Black Sheep Brewery's new boss on saving firm, £100m revenue plans and why he won't be photographed

As he meets this newspaper in the bar at Black Sheep’s central site in Masham, the affable but astute Welshman is upfront about explaining why.

“There’s a very simple answer to that, it is not anything as suspicious as it sounds,” he says.

“As an acquisitive entity when a business is in difficulty or just simply for sale, you see the numbers first but then you have to kick the tyres. What we have found in the brewing industry is it is in the press every day. If I turned up and started looking around, people would think ‘they are in trouble or up for sale’. We can’t have that, so that is why the anonymity is quite important for us.

“There’s no value in having my mug shot in the paper. I’d much rather see a Black Sheep employee in the paper than myself, what value does my face add?”

Williams is part of the Breal Group, a London-based investment firm founded by business partners Brent Osborne and Alan McLaren.

Their MO boils down to taking over promising businesses, improving their operations and then eventually selling them on for a substantial profit.

Williams says he has been with the company for around nine years, having previously worked in the communications industry and for British Airways.

Williams says: “Breal is always labelled as a private equity company but we are really not. It is a group of individuals that invest alongside each other. We are not bound by the rules that some private equity companies have in place that are quite strict. We can carry out an acquisition in a very short space of time because it is our money.

“I’m an investor in Breal along with my partners and I’m also a shareholder in all the breweries. It is my money in here and my partners’ money.”

The brewery sector is something of a departure for Breal having previously specialised in the industrial sector covering everything from ladder and steel door manufacture to making parts for military aircraft.

Williams says that after selling some businesses at the end of 2022, Breal was looking for further acquisitions and became aware of Black Sheep’s financial difficulties.

“A number of my partners are into their beer. And when Black Sheep came up they spotted it immediately. We saw it in the press first and came up with the idea to reach out and see what is what.

“It doesn’t cost anything to have a look. We came along anonymously and honestly just fell in love with the place really. It just felt right.”

Breal purchased Black Sheep in a pre-pack administration deal in May 2023 for £5m. It was a deal that carried some controversy with it as it wiped out the value held by over 1,000 shareholders as well as leaving creditors and taxpayers with an expected loss of millions of pounds.

The firm has since gone on to purchase London outfits Brick Brewery and Brew by Numbers, as well as Warwickshire-based Purity Brewing Co. In each case, the businesses were either in administration or close to it.

They all now come under the same umbrella organisation called Keystone Brewing Group, which Williams and his business partners want to grow into a £100m-a-year revenue business by 2028.

“In every sector, you have to do it better and more efficiently and be the fittest. Being completely honest when we bought Sheep we didn’t know the absolute turmoil that was happening in the sector.

“When Sheep came on board, the floodgates opened and people were knocking on our door saying, ‘Are you interested?’”

The London brewing operations have been shut down and will now have their products produced in Masham. Williams says the original intention was to find suitable premises to house both breweries in the capital but when that proved financially impossible, the Yorkshire move was arranged.

It has been the subject of some criticism in the brewing industry but Williams says operations will be up and running in Masham in April and every effort is being made to maintain the integrity of the drinks.

“The water is treated to bring it within a gnat’s whisker of what it was like in London, we have the same brewer, we have the same tanks, the same brew equipment. Here we have a better quality system and a more stable brew environment and frankly more capital to make the right decisions.”

The outcome of the Black Sheep takeover also saw three of the firm’s four pubs in Yorkshire close their doors while Williams says a “small number” of redundancies also took place in January.

CEO Charlene Lyons has also left the business in recent weeks. Williams says it was her decision to depart but confirmed that her position in specific charge of Black Sheep will not be replaced.

“I don’t know anybody who worked as hard as she did. It was quite an uphill battle. When we took the business on, she made clear she had done enough. We asked her to stay on for a period of time and she stayed on for longer but ultimately she was always leaving.

“We have a number of breweries now and a group structure so I don’t need a CEO in every brewery any more. There may come a time where we need to do something like that but for now we are all about saving roles.”

He says there are no plans for further job cuts at Black Sheep having “right-sized” the business and the focus is now on how to grow the company and the wider Keystone group.

The Keystone businesses collectively make around £28m in annual revenue but Williams says it is hoped that figure can get to £100m within the next few years through a combination of improving the current breweries and making new acquisitions.

“Our target is to get to £100m before the end of 2028 - I think we will get there by the end of 2026,” he says.

Williams says acquisitions will not just be of businesses in trouble as has been the case so far. He says contrary to perception, buying firms in administration can be more costly in the medium-term than taking on solvent counterparts.

“Sheep was losing a horrendous amount of money when we bought it. It is losing less money today but it is still losing and so is Purity and so is Brick and so is Brew. We are making less loss than we budgeted but we are still losing.

“It is folly to think that we somehow charge in, buy a business for cheap and suddenly kiss the frog and turn it into a prince.”

He says the pandemic hitting trade, was followed by energy and grain price costs rocketing in the wake of the Russian invasion of Ukraine - as well as Black Sheep losing its biggest export market which was to Russia. Covid loans taken out to tide over the business also became increasingly costly as the repayments were tied to the rapidly-rising Bank of England base rate.

He says of the firm’s former management: “They did their absolute level best to keep the business going until under advisement they sought the administration. They moved heaven and earth to try and stop what was happening.”

Williams says he has sympathy for those who have lost money as a result of the administration process. “People lost money and that stings. Last month we lost £15,000 from pubs going bust and I’m expecting probably the same this month.

“I genuinely sympathise with the plight of shareholders. I have invested in companies myself in the past and lost that money, I know exactly how it feels. But if you don’t want any risk in your portfolio, leave the money in the bank.”

He says that having greater scale gives Keystone a stronger chance of success than the businesses it has ended up taking over.

“To survive in the brewing game nowadays you need a level of volume. Our goal is to be £100m plus have a range of brands that are familiar. We are going to be ‘regionally national’. We are going to buy breweries that resonate in their localities and people feel, that is my beer. We will build a business of regional brewers that mean something to local people.”

He says that aim is to make “at least” 10 per cent EBITDA profit margins on revenue.

Black Sheep’s last published results for the 2021/22 financial year showed revenues of £14.2m. Williams says he believes the company can get to £20m a year, representing a fifth of Keystone’s total business.

As part of the plans, Black Sheep’s packaging site is being upgraded to allow it to offer other brewers the chance to bottle their drinks with them.

Keystone is also looking to take on groups of pubs that fit with their vision but Williams says he can’t divulge any further information at this stage.

But while Breal has only just got its foot in the door in the brewing game, the nature of its business model means there is an obvious question about where these businesses will end up in the long-term.

In answer to the question, Williams’s highlights Breal’s success with Glasgow-based steel firm Barclay & Mathieson which it took over in 2015 and ultimately sold to Japanese giant Marubeni-Itochu Steel in 2022.

“At the right time, maybe we will sell the brewery group. But there is no end date here - we sell when we think we can’t add any more value and it would be better off in someone else’s household.”

He says Breal tend to sell to either management teams, private equity or trade buyers.

“I could see looking forward that a group turning over £100m in the UK would be attractive to a Singapore brewer or an Indian brewer with very little assets on the ground here. I don’t know who will buy the business or even if we will sell it.”

He adds: “We are not the bad guys here. If it wasn’t for the pre-pack 80 people would have lost their jobs and Masham would have been devastated. There was no one else in the mix with us. We are in this to make money but we have probably saved 100 jobs so far across the whole group and kept some really great brands alive.”