Probably NOT the best beer deal in the world!

I am rather surprised that so few bloggers and beer writers picked up on last week’s story, concerning joint venture between Danish brewer Carlsberg and British brewer Marston’s. Under the deal, the Danish firm will own 60% of the new Carlsberg Marston’s Brewing Company with Marston’s holding 40%. The Burton-based brewer will also receive a cash payment of up to £273m.

This cash injection, whilst welcome, won’t go far towards easing Marston’s massive £1.39 billion debt; a burden they were planning to clear by selling off some of their less profitable pubs. Then, along came Corona-virus.

The merger casts doubt on the future of the other breweries and brands owned by Marston’s, in particular the Wychwood Brewery—home of Hobgoblin beers, plus well-regarded regional brands like Jennings and Ringwood. Veteran beer writer Roger Protz described the deal as “alarming,” adding he was worried about the fate of the Jennings Brewery in Cumberland, as well as the future of Draught Bass, which Marston’s contract brew, in Burton, on behalf of AB InBev. 

When approached, a spokesperson for Marston’s declined to be quoted, but denied there are any plans to close breweries. This is despite the two companies pointing to £24 million worth of savings said to come from streamlining brewery operations, logistics efficiencies and other reductions in overhead costs.

Marston’s’ pub business is not part of the deal, but written into the agreement is the guarantee of a supply arrangement for Carlsberg brands. This has prompted concern among many small brewers, that they will be squeezed out of the market.

The new business will offer a mix of Carlsberg’s mass-market lagers and Marston’s cask ale brands such as Hobgoblin and Pedigree, and will also be able to feed Carlsberg beers into Marston’s estate of around 1,400 UK pubs.

The Society of Independent Brewers (SIBA, warned the deal could make it harder for independent beer firms to get their beers into pubs. Their chief executive James Calder, said “This merger is the latest in a series of consolidating measures within the UK beer market, and has the potential to impact negatively on small independent brewers by further reducing the access to market they receive.”

Marston’s is the third national cask brewer to have been snapped up by a multinational corporation in barely a year—each time at a discount due to turmoil in the British economy. In January 2019, Asahi bought Fuller’s brewing business for £250 million, while Hong Kong property firm CKA paid £2.7 billion for Greene King’s brewing arm and pub estate last August.

The value of the pound has remained low since June 2016, when the U.K. foolishly voted itself out of the European Union, making these types of  transactions even more attractive to foreign investors. So much for taking back control! The fall in Marston’s share value, following the ongoing fallout from COVID-19, made this merger even more attractive from Carlsberg’s point of view, although they have since surged by 36%.  

Until this deal, Marston’s was the last remaining brewing group of any size, left in UK hands. Now, that honour has apparently passed to those Aberdeen-based upstarts,  Brewdog!