Britain’s oldest brewery mulls future as cost pressures bite
The family-run company behind Britain’s oldest brewery is exploring its future after wrestling with soaring costs and sliding sales.
Shepherd Neame, which was founded in 1698 in Faversham, Kent and is the firm behind classic British beers Spitfire, Bishop’s Finger and Whitstable Bay, said it had begun a strategic review into its brewing operations “to provide a satisfactory way forward”.
Shepherd Neame chief executive Jonathan Neame told City AM there were “three things that we’re grappling with, which is higher logistics costs, declining volume, and in our case, the need to to invest and modernize our plant.
“We’re not the only ones in the sector facing a squeeze in this respect. But we have to recognize that profitability in this part of the business has been falling for the last few years.
“We’ve been facing challenges for some time, and, therefore, it’s appropriate to have a much fuller, wider-reaching strategic review.”
Asked whether Shepherd Neame would consider closing down its brewing operations entirely, he added: “Brewing is integral to our identity and, indeed, prosperity, so you can read into that what you want, but I can’t be drawn too far on this.”
The decision to review the future of beer-making operations comes after Shepherd Neame reported a near-10 per cent year-on-year slump in beer volumes as Brits moved away from traditional cask ales in favour of modern lagers, stouts and alternative alcoholic drinks.
The Aquis-listed firm, which operates more than 200 pubs across England including the Hoop and Grapes in Farringdon, Old Doctor Butler’s Head in Moorgate and the recently-refurbished Jamaica Wine House, next door to the Bank of England, reported a 4.6 per cent decline in revenue from its brewing operations to £42.8m in the year to end June.
“There are major changes by category, as consumers move away from ale to stout, and from standard premium lagers to world lagers and specialist beers, and shifts in route to market,” the company said in a statement.
“We are not immune to these trends, and have experienced volume declines for the third year in a row.”
Overall, the company reported a 1.1 per cent decline in revenue to £162.6m during the year, while its pre-tax profit slid 43 per cent to £3.6m driven by impairment charges across more than a dozen of its sites.
Neame said the firm’s London sites had been the company’s stand-out performers over the past year, defying wider consumer challenges over cost of living pressures.
“I don’t think that the appetite for going to the pub is diminished anywhere in the country – I think the need for a third place, the need for socializing in that third place, and the key occasions, either after work or Sunday lunch or Friday night, are still very much part of people’s lifestyle,” he said.
“But the cost inflation and impact on the sector, whether it’s driven by regulation, whether it’s driven by inflation, has been very significant, and that is proving difficult for many households to absorb. In London, though, it’s a very different market.”
If Shepherd Neame decided to give up its brewing operations, it would add the company to a long line of pub groups that offloaded beer-making in favour of retreating to focus on operating as property and hospitality-based businesses.
The previous title-holder for operating the UK’s oldest brewery was London-listed Young’s, until it shuttered the centuries-old Ram brewery in Wandsworth in 2006 and subcontracted production of its famous Young’s Original ale to brewer Charles Wells. In 2019, London-based brewer Fuller’s followed suit, selling its Chiswick brewery to Japanese drinks giant Asahi.
A number of family-run British pub groups continue to own and operate their own breweries, including Hall & Woodhouse, McMullen’s and Timothy Taylor’s.