Carlsberg UK and Marston’s have agreed to form a joint venture beer company in the UK. The creation of the £780m business will allow the two companies to merge their operations and save costs at a time when their sales have fallen dramatically due to the closure of pubs and restaurants during the coronavirus lockdown.
Both firms will inject their brewing and distribution assets into the joint venture that will be called the Carlsberg Marston’s Brewing Company.
Marston’s will receive a £273m cash payment from Carlsberg as part of the deal. Consequently, Carlsberg will become the controlling shareholder, owning 60% of the joint venture, with Marston’s owning 40%.
The new company will have access to an extended portfolio of brands. Carlsberg’s brands include its Danish Pilsner, Expørt, Poretti, Tetley’s, Somersby cider and the London Fields Brewery lines, as well as the UK licence for San Miguel and Mahou. The Marston’s portfolio includes Hobgoblin, Wainwright, Marston’s Pedigree and 61 Deep. It also has the UK licence for global brands such as Estrella Damm, Shipyard, and Warsteiner.
The company’s assets will include Carlsberg UK’s Northampton brewery, London Fields brewery, and national distribution centre; and Marston’s six national and regional breweries – Marston’s, Banks’s, Wychwood, Jennings, Ringwood and Eagle – and 11 distribution depots.
The proposed deal will see the joint venture have access to Marston’s 1,400-strong pub estate for its beer portfolio through a long-term supply and distribution agreement.
It will also benefit from the Marston’s Beer Company’s wide distribution network which covers 11,000 customers, including the independent free trade, other pub companies, the off-trade and export.
The two firms stated that the tie-up would deliver annual cost savings of around £24m by the end of the third year following the completion of the deal.
Current Carlsberg UK Managing Director, Tomasz Blawat, will be appointed CEO of the Carlsberg Marston’s Brewing Company, with current Marston’s CEO, Ralph Findlay, appointed as Non-Executive Chairman. Meanwhile, Richard Westwood, current Managing Director of Marston’s Beer Company, will be appointed as Chief Operating Officer, Integration.
Blawat commented: “We are excited to move into the next phase of our growth strategy. After a successful relaunch of Carlsberg Danish Pilsner in the UK last year, we are now building a new beer company by combining two organisations with shared values and strong history and heritage in brewing.
“Our intent for Carlsberg Marston’s Brewing Company is for it to become a platform for growth for all of our customers and suppliers, offering a bigger beer portfolio of complementary international, national and regional brands. We believe the new business will deliver even more value for employees, customers and consumers, thereby creating greater future growth potential.”
Findlay added: “Marston’s strong heritage, extensive distribution platform and established reputation for brewing and logistics excellence, together with Carlsberg UK’s global brand portfolio and scale, combine the best attributes of both to create a compelling beer business with an outstanding portfolio of global and local beer brands, proven brewing expertise, strong distribution network and wholesale opportunity.”
The deal is expected to be completed in the second half of this year, subject to shareholder approval and competition clearance.
NAM Implications:
- Obvious benefits for each company…
- …with possible adjustments required in prices and terms, especially in off-trade.
- Meanwhile, NAMs should regard this as a pointer re other supplier and retailer concentration post lockdown…
- …and prepare accordingly.
