Exclusive: Brewer Theakston warns of decline in the real ale market

Theakston, which was returned to family ownership nearly eight years ago, increased profits by more than a third to £1.35m despite sales dipping below the £10m barrier.

The brewer of Best Bitter, Old Peculier and Black Bull Bitter said it had performed well in a tough market but warned that real ale is in long-term decline.

Turnover for 2010 fell to £9.91m, compared to £10.54m the previous year, but the firm was boosted by the strength of its exports, especially to America, and more demand for its premium brands.

Executive director Collin Wood told the Yorkshire Post: “It has been a series of strong results since the brewery became independent (but) the marketplace is tough.

“There has been a very significant move from drinking in pubs and clubs to drinking at home. The financial dynamics of those two are very different.”

Theakston, founded in 1827 and based in Masham in North Yorkshire, was taken back into majority family ownership in 2003 when the four Theakston brothers led a buyout from drinks group Scottish & Newcastle.

Last year Theakston resumed exports to America and today its beers are also sold in continental Europe, Australia and Mexico.

Mr Wood said the owners had invested “six figure sums” in the brewery’s technology and plant equipment every year since the purchase from Scottish & Newcastle.

He added: “We will continue with our capital investment programme. We are doing the same this year, next year and the year after.

“We are committed to it for the long-term. The brewery in Masham is at the centre of everything we do. It is an old Victorian brewery that requires investment over time.”

Production of Best Bitter returned to the brewery two years ago, made possible only after a programme of investment to double capacity.

After buying the business the four brothers began building substantial cash reserves to pay for increased production at the brewery. Development work includes a doubling of the fermenting capacity, the creation of new storage facilities and upgrades to equipment. Theakston added Lightfoot, a seasonal light ale, to its classics roster, meaning it will be produced permanently. The beer was created as a tribute to Lightfoot Brewery, Masham, which Theakston bought in 1919.

This week, however, the directors warned of the impact of changing tastes and expressed frustration at the level of taxes on beer under the alcohol escalator, which means the levy rises at an above-inflation rate. The policy has prompted the Campaign for Real Ale to warn of nationwide pub closures and thousands of job losses in the industry.

In Theakston’s accounts for 2010 the directors wrote: “The UK beer market continues to be highly competitive, principally as a consequence of further significant restructuring.

“Within this, the ale sector continues to be in long-term decline... (But) the introduction of progressive beer duty in 2002 has led to the creation of unintended market distortions which, as a consequence of the rise in beer tax... offer an increasingly significant advantage to small scale, micro brewers of cask ale.”

Mr Wood warned the escalator puts “massive pressure” on the brewers and makes drinking in pubs more expensive. The British Beer and Pub Association has repeatedly lobbied Government on the issue.

“Pubs are closing at a very significant rate. With closing pubs comes lost jobs. In rural communities closure means the loss of a local amenity,” Mr Wood said.

“The BBPA has made a series of presentations to successive governments regarding the level of the escalator.”

Mr Wood was previously managing director of Theakstons when it was part of S&N. He switched roles as part of the family buyback.

The company is majority owned by Simon Theakston, an executive director, and brothers Nick, Tim and Edward Theakston, all non-executive directors. Mr Wood also has a stake.

The brewer is backed by a holding company but Mr Wood declined to reveal its details, other than to say its trading was accurately reflected in T & R Theakston’s accounts. Profit figures for Theakston and its parent were the same in 2010.

A family affair

THEAKSTON has been part of the Yorkshire landscape since 1827, despite various changes in its ownership and structure.

Theakston had been sold to Blackburn-based Matthew Brown in 1984 which, three years later, was taken over by Scottish & Newcastle

The great-great-grandsons of founder Robert Theakston took majority control in 2003 – which meant the Theakston family controlled two breweries in Masham. Simon Theakston’s cousin Paul Theakston previously left to launch the Black Sheep Brewery after disagreeing with the sale to S&N in 1987.

Today Theakston is also known for its sponsorship of the Old Peculier Crime Writing Festival in Harrogate.