Brewing merger could create 100 Bedford jobs
Britain’s oldest brewery is to merge its brewing operations with local firm Charles Wells in a move that will create a major new force in UK brewing and could bring as many as 100 jobs to the region.Britain’s oldest brewery is to merge its brewing operations with local firm Charles Wells in a move that will create a major new force in UK brewing and could bring as many as 100 jobs to the region.
Established in 1581, Young’s of Wandsworth London will separate from its retail division and move its brewing and wholesale business to Bedford to form the Wells & Young’s Brewing Company. Operations are due to start on 2 October.
Wells & Young’s will operate entirely from the existing facilities at the Charles Wells’ 16-acre Eagle Brewery, Bedford, which will include the production of upwards of 400,000 barrels of beer each year, some 100,000 more than Charles Wells currently produces.
Young’s intends on selling its historic Ram Brewery in Wandsworth to property developers and expects to make a more definite ann-ouncement on the future of the 5.5 acre site at some point over the next seven days.
Wells & Young’s will operate as an independent company, at arms length from the two shareholders. Both Young’s and Charles Wells will continue to operate their pub estates independently of each other and the two have entered into separate three-year rolling supply agreements – minimum five years – with Wells & Young’s.
It will be owned 40 per cent by Young’s and 60 per cent by Charles Wells, reflecting the assets being contributed by each shareholder, which for Charles Wells include the freehold land and production facilities of the Eagle Brewery.
Exact details concerning new jobs at Wells & Young’s are still being finalised, though it is expected that around 35 of Young’s employees will be offered the chance to move to Bedford. Another 35 new jobs will also be made available, though it is thought this may well increase.
In the last financial year Wells & Young’s produced pro forma, own-brewed volumes of around 400,000 barrels. This, along with significant contract brewing and wholesaling volumes, gives the company scale to compete at a national level and makes it one of the largest speciality brewers in the UK.
The pro forma financials of Wells & Young’s will be augmented by significant synergies from improved economies of scale, although the full impact of these will not be felt until the year ended September 2008.
In the financial year ended September 2005, Charles Wells brewed around 300,000 barrels, its turnover reached £138 million with a pre-tax profit of £7.9m.
For the year ended 1 April 2006, Young’s brewed over 167,000 barrels of beer including 106,000 barrels of owned beer brands, of which Young’s Bitter accounted for 46,000. Its brewing and wholesale business generated an EBITDA of £3.2m and an operating profit before exceptionals of £0.9m on sales of £50.4m.
Wells & Young’s will be responsible, amongst other things, for brewing, packaging, warehousing and wholesale activities. Jim Robertson, Master Brewer of Charles Wells, will be Production Director, with Ken Don, Young’s Head Brewer, retained as a full-time consultant until his retirement.
It is intended that, following the completion of taste matching and product quality trials over the summer, Young’s will have transferred all of its brewing and wholesale activities to the new company by 1 October 2006.
Distribution and warehousing will remain at Wandsworth until its relocation to a new satellite depot in late 2007. All remaining Young’s staff and corporate functions, including the managed houses and tenanted estate managers, will be relocated in 2007 to a new head office in Wandsworth.
Young’s will remain a vertically integrated business, with a significant interest in the future of Wells & Young’s, which ensures that Young’s beers will continue to be brewed to the company’s standards and will be available in all Young’s pubs and to all Young’s customers.
Charles Wells currently brews the flagship Wells Bombardier, Wells Eagle IPA Bitter, John Bull Bitter and Kestrel lager together with a variety of other speciality and seasonal ales.
It also has the rights to brew and market Red Stripe Lager and Japanese brew, Kirin Ichiban lager. It also has the UK distribution rights for Corona Extra – the world’s fourth largest beer brand.
Young’s decision to team up with Charles Well was taken after a two-and-a-half-year review of brewing operations in Wandsworth, originally prompted by a master plan for London drawn up by Mayor Ken Livingstone and by Wandsworth Council’s proposals to rejuvenate the borough.
John Young said the Ram Brewery site, which is needed as part of those plans, had many problems as a working brewery. He said: “Given these problems, the council’s desire to press ahead with its development plans for Wandsworth and the opportunity to link up with Charles Wells, the decision to sell the site and unlock capital for future investment in the business, while emotional, was relatively straightforward.”
Paul Wells, managing director of Charles Wells, said: “The merger of our respective brewing interests creates a significant new force in UK brewing, with strong and growing cask ale brands, operating out of one of Europe’s most modern breweries.
“We look forward to a long and profitable partnership between the two companies.”
John Young, chairman of Young’s, said: “This move will help to safeguard the future of Young’s and greatly strengthen cask beer’s overall position in the market. Charles Wells is a similar firm to Young’s in so many ways.
“As we prepare to say goodbye to Britain’s oldest brewery, founded in the reign of Elizabeth I and run by my family since 1831, we must avoid shedding tears and instead consider the advantages that our move will have.
“The new company will have a modern brewery, with its own supply of natural mineral water. All our ales and stouts – on draught, in bottles and in cans – will be transferred and we shall benefit from access to Charles Wells’ brands.
“Our sales team will join forces at the new company with their colleagues from Charles Wells, to give the enlarged beer portfolios greater marketing power and make Wells & Young’s a truly national and international drinks business.”