Carlsberg Marston’s Brewing Company, one of the UK’s largest brewers, rocketed into the headlines many times over the past 12 months. But why, and what’s the behemoth brewer’s business strategy to bolster its positive image in the year ahead?
Formed from the merger between Carlsberg UK and Marston’s Brewing Company in 2020, the venture produces household brands including Carlsberg Pilsner, Tuborg, San Miguel, Brookyln Pilsner, Hobgoblin and Marston’s 61 Deep for UK retail.
Yet since its creation, CMBC has continued to downsize its brewing footprint, shuttering five breweries following the merger, all of which were previously operated under Marston’s.
When two large businesses merge, consolidation can be necessary; removing duplicate operations to create efficiencies is key to financial stability and growth. CMBC’s speed and scale to cut operations, however, has drawn criticism from the beer and brewing industry, particularly among those who consider UK brewing heritage endangered.
So what is on the beer group’s agenda as 2024 unfolds? Are more cuts and consolidation in the pipeline, or will the giant now increase investment behind the remaining brands and breweries?
Brewery closures ‘prompted by declining sales’
The closure of Ringwood Brewery, on the Hampshire-Dorset border, was CMBC’s third in little over a year, having revealed it was to shutter Wychwood’s Hobgoblin brewery in September, and closed the Jennings Brewery in late 2022. The decisions for all three were made due to declining sales of the brands brewed at the sites.
It also sold off the Eagle Brewery in Bedford to Damm, and offloaded London Fields to Grace Land Group.
Of the CMBC brands produced at these breweries, only Hobgoblin Ruby and Hobgoblin Gold made it into the top 25 ale and stout brands, according to NIQ data in The Grocer’s Top Products Survey 2023 [NIQ 52 w/e 9 September 2023].
These two products lost a combined £1.8m on volumes down 11.3% in retail, while cask ale sales (which the closed breweries predominantly made) in the on-trade have been dropping for many years.
Such declines will inevitably prompt a resourcing rethink, hence shifting production to other larger CMBC facilities, which arguably makes financial sense.
“By making use of the break clause in our lease for Wychwood Brewery, we can consolidate our brewing network to achieve greater efficiency and productivity, supporting ongoing investment in our people and business,” noted CMBC chief executive Paul Davies in a statement in September.
So why the anger from those outside the business?
Ale brewing heritage ‘being lost’
The answer is, at least partly, sentimental. Brewing at Jennings had taken place for almost 200 years until CMBC shut down the facility in November 2022, while a maltings existed on the site of Wychwood brewery from at least 1841.
Closing these sites and moving production of the brands made there (CMBC has said it intends to brew Jennings, Ringwood and Hobgoblin beers at its breweries in Burton, Wolverhampton and elsewhere “in the CMBC network”) means the loss of centuries of brewing history, according to beer writer Roger Protz.
“We’re losing our heritage as a great ale brewer, whilst the market is being flooded by mass-produced lagers, which have been thrust down the throat of people in this country because they’re much more profitable than ale,” he says.
When Carlsberg Marston’s talk about the decline of the sector, it depends on who you talk to
Roger Protz, beer writer
The decision of CMBC to shutter its regional cask breweries, whilst investing more than £10m at its Northampton brewery to increase production of its ‘snap pack’ cans of Carlsberg lager, is evidence of the shifting priorities of the venture, according to Protz.
“At Jennings under Marston’s ownership, £1m was spent drying out and getting the brewery going again after flooding,” he says. “Stephen Oliver, the then-managing director of Marston’s, said ‘it doesn’t matter what it costs, we’re going to get it up and running again’.
“Now, under CMBC, Jennings is closed.”
Unsurprisingly, Protz doesn’t buy the argument that cask and traditional ales aren’t profitable or popular enough to warrant investment. He points to Timothy Taylor in Yorkshire and Robinsons Brewery in Stockport, both of which say more beer is being brewed now than pre-Covid, as well as the fact Guinness recently became the UK on-trade’s most popular beer.
“When Carlsberg Marston’s talk about the decline of the sector, it depends on who you talk to,” he says. “I think if you believe in the product, you will get behind it.”
Approached by The Grocer for comment, CMBC chief executive Paul Davies said the company remained “incredibly proud to be a leading brewer of cask ale” despite the “incredible competitiveness of the UK beer market and the challenging environment for cask”.
“The economic outlook means we are having to navigate means we’ve had to carefully consider how we operated and what we invested in to ensure the health and success of CMBC in the long-term,” he said. ”We’ve been investing in our Marston’s and Banks’s breweries and optimising operations for greater efficiency. These steps, crucial for our future, reinforce our commitment to a thriving, sustainable ale industry.
“We’re passionate about our work in ale, and despite the overall decline in the ale category, we are gaining market share, particularly in craft and premium canned ales. CMBC has one of the widest and best portfolios of ale brands, including old favourites such as Pedigree, alongside adding new beers to help drive the category forward, such as Hobgoblin Session IPA and Wainwright Amber Cask.”
However, just last week CMBC announced it would be retiring the four remaining ’Union Sets’ of fermenters at Marston’s Brewery in Burton-on-Trent. The sets had been used to exclusively ferment Marston’s Pedirgree for cask format. Marston’s Brewery had been the last in the UK to use this system for producing cask ales. This “hugely disappointing move” would, according to CAMRA chairman Nik Antona, ”see a unique and historic part of Britain’s brewing heritage declared completely extinct”.
CMBC’s sustainability push
So if ale isn’t at the forefront of the agenda for CMBC, what is?
The aforementioned push to improve the sustainability credentials of CMBC’s main lager brands will undoubtedly remain a focus. At a top level, the Carlsberg Group has set the target of working towards zero emissions at its breweries by 2030, and across its entire value chain by 2040. It’s also committed to powering its breweries with 100% renewable electricity by 2030.
Achieving this means investment in sustainable production methods and packaging. To that end, CMBC announced in March it would be using exclusively regenerative barley in Carlsberg Danish Pilsner by 2027, and all of its other UK-brewed brands by 2031.
Snap-pack, the plastic-free method of sticking together multipack cans first introduced by Carlsberg Group in 2018, has also taken centre stage in CMBC’s efforts to improve sustainability in its packaging.
CMBC says the investment of more than £10m in Northampton will allow it to eliminate plastic rings from its four and six-can multipacks entirely by the end of 2024. The technology has so far been used across CMBC’s portfolio on brands including Carlsberg Danish Pilsner, San Miguel, Birrificio Angelo Poretti and Brooklyn Pilsner.
Premium lager and low & no focus
From a brand perspective, the focus has been predominantly on Carlsberg’s premium and world lagers such as San Miguel, Kronenbourg and Brooklyn Pilsner. The latter brand made its UK television debut in 2022, as well as becoming the official beer of Glastonbury Festival, as CMBC sought to establish the product in both the on- and off-trade. Kronenbourg, meanwhile, came into the CMBC fold in June 2023, having previoulsy been distributed in the UK by Heineken.
San Miguel is also benefiting from increased investment from CMBC, on account of renewed interest in world – and especially Spanish – lagers. A multimillion-pound campaign, launched in summer 2023, aimed to emphasise the brand’s credentials as an “authentic” Spanish lager. It’s helped San Miguel add £20.8m on volumes up 5.4% in grocery [NIQ 52 we 9 September 2023].
Another area in which CMBC – like many global brewers – is turning a greater amount of its attention to is low & no-alcohol. At a group level, Carlsberg has set itself the aim of having 35% of its brews globally made up of low-alcohol or alcohol-free products by 2030.
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In the UK, that’s meant a third crack at Carlsberg 0.0, as well as increased investment behind a portfolio of low/no products that includes Erdinger Alkoholfrei, Brooklyn Special Effects and San Miguel 0.0.
While ale tends to skew itself towards an older consumer base, the focus on low & no – given current drinking habits among younger adult consumers – looks a shrewd move. Just last week, YouGov reported almost half of 18 to 24-year-olds consider themselves as either regular or occasional drinkers of low & no alcohol products.
The cohort is now the largest consumer of low & no alcohol alternatives in the UK, so by prioritising growing this area of its portfolio, CMBC will be setting itself up to benefit in the future.