UK Brewing Industry Research Articles

Whitbread: routines and resource building on the path from brewer to retailer

This study investigates the UK former family firm, Whitbread, and its transformation from traditional brewer to leading leisure retailer comprising two main business lines, Costa Coffee and Premier Inn hotels. An unexpected regulatory intervention in 1989 all but ended the centuries-old vertically integrated model of the UK brewing industry, of which Whitbread was an important member. The major brewers were challenged to find alternative business models and growth trajectories. In the subsequent structural and organizational change of the 1990s and 2000s, Whitbread was the only original brewery group name to survive in the public domain as the others disappeared in industry-wide consolidation. Few observers would have anticipated Whitbread’s endurance, let alone the nature of the Whitbread that emerged from this process. As important to the narrative of a 250-year family legacy founded on socially conscious entrepreneurship and financial prudence, is a rare ability to respond and adapt to changing institutional conditions through continuous experimentation and innovation set against the backdrop of an industry constrained by the dominant logic of maker rather than seller.

Vertical and financial ownership: Competition policy and the evolution of the UK pub market

Traditionally the UK brewing industry was vertically integrated with brewers owning and controlling pubs. This came to an abrupt end in the forced divestment of a large proportion of the major brewers' pub estates in the 1989 ‘Beer Orders’. The divested pubs spawned the independent pub companies. This study of regulatory policy and financial services interest in the UK brewing industry poses the question of whether the original industrial structure was preferable to what has emerged subsequently. The contribution of the article is in highlighting the risks and rewards of regulatory intervention in deeply-embedded organisation and the sustainability of alternative business models that emerge.

Competition Policy and Financialization in the UK Brewing Industry

Traditionally the UK brewing model was one that incorporated vertical ownership and control of public houses (pubs). The political affiliation of the leading firms and their powerful lobbying inter...

Consolidation by merger: the UK beer market

This paper examines the determinants of market structure in the UK brewing industry over 1949–1969. Sutton (Sunk costs and market structure: price competition, advertising, and the evolution of concentration, 1991) points to technology and advertising races as two key drivers of market concentration. This study uses an own-built longitudinal data set of the population of firms and breweries, and reveals the importance of institutional factors in explaining the dynamics of market structure. The practice of tying outlets to brewers and legal restrictions on opening retail outlets, together with a permissive policy towards mergers, made acquisition of medium-sized firms and brewery closure (shortly after acquisition) the main driving mechanism towards industry consolidation. During this period, the number of firms and plants fell sharply (by 74% and 60%, respectively) and production rose (by about 25%), with no firm entry and just one new brewery opening. As a result, concentration increased and the market transformed from a highly fragmented one into a stable oligopoly.

Does time impact relational norms in bilateral exchange? The small business case

PurposeThe purpose of this paper is to assess empirically the presence of relational norms and the effect of time during the “transitory” and “established” phases of bilateral exchange for small business enterprises. Relationship development has recently become a central research focus in business management literature and is currently gaining more prominence when addressing the small firm sector. To‐date conceptual work has concentrated on the development of business‐to‐business relationships through sequential time dependent stages, including empirical work on the dimensions of relational norms. However, little attention has been given to role of time in this process of relationship building.Design/methodology/approachThe commercial setting is the UK brewing industry which is characterised by a few large suppliers (breweries) and many small retail buyers (public houses). The focal dyad for the study is the brewery‐public house relationship. Data was gathered through a telephone survey to: confirm the presence and structure of relational norms between trading partners; and assess whether time impacts the development of these norms.FindingsFor longer established bilateral exchange covariance based structural equation modelling confirmed the presence of relational norms as a higher order construct reflected by three dimensions: flexibility, information exchange and solidarity. Further, regression analysis supported a positive relationship between the length of the trading partnership and relational norms.Research limitations/implicationsThe implication of this study is that trading partners should nurture relationships through its early developmental stage to ensure enduring successful partnerships. The study needs to be replicated using a longitudinal design and alternative dyadic relationships, e.g. franchising and dealership arrangements.Originality/valueThe research provides empirical evidence supporting business‐to‐business relationship conceptualisations underpinned by social exchange theory.

Mergers, brand competition, and the price of a pint

Mergers in the UK brewing industry have reduced the number of national brewers from six to four. The number of brands, in contrast, has remained relatively constant. We analyze the effects of mergers on brand competition and pricing. Brand-level demand equations are estimated from a panel of draft beers. To model brand-substitution possibilities, we estimate the matrix of cross-price elasticities semiparametrically. Our structural model is used to assess the strength of brand competition along various dimensions and to evaluate the mergers. In particular, we compute equilibria of pricing games with different numbers of players.

Will progressive beer duty really help UK small breweries? a case study in profit appropriation

Both the Campaign for Real Ale (CAMRA) and the Society of Independent Brewers (SIBA) argue that barriers to market access in the UK brewing industry disadvantage small brewers. They have been actively campaigning for a number of years for a tax concession (progressive beer duty or PBD) to alleviate the situation of small brewers. This paper argues that the disadvantages faced by small brewers are due to a complex monopsony in the beer industry, where the power of the distribution segment of the value chain is paramount. It outlines a model of the structure of the UK beer industry, and undertakes two types of empirical analysis to test the potential impact of PBD on the small brewery sector. The paper finds that control over distribution is the key to profitability and survival in the beer industry, and that small brewers with such control are most likely to benefit from PBD. The findings, however, also have relevance to the position of any small business facing a powerful distribution segment. Finally, for the issue of policy development, the paper indicates that the potential outcomes of a policy change may not be entirely those intended.

Strategy and Relationships: Defining the Interface in Supply Chain Contexts

The emergence of the network organization is a phenomenon that has given rise to much comment and analysis. These virtual organizations are characterized by a confederation of specialist skills or capabilities provided by the network members. It is argued that in turbulent environments such collaborative arrangements can provide a more effective means of satisfying customer needs at a profit than the single firm undertaking multiple value‐creating activities. The implications of the network organization for relationship management are considerable. In particular, the challenges to logistics management are profound. The analysis of relationships is clearly linked to competitive strategy in a network context, yet the exploration of the interface between relationships, strategy and supply chain management is far from complete. Therefore, this paper seeks to conceptualize the relationship strategy interface in supply chain contexts. A framework is proposed and its basic principles illustrated through an analysis of the development of relationship strategies between leading market players in the UK brewing industry.

The Development and Implementation of Co-Managed Inventory Agreements in the UK Brewing Industry

ABSTRACT This paper reviews some of the existing literature on the subject of Co-Managed Inventory (CMI) and its antecedents, placing CMI within the wider lexicon of Efficient Consumer Response (ECR). It then moves on to consider the background and circumstances of the adoption of CMI by a number of leading players in the UK brewing industry, before presenting an empirical study of two of the programmes underway. Drawing on the experiences of these early adopters as they pass through the initial stages of implementation, it identifies some of the wider business implications ensuing from the introduction of these cooperative inventory management agreements.

An empirical analysis of the effects of the Monopolies and Mergers Commission Beer Orders (1989) on the UK brewing industry

The aim of this paper is to analyse the structural changes in the UK brewing industry, resulting from the Monopolies and Mergers Commission's (MMC) Beer Orders, 1989. Our discussion is supported by an empirical analysis of the effects of these recommendations on the demand for beer in the UK. The empirical results indicate no significant change in the national market following the recent government interventation.

Market Change, Distribution, and New Firm Formation and Growth: The Case of Real-Ale Breweries in the United Kingdom

Many of the most influential accounts of the growth in the numbers of new businesses being started and the general increase in the economic significance of the small-business sector draw upon flexible specialisation theory, which explains such trends in terms of the breakup of the mass market for standardised goods and services and the consequent emergence of a variety of smaller niche markets capable of exploitation by new or small businesses. In this paper our purpose is to suggest that the opportunities for new firm formation and growth arising from such changes may be more circumscribed than have hitherto been acknowledged. Drawing upon evidence from the UK brewing industry, which has seen the creation of many hundreds of new breweries during the past twenty years, we highlight the role of distribution channels as a significant barrier to the growth of the small-business sector. Changes to the regulatory environment (the Beer Orders) in an attempt by government to improve the competitiveness of the UK brewing industry have, paradoxically, had the opposite effect to that intended, and so have failed to increase market opportunities for microbrewers. Future research must give greater attention to the role of distribution in order to achieve a better understanding of the changing structure and spatial organisation of production.

Manual Handling in the Uk Brewing Industry

Manual Handling in the Uk Brewing Industry

Product Liability: Implications for the Brewing Industry

Highlights the growing impact of product liability on retailers, manufacturers, suppliers and consumers in the brewing industry. Amongst the major findings of the study are: the UK brewing industry tends to view product liability in the same way as health and safety, conform to the standards and everything will be okay – this approach considers the criminal aspects of liability but blindly ignores the dangers of increased civil activity against them; product liability problems with beer stem mainly from the packaging process where objects may have got into the bottle/can, and tampering is on the increase in the industry. Points out that brewers can protect themselves against product liability claims by ensuring technical evaluation is available on all delivered products; ISO 9000 series registration; ensuring that all products retailed are properly labelled; setting up a recall pressure plan and practising it; establishing a crisis management team and identifying the logistical support required.

The UK Brewing Industry: Past, Present and Future

Traces the diversification of some of the major companies in the brewing industry into leisure‐based interests. Identifies how current social and economic trends, coupled with some dramatic changes in the legalities of the brewing industry have forced brewers into a clarification of their long‐term objectives.

Leasing Developments in the UK Brewing Industry

Notes that major brewers and some regional operators are now replacing traditional tenancy agreements with assignable commercial leases. Examines the background to these developments, the differences between the leasing arrangements now being offered and some of the problems so far encountered. Concludes that, courtesy of the Monopolies Commission, the very evident need for improved returns on capital for the big brewers means that assignable leases are here to stay.

Understanding Plant Closures: The UK Brewing Industry

Understanding Plant Closures: The UK Brewing Industry