, and while Fuller’s have long received praise for their brewing prowess and approach, they’ve not received enough credit for the care, attention and confidence they show in the pub sector. £250m, minus costs and yachts, houses or whatever else the beneficiaries might buy, remains a significant chunk of money to invest in pubs. Those pubs will all still stock Fuller’s beers, as Asahi will be their main beer supplier.

From Asahi’s point of view, this sale sees them building up a very respectable portfolio of western beer brands now. I have to admit that as a drinker, the prospect of Fuller’s, Dark Star, Meantime and Pilsner Urquell, plus Cornish Orchards cider, all on the same team, is an enticing one. Martyn Cornell also raises the sharp observation that this is a foreign lager brewer making a massive vote of confidence in British cask ale. Fuller’s flagship beer, London Pride, has been suffering sustained decline, squeezed between the big multinationals’ marketing power and the rise of craft beer. Pride and the rest of the Fuller’s portfolio now belong to a company with much deeper pockets. 

And the point many of us miss is that these big companies have a global outlook. You have a well-respected traditional British beer called LONDON PRIDE that now has access to huge distribution in big, beer-hungry, and often massively Anglophile markets in Central Europe and Asia. People often ask me why the hell Carlsberg bought a toxic brand (within the UK beer bubble) called London Fields. Same reason. 

Many who, like me, remain sad about the deal despite this commercial logic, try to put their fears into rational terms by suggesting that a multinational lager brewer might screw up their beloved beers. I genuinely don’t think will happen. Asahi has absolutely no experience in cask ale. They wouldn’t risk blowing their £250m investment by trying to change what they don’t understand. They’ll leave Fuller’s and Dark Star well alone to do what they know how to do best, merely providing them with more production capacity and wider distribution, and a shitload more health and safety notices around the workplace. That’s what they did with Meantime. And after a couple of false starts, they’ve actually handled Pilsner Urquell pretty well. 

I’m almost talking myself into cheering this sale rather than mourning it. But I can’t quite get there. It’s not just the keyboard warriors who want to keep craft beer pure even as they sit in comfortable corporate jobs drawing salaries from big multinationals who are sad about this sale. Brooklyn Brewmaster Garret Oliver told me that, “Fuller’s, more than any other brewery, is responsible for my becoming a brewer.” Last year I interviewed John Hall, founder of Goose Island, when he came to Fuller’s to brew a collaborative beer to celebrate that company’s 30th anniversary. On business trips to Europe, he used to detour via London simply so he could drink London Pride at the Star Tavern, a Fuller’s pub in Belgravia. When he finally changed out of his business suit and into brewer’s overalls, he brewed Honker’s ale to try to emulate his favourite beer. Sierra Nevada’s Pale Ale began life as an attempt to imitate Fuller’s ESB. ESB itself is now a category, a bona fide beer style brewed all over the world and judged in international competitions, when it was once simply the name of a tasty, strong beer in the Fuller’s portfolio. 

Fuller’s was the brewery that inspired the breweries that inspired the modern craft beer boom. Arguably no other brewery in the world is as responsible for shaping craft beer. These individual stories of inspiration – and there are many more – cannot be measured on a balance sheet. But they create value nonetheless.

Asahi are not evil and they’re not going to screw up these beers. Fuller’s are not sellouts who deserve to be shunned by beer ideologues. And yet we’ve still lost something. We’ve lost some of beer’s romance and heritage. We’ve lost a sense of stability and continuity. We’ve lost a bit of magic. Yes, I’m being sentimental. But even the most hard-nosed businessman should be wary of scorning or dismissing such sentimentality. Because it’s the basis of loyalty – no, devotion – a fierce passion for some beers and breweries that few if any other products can summon among their core customers. 

My warning to Asahi would be to respect this irrational devotion and sentimentality and to honour the beers and the brewery that created it. I suspect they will do a fairly decent job of that, because the business they just bought depends on them doing so. But it still won’t quite be the same.

6 Comments

6 Comments

Martyn Cornell

Indeed. My head, too, agrees it’s an obvious move, my heart grieves more than a little. But at least the Griffin brewery is still open. In the 45 years since the 1974 Good Beer Guide was published, we have lost some 60 classic old-style breweries, one every nine months, from Fremlins to Hartleys, most of them producing brilliant, irreplaceable beers. There were 950 new breweries opened between January 2016 and December 2017, but none of them is brewing Rayment’s BBA, one of the finest bitters ever.

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Gary Gillman

“Asahi are not evil and they’re not going to screw up these beers”. But it’s more than that. Maybe the beers will need need “screwing up” in the future. Who is better placed to do that, British owners and their management or offshore owners and their management?

Would an offshore owner have decided on what is now ESB in 1971, or might it have kept Old Burton Extra out of a strenuous devotion to the status quo? Would offshore management have decided on Freedom Lager (or lager analogue of the future), or would it slot in one of the tried and true lagers from the parent company’s home country?

Pilsner Urquell is a single jewel in the crown of its brewery, and has been international since the latter 1800s. I don’t see the analogy to Fuller.

The commercial logic between buyer and seller is one thing, but viz. the enthusiast of bitter and the cask ale tradition, I don’t see cause for optimism.

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Chris Owen

When I first read about this deal my reaction was rather similar to yours – disappointing but a no-brainer from a financial perspective. However, once it became clear that the freehold of the brewery site was included it didn’t look quite so attractive. I just had a look at Fullers accounts and couldn’t see any obvious way of teasing out the valuation of the brewery site from the rest of the property. But, because of the conservative way in which freehold property is valued in audited accounts, the book value is often not a realistic valuation anyway. However, I’d say Asahi have got it rather cheap.

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Craig Hill

On a tour of Fuller’s yesterday I got the strong impression that the brewery ran at or near capacity and had nowhere to expand. Maybe this is what drove the logic. If so, it means some Fuller’s ‘brands’ will be brewed at sometimes outside of the Griffin.

As an Australian I am torn between the uncertainty that comes when the ultimate business decisions are just that much further removed from where the brewing magic happens and the likelihood that, with Asahi’s distribution, we’ll see more Fuller’s downunder. So cautiously optimistic… and at least we’ve got Coopers!

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Phil

We haven’t really had enough time to see the Meantime acquisition bed in – or Fuller’s own acquisition of Dark Star – but I’m not optimistic; I can’t see anything like the current range[s] surviving longer-term (Hophead and APA? Bengal Lancer and Wild River? ESB and 1845? And as for the London Porter…) The quality of the Meantime beer I’ve had recently hasn’t been great, either. I foresee London Pride going from strength to strength – mostly outside Britain and mostly on keg – and Hophead becoming at least a national brand, but I’m not so sanguine about the non-flagship lines. I suspect our current association of the Fuller’s name with quality, tradition and creativity will rapidly become a thing of the past.

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