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Fuller's chief executive Emeny, assisting in the relaunch of London Pride in 2018:
brands in the hands of a focused international brewer would be the best outcome for maintaining the business

INTERVIEW: Fuller’s chief executive Simon Emeny 

In the days following the sale of their beer business to Asahi Breweries for £250 million, Fuller’s chief executive Simon Emeny was interviewed by The Brewery Manual regarding the rationale for the transaction that caught virtually everyone in the industry by surprise.

What’s happened in the last three to six months to lead you to reconsider selling the brewing business as part of the strategy going forward? 

I don’t think anything significant has happened in the last three to six months. I think what we have seen over the course of the last decade increasingly is a position where in a flat market the top four global brewers have not only had a big effect on the UK market but the wide proliferation of craft brewers and then more recently the global brewers buying craft brewers has made us think very carefully about our position in the squeezed middle, really. 

It has made us be aware of for some time that we’ve had enormous success with building our brands, particularly Cornish Orchards, London Pride and Frontier. Then actually, at a time when our pub estate is responsible now for approaching 90% of our profits, it’s made us wonder sometimes whether our brands in the hands of a more focused international brewer would be the best outcome for maintaining our beer business. 

We met Asahi. We felt that they have a similar rich vein of history to ourselves. We felt that they, in terms of their portfolio, had gaps in their portfolio. That would mean that our brands would be very welcome in their home and that they could certainly give our brands exposure to a much more broader audience than maybe we could do. 

So it was really a question of making sure we had the right partner going forward and in Asahi we found that was the case.

How did this partnership develop? Was it something you approached them about or was it them approaching you? 

It was somewhere in the middle, really. We are already trading partners of theirs, so we were already very familiar with them and we met their worldwide board a number of months ago. They spent some time in the brewery understanding about the heritage of our brands and were very excited about the prospect of maintaining what we have already created here at Chiswick but also taking it to another level.

Were there strategic alternatives considered other than a sale? Perhaps selling the Griffin Brewery and relocating?

That’s harder to do than you would think it is. One of the attractions to us of actually partnering with Asahi is that they’re very keen to brew at Chiswick. I think that particularly to our board and family members it was important, that it’s a sign that they care passionately about seeing it in the hands of owners who are equally excited about brewing here.

In terms of the strategic options, what else was considered, short of a sale?

Well, we’ve clearly been growing the business by acquisitions. We’ve had some very successful acquisitions of businesses like Cornish Orchards, Nectar and Dark Star. That was one of the strategic alternatives, that we continue to acquire. 

But it’s such a fragmented industry. Attempting to consolidate a sector that has 2,500 breweries would have been very expensive. We feel we, in terms of capital allocation, were getting very strong returns on investment in our pubs. We’ve looked at other strategic alternatives but this was by far the best outcome for the business. 

Did you look at licensing beer production elsewhere in the world? 

We have done but most companies actually want to own the brands themselves. 

It still seems, with the recent additions of Dark Star and Nectar Imports, a bit of a shock to have this happen now.
I’m sure it is and it’s not a decision we’ve taken lightly. In fact I think those two acquisitions have helped the business even more attractive to someone like Asahi. We weren’t going to sell the business unless we had a really exciting offer which is what we had from Asahi. 

At the time we bought Dark Star it wasn’t our intention to sell the business. 

I take it Asahi will secure the jobs that are in place at this time?

The vast majority of colleagues will either go to Asahi or stay with Fuller’s. There will be some redundancies but we’re working hard to make sure that’s kept to a minimum.

Leaving aside the dividends to shareholders, what are the plans for the capital coming in in terms of investing in the business?

We have a very successful position in our pubs and hotel business, around premium pubs and hotels. It will be our intention to continue to invest in a similar vein, to grow the estate not only through investing in our existing pubs but also through new acquisitions. 

But there’s something that we are prepared to be patient about and make sure that we invest in the right long-term opportunities.

Larry Nelson
7th March 2019

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