Annual Review 2015
Contents
contents
Chairman’s report
4
financial review
6
brewing10
marketing11
Quality Assurance
12
sales14
packaging15
customer service
16
uk pubs
18
charles wells france
21
managed pubs
22
Cockburn & Campbell
24
French Free Trade
25
Scotland26
italy27
Keep
an eye out
for this little
lightbulb throughout
the review to discover
some of the bright ideas
we’ve implemented to
save money, reduce our
environmental impact
and contribute to our
community.
2
Charles Wells Annual Review 2015
Chairman’s Report
Chairman’s Report
Chairman’s Report
This has been a year of
steady progress in each
of our operations.
At the start of the 2015 we launched
our ‘One Team’ project to re-unite all
parts of the business under the Charles
Wells banner on the brewery site. Our
corporate identity was revised, the
office space was creatively opened up
and a new chapter in the company’s
long history commenced.
The year has been one of steady
improvement in many respects. In
financial terms turnover grew by £1.7m
to £188.9m and operating profit
increased to £8m. Our total borrowings
reduced to £49.8m and interest costs
also fell. In brewing and brands we
increased volume and margin and in
our retailing we invested in new
developments to good effect.
4
brewery
Despite indifferent weather in the year
the brewery made progress, with new
products and new market
developments leading the way. Both
owned and agency brands did well,
with London Stout and Estrella Damm
demonstrating effective marketing and
vigorous sales. Outside the UK volumes
were impacted but, despite the
weakening Euro and further sanctions
in Russia, our proportion of sales
outside the UK was maintained at 17%
of total sales.
Our French pubs weathered the
economic downturn in France
reasonably well, although our sales
were affected in the first half but
recovered as the summer started. We
have identified several new sites for
acquisition, two of which are existing
pubs and completion will have taken
place after the year end. The English
Country Kitchen, which is a move into
the tea room market, has been steadily
building a reputation and is now at a
good level of turnover.
outlook
This last year has been challenging in
many areas of the company but we
have made great progress and plans
are laid which will continue to deliver
results this year. In last year’s report I
mentioned the economic headwinds
and they remain strong; consumer
confidence is still recovering, the beer
market is alive with new breweries and
brands, and we need Sterling to be
competitive for exports.
In this year we will continue to develop
our beer brand and pub portfolio with
the same careful determination which
characterises your company. The
consumer is at the heart of everything
we plan, and we must give them the
best quality experience, whether it is a
glass of beer or a celebration in a pub.
The
Charles
Wells Board of
Directors
(LtoR) Andrea Holton,
Paul Rawlinson, Peter
Wells (seated), Anthony
Fryer, Justin Phillimore,
Paul Wells (seated),
Tony Mair, Bob
Ivell
After close to eighteen years as
Managing Director I am pleased to be
handing over, and I know Justin and his
team will be very effective. In closing I
would like to take this chance to record
my thanks to all the people I have had
the privilege to work with over those
years. The company is its people, and it
is they who make it successful.
paul wells, chairman
people
pubs
We have continued to invest in our
pubs with a plan to make each
investment the best possible for the
site. Our largest investments have been
on pubs which we run ourselves and
we now have four under management
in the UK with a full pipeline of projects
for 2016 and 2017. We will maintain
very strong partnerships with talented
operators for the majority of our pubs
as the business model works better for
those sites. It is still the case that
recruiting the best possible partner in
each pub is the key to success.
In September we announced changes
to the board of directors with the
appointment of Justin Phillimore as
Chief Executive of Charles Wells. Justin
will have overall executive responsibility
for the company and I will continue to
chair the board. Peter Wells was
appointed to the new role of
Commercial Director with responsibility
for sales and marketing in brewing and
retailing.
Charles Wells Annual Review 2015
www.charleswells.co.uk5
Financial Review
Financial Review
Financial Director’s Report
Sales income for the group
increased in the year by
£1.7m with this increase
coming from the brewery.
Our beer range continues to develop to
match consumer demand for craft beer
and innovation, and we have been
successful both at home and abroad in
this area.
Our continued focus on improving the
long term sustainability of our pub
estate saw five smaller and unviable
sites being sold in the year, generating
£1.3m of sales proceeds.
To allow for the continued innovation in
and development of our beer brands
we continue to invest strongly in the
brewery. The £1.2m replacement of the
brew house control system, which we
referred to in last year’s accounts,
continues at pace and will complete
during 2016. In addition a further
£1.9m of investment has been made
within Charles Wells Brewery during
2015.
Despite challenging economic
conditions in France, Charles Wells
France has again performed strongly
from its 11 sites. Convoluted planning
regulations has hindered expansion
plans although our second site in Paris
has now been secured and will
become our 12th trading site by the
end of December 2015.
Operating profit before exceptional
costs was £8.0m, which is 4% higher
than last year. This was due to steady
sales margins and strong cost control
across the Charles Wells Group.
Whilst no new pubs were acquired in
the UK during our financial year to
September 2015, we have continued to
invest strongly in the estate, with more
than £2.5m being spent on the UK
estate, an average of £12,600 per pub.
2015 also saw Charles Wells expand its
managed house portfolio in the UK with
Merlin’s Cave in Chalfont St Giles
transferred from the leased and
tenanted estate and also Cox’s Yard in
Stratford being taken back from a sublet to a local operator. This brings the
Apostrophe pub estate up to three
houses with two further sites identified
and progressing.
6
Financing and Treasury
Borrowings at the end of the year were
£49.4m compared to £51.2m in 2014.
Interest for the year of £3.3m
compares well with the £3.2m in 2014
as we have enjoyed steady levels of
borrowings and a stable level of
interest rate.
Defined Benefit Pension
Scheme
Following last year’s closure to future
accrual for the three defined benefit
pension schemes, further work has
been undertaken this year to identify a
long term deficit reduction plan which
allows the pension obligations to be
met at the same time as allowing
continued investment into the
operations of the group.
Both the company and the pension
trustees have worked tirelessly to
reach the desired outcome for all
concerned and as of February 2015 a
20 year deficit reduction plan has
been agreed. This also saw the three
closed schemes merge into one
scheme allowing a six figure saving on
annual running costs for the closed
defined benefit scheme.
Exceptional costs
For any transaction which is nonroutine, we are required to show the
value to the Profit and Loss account as
exceptional. In total, the group has a
net cost of £0.3m for such items during
the year to September 2015. This was
made up of £0.5m of restructuring
costs and a £0.2m credit relating to the
reversal of an asset impairment booked
in a previous year.
A simplified profit and loss account
For the 52 weeks October 2014 to September 2015
What income we have generated
£’000
The Group’s turnover is the total amount of money that has been charged for our products and services. It includes sales of beers,
wines and spirits, rent from the tenants of Charles Wells pubs and trading income from our French sites.
Turnover
188,842
What we have spent
Out of this, we have to pay for:
Raw materials, wines, spirits and beer from other brewers
81,440
Beer duty - the governments share
55,953
Wages, salaries and pensions19,934
Repairs to licensed properties810
Repairs to the brewery1,498
Depreciation and amortisation5,718
Tax
Other operating costs15,486
The Chancellor of the Exchequer,
George Osborne, maintained his
support for the brewing industry by a
third consecutive year of duty cuts
within the budget and, as in the
previous two years, we took the
decision to pass the 1p per pint saving
on to our brewery pub licensees.
The importance of our single brewery’s
contribution to Exchequer coffers
continues to be a key point to note. In
the year to September 2015, the
percentage of tax paid in relation to
turnover was 33% and totalled £62m.
This includes excise duty, employment
taxes and corporation tax. In addition a
further £18m was paid in VAT.
Total expenses
180,839
Operating Profit
8,003
Property profits - The profit made on disposal of non core assets
2,061
Finance income on pension scheme1,176
What’s left
We are now left with our operating profit before exceptional costs
11,240
from which we have to reflect:
Exceptional items-318
Interest payable - on money borrowed from the bank and other institutions
-3,309
Interest receivable4
Profit before tax
7,617
Our profit is then divided between:
anthony fryer,
finance director
Corporation tax - reclaim to use against amounts we have paid in the past
201
Deferred tax - non-cash item predominantly relating to pension scheme funding
Dividends - the share holders return
Exchange difference - the impact the weakening Euro has on our French business
Employee share scheme - annual charge for our employee benefit scheme
Pensions - annual revaluation of defined benefit pension scheme
2,189
-2,044
-38
-3
-2,724
Charles Wells Annual Review 2015
5,198
Historical retained profits at start of the year
76,525
Historical retained profits at end of the year
81,723
Financial Review
Financial Review
A simplified balance sheet
A simplified cash flow
On 26th September 2015
For the 52 weeks October 2014 to September 2015
What we own
£’000
What trading cash we generated
Fixed assets - the brewery, public houses and other assets
106,075
Operating profit before exceptional costs11,240
Brands - beer brands that the Group has purchased
Stock - raw materials, beer, wines and spirits
Debtors - money owed by customers and others
51,391
9,226
£’000
Depreciation and amortisation - added back as this is not a cash item
5,718
Earnings before interest, tax and depreciation (EBITDA)16,958
47,970
Cash4,759
What other cash came in to the Group
219,421
Sale of non core pubs - the proceeds received
Less what we owe
Sale of non core pubs - the profit already counted in operating profit
-2,061
Working capital movements - changes in our levels of stock, debtors and creditors
-5,325
Creditors - for supplies of raw materials, wines, spirits, duty, VAT,
tax, dividends, services and equipment
66,275
Loans - long term money borrowed to run the business
49,829
Deferred tax155
Defined benefit pension scheme liability20,149
136,408
Share capital and reserves
83,013
1,290
Historical profits
81,723
Shareholder funds
83,013
8
Working Cash flow
What other monies we spent
Investing in our pub estates in both France and UK
12,474
£’000
6,183
Monies paid into the defined benefit pension scheme328
Dividends paid to shareholders
2,044
Interest paid2,940
Net Assets
2,902
Charles Wells Annual Review 2015
Corporation tax refunded by HMRC
Total Cash Outflow
Net cash movement for the year
-799
10,696
1,778
www.charleswells.co.uk9
Brewing
Marketing
Where the MAGIC happens
The most exciting project for us
brewers this year was the development
of Charlie Wells Dry Hopped Lager. To
set it apart from our competitors’
lagers we turned to dry hopping, a
technique more commonly used with
ale; the beer undergoes a two week
cold conditioning stage, where Galaxy
and Ella hops infuse a tropical fruitiness
into the beer. Gentle rounded
maltiness, a soft palate, and a slight
sweetcorn flavour from the malt,
combine with new world hop character
to give it a real lift.
The biggest challenge was getting the
beer right for international markets –
they were looking for something more
hoppy and robust, so we rejigged the
recipe with an increased hop rate that
give it the extra oomph we were
looking for.
We’ve now completed our first full year
on a three shift pattern, and this setup
feels much more embedded. We have
seen some great teamwork; the
change in shift pattern was undeniably
stressful, but the team have really
gelled in their new structure, and are
motivated to keep producing great
beer, demonstrated by meeting our
volume targets for the year.
Work has taken place in the filter room
– improved filterability has given us
longer filter runs, meaning a more
uninterrupted supply of beer to be
packaged. This in turn leads to reduced
losses and reduced effluent, which is
good news for both us and the
environment. We’ve also achieved a
significant decrease in time lost while
waiting for beer to be packaged, across
all four of our packing lines – we now
sacrifice less than two hours a week for
both cask and keg combined,
compared to four hours just a couple of
years ago.
The biggest challenge we faced this
year was an abrupt shortage of CO2
when our supplier ran dry in the early
summer. This meant significant
rationing and very tight control of both
production and packaging, but I’m
proud to say that our customers never
knew the difference – our supply of
beer to them was uninterrupted.
Meet
Chris Reid,
Technical
Brewer
10
FOND FAREWELLS, HAPPY
HOW-DO-YOU-DO0S
Following the sad passing of Rik Mayall, the face of Bombardier, we worked
hard to find a personality who could fill his shoes as William Charles
Bedford. That personality turned out to be Bob Mortimer, a great fit for our
flagship brand, and a full design relaunch was planned to coincide with his
appointment.
The resulting St. George’s Day execution turned out to be one of our most
successful to date. We made more of a fuss at the point of purchase;
research shows that drinkers’ purchasing decisions are hugely influenced
by the presence of a brand on the bar itself, so we added little cannons
and sleeves to our pump handles, and included some striking new pump
clips to highlight both Bombardier English and the now permanently
available Bombardier Burning Gold.
2015 saw our
first company-wide
Employee Opinion
survey, with all of our
colleagues answering
the same questions and
giving their feedback as
One Team.
An ongoing theme for us is that of cost
savings; while our colleagues in Sales
are working to maximise revenue out in
trade, we’re working equally hard
behind the scenes to ensure that our
overheads do not eat into our profits.
Project Scarlet, an initiative to address
losses in the brewery, has made good
progress this year: we’ve achieved
savings of £224k. Improved
management of yeast processing,
higher gravity brewing and the
introduction of conditioning tank
bottom collection and pre-processing
have all contributed. Phase two of
Project Scarlet, which will be bigger
and better, is planned for the year to
come.
Charles Wells Annual Review 2015
Bombardier finds itself in a challenging situation, competing against small
craft outfits. Consumers’ ‘beer repertoires’ are bigger now, with kegged
and canned ales now acceptable, but our new imagery is impactful, and
ensures that Bombardier can compete aesthetically on the bar.
Another big focus this year was the launch of Charlie Wells Dry
Hopped Lager. Everyone in town still refers to us as ‘Charlie Wells’,
so to bring our founding father to life via this new brand and celebrate
his story means a lot. Charlie’s new look was 18 months in the
making and meshes perfectly with the more informal craft beer
market that has emerged; not many breweries have done
something as interesting with their lager,
so it really stands out.
Young’s London Stout has also
flourished under its modern branding –
it’s now installed in the majority of
Young’s pubs, and over 100 Charles
Wells sites. Based on an original
recipe from the 1800s,
predating Irish stout,
ours is the real deal.
The look, name
and taste are all on
form, and it’s
starting to claim
some real market share
as people realise that stout is no
longer a one-brand marketplace.
Beer can act as a talking point
amongst friends, but also as the
genesis for a great night out. If
they break their conversation to
comment on their ‘nice pint’,
we’ve done well.
www.charleswells.co.uk11
Quality Assurance
Quality Assurance
Total brews this year
54
tonnes (or 56,460 kg) of hops used in our brews
78 million
pints of beer
Minimum no of quality checks
on our beer before it leaves
the brewery
26
Number of new yeast
cultures started (to keep
our beer in fine health)
12
It’s a Brew Story
56
1,943
Total volume brewed
391,604
casks
to draught
We’ve never been more confident in
our ability to provide consumers with a
fantastic pint, every time.
An incredible team effort has resulted
in a system that now allows us to both
recognise potential issues in good time
and to pinpoint their origins, ensuring
that problems are nipped in the bud
before they can affect production, our
customers or our consumers.
One pivotal change was the
introduction of a Laboratory
Information Management System
(LIMS) – we’ve been using this for
around 4 years now, and thanks in
particular to Paul Warren, our in-house
LIMS guru, have really begun to see the
benefits over the past couple of years.
LIMS allows us to monitor almost in real
time what is taking place in our
brewery, and make adjustments that
are based on hard data, not supposition
or informed guesswork. Everything
previously collated on bits of paper and
manually entered into spreadsheets is
now automated, with the whole team
receiving daily emails containing the
latest update. I’d estimate that this
automation saves us around a person a
week in time, which obviously allows us
to focus our resources in other areas.
What’s more, the lag between
conducting a test and receiving the
results has shortened dramatically. In
years past we might have had to wait
two weeks for data; now, this is
available as soon as the result is
entered into LIMS, allowing us to
change tack as required without
problems snowballing out of control.
Because cask beer carries live yeast,
it is vulnerable to quality risk at several
points in its journey. Our brewery
quality assurance is now at a record
high, which we can gauge by the small
number of casks returned to us. This
lower volume of returns allows us to
check each cask individually, and we’re
finding that most problems are actually
at the pub’s end (broken cellar cooling,
for instance), and not the fault of the
brewery.
Reducing our rate of returns has huge
cost-saving implications; not just for
the beer itself, but also redeliveries,
dealing with customers, restocking…
in fact, we estimate that each returned
cask or keg costs us three times the
value of its contents when all these
extra elements are factored in.
We’re
creating less
waste than ever;
alongside our dedicated
recycling programme,
around 80% of our general
waste each month is now
also recycled instead of
being sent to
landfill.
Combine these improvements with
similar work on our keg production,
which has seen the number of kegs
returned to us more than halve in the
last two years, and it’s clear we’ve
come a long way. The manner in which
our team work tirelessly to improve our
laboratory processes is inspiring –
the quest for brewing perfection
never ends.
Meet
Alison Britt,
Quality Process
Leader
Total beer sent to draught = 162,244 Hectolitres
Charles Wells Annual Review 2015
www.charleswells.co.uk13
Sales
It’s impossible for our Sales team to
reach every pub in the country, so it’s
vital for us to achieve national
coverage via other distributors, and to
ensure that we find ways to make our
brands popular with their consumers.
Close ties with many of the national
pub chains allow us to extend our
reach beyond our own sales network,
and market to their pubs as if they
were our own.
Packaging
A change in
recycling services
supplier in 2015 means
that instead of being
transferred around the
country our waste now
only makes it as far as
Luton, further reducing our
carbon footprint.
FRIENDS & PARTNERS
Enterprise Inns are one such example;
our close working relationship allows
our Telesales team to deal directly with
their sites, and regular in-house
promotions ensure that new products
we bring to market such as Young’s
London Stout and our charity special
Poppy Ale receive the exposure they
need.
We also collaborate with national
drinks wholesaler Matthew Clarke.
We’re able to network with their large
sales force, present at their trade
shows and gain access to over 16,000
On-Trade premises in the UK.
Working in tandem with the head office
of the C&C Group (trading as Wallaces
TCB) has been vital in increasing our
sales volume north of the border. In
return for their cooperation we’re able
to offer them preferential treatment
such as the exclusive listing of
McEwan’s IPA in keg, a great product
that has already seen many
installations as a result.
Heineken UK (HUK) is a long
standing and very
important customer for
Charles Wells; they sell
large volumes of our cask
ale brands across the UK,
and are particularly
important for our
McEwan’s and Younger’s
keg sales in Scotland and the
north of England. The challenge for
can-do
With a
us was to stand out amongst the
myriad suppliers and brands in their
portfolio, and beers such as London
Stout (listed by HUK for Free Trade
pubs in the South East) help achieve
this.
Jeff Bate at HUK explains: “Our
reciprocal working partnership
continues to grow with Charles Wells.
We have solid transparency of goals on
both sides, which means we can more
effectively strive to deliver for one
another.”
Paul Brown, Senior National Account
Manager
Free trade sales
Team London achieved 1.8% growth,
against a free trade market performing
at -5.4% in the Capital according to
CGA data.
How did we do this? Building
relationships – both internal and
external. We have been keen to
develop a close relationship with
colleagues in the brewery to enable us
to deliver as One Team. Having good
relationships with customer care, credit
control and the administration team has
enabled us to quickly secure new
agreements and to get new accounts
pouring quickly. Externally, strong
relationships with technical services
provider Three Nations and Grupo
Damm help to secure new business,
and we will look to continue this in the
future as their team expands.
Aside from developing relationships,
we have really tried to work on
structuring deals which think outside of
the box and aren’t based solely on
price. This has helped us to bring on
more profitable business, which is one
of the main reasons why our margin
has grown over the last 12 months.
We were fortunate enough to win a
tender for the supply of an
account called Frank’s cafe. This
site opens for three months a
year during the summer at the
top of a multi-story carpark in
Peckham. We won this account
by structuring a deal based on
their key needs: a fast dispense
draught system with emergency
technical support available, a flawless
delivery service, 150,000 plastic
disposable pint pots, and brands which
were a perfect fit for their business
model and the customers who visit
their events.
Alex Hodgson, Regional Sales
Manager
attitude
Meet Justin
Adams
Packaging
Process Leader
This has been a good year for
investment in bottling and canning, and
the team have responded really well.
We’ve worked hard to keep on top of
preventative maintenance, which is
driving good, sustained improvements,
and concentrated on our cleaning
programme by bringing in foam
machines to clean and sanitise
stations. This hard work has been
replicated in keg and cask, where
everyone working on the line has
contributed to our most consistent
production quality to date.
In canning we’ve been running an old
hi-cone machine for some years, but
were starting to struggle to get parts
for it. The hi-cone machine applies the
plastic rings around the tops of cans to
keep groups of them, often four packs,
together. We were offered an option to
invest in a mid-cone applied orientated
machine, and we shut down for two
weeks in January for installation. This
machine applies the plastic lower down
the can; it has a handle on the side to
give better transportation and to
prevent drop-outs that occasionally
happen. It also allows you to orientate
the cans so that when they’re
displayed on the shelf you know that
the branding will all be facing outwards.
The mid-cone machine also offers the
possibility of putting promotional labels
on the packaging and this was used for
the first time in the summer, in the run
up to the Rugby World Cup. Bombardier
cans carried details of a rugby-themed
promotion; this was the culmination of
many discussions with the Marketing
team to use the technology to
maximum advantage.
the capability of canning 6, 8, 12 and
16 packs if we want to explore this
option in the future. After the initial
concerns about installing new
machinery the teams love it as they
don’t have to spend so much time on
it with performance up and very
little down time recorded.
differently and their attitude has made
a real contribution to our success in
reducing losses and downtime and
increasing efficiency.
A great team effort has
really helped us achieve
even better results
through a flexible and
positive ‘can do’ attitude.
All of the packaging
teams have
been open to
new ideas and
got involved
with how we
can do things
We’ve been running four pack cans
through this year but the machine has
14
Charles Wells Annual Review 2015
www.charleswells.co.uk
15
Customer Service
Customer Service
tops for support & service
Customer Experience team
in the spotlight
The Customer Experience team’s
core responsibility is to deliver an
excellent customer experience
alongside delivering Charles Wells’
excellent beers and wines.
The Telesales team, National
Accounts team and International
Sales team take orders for all of
Charles Wells’ customers both
nationally and internationally. This
covers the Charles Wells and Young’s
estates, along with all our Free Trade
customers from John O’Groats to
Land’s End. We also take orders for
the major supermarket chains and
regional wholesalers, as well as
exporting to over 30 countries around
the world. The telesales team also
upsell our products via promotional
activity and our expertise can help
improve product mix or suggest
appropriate alternatives to add
variety to the range stocked. The
value of the orders (finished goods
and duty) we took in 2014/15 was up
1.4% versus the previous year.
The Customer Care team look after
all our customer’s queries and liaise
with our logistics partner KNDL and
with our internal financial processing
teams to ensure an excellent
customer experience. This year the
16
team logged over 20,000 queries
dealing with a whole range of issues,
from uplift of empties to missing
stock and everything in-between.
The team work exceptionally hard to
resolve all queries within our agreed
time limits. The number of deliveries
made that required corrective action
(missing stock, leakers, broken in
transit, wrong stock) account for less
than 3% of all our deliveries last year.
The work undertaken with KNDL has
seen service levels improve across
all of our distribution channels.
Meet Rebecca
Abraham,
Telesales &
National Accounts
Team Leader
The varied role of the customer
support team is to offer a one-stop
shop of advice and guidance for
Charles Wells’ pub licensees. We deal
with queries from the tenanted and
leased estate as well as the growing
group of managed houses, with around
70% of calls being property or
compliance related.
We primarily focus on the reactive and
compliance jobs, but are increasingly
involved in the planned maintenance
programme, and we handled 10%
more property jobs this year compared
to last.
A review of contractors has resulted in
new partnerships being forged and the
relationship with them is crucial to give
the best service possible to licensees.
Of the repair jobs we managed, 30% of
customers had a follow up call, chosen
at random to get the most
representative performance feedback
that we could. We made nearly 600
outbound check calls and 83% of jobs
had seen a ‘right first time fix’, up
from 81% the previous year.
We do a lot of work to ensure that the
pubs remain safe and healthy and that
we exceed our obligations under the
code of practice. We work with
licensees to provide training and advice
to support regular line cleaning and
beer quality; check that pubs are
always compliant with health & safety
legislation and ensure business
continuity at all times.
At the start of the year, we introduced
an operations audit, offering a fresh
pair of eyes as additional support.
This checks that the external approach
is clean and tidy, relevant compliance
documents are readily to hand and
assesses whether additional glassware,
point of sale etc is required. We’ve also
set up a fire compliance package for
new licensees which is planned to be
rolled out to existing operators next
year.
Our most common call-outs are for
heating or electricity failures and with
some complicated jobs taking several
weeks to resolve our challenge is
to make sure that our
customer’s business
doesn’t suffer whilst the
job remains open. It’s not
just a case of reacting to
anything that’s thrown at
us, though.
Red flag accounts which are
accounts that have suffered a poor
customer experience have been
reduced by 68%.
By bringing the teams together and
encouraging all of the Customer
Experience team to be accountable
for costs and continuous
improvement we have reduced our
courier costs by more than 65%, as
well as reducing mistakes in the
order capture by over 50%.
Meet
Berni Myers,
Customer Support
Manager
The Customer Experience team is
now more focussed than ever on
improving our customers’ experience
and we have lots of exciting plans for
2016 that will achieve this.
Charles Wells Annual Review 2015
www.charleswells.co.uk17
UK pubs
UK pubs
The UK pub estate has been through
a series of changes through the year
but has remained true to the key
principles that a great venue has three
key elements – a fantastic pub, amazing
operators and the right support from the
brewery.
There were internal structural changes this year, as Craig
Mayes concentrated on development of managed houses
and I took responsibility for the tenanted and leased
business.
We also reviewed the support we offer our licensees and
this enhanced back-of-house structure saw us listed as
finalists at The Publican Awards in two categories, Pub
Company of the Year and Pub Operations Team of the Year.
Integration back onto the brewery site has enabled us to
work more closely with our Brewing and Brands teams, and
the proportion of own-brewed beers in our pubs has
increased as a result.
We’ve continued to develop our people, and support from
across the business has helped improve licensee retention
rates year on year. Of recent appointments 96% are still in
place after 18 months and 84% in situ after 36 months, up
from 80% in the previous year.
Our commitment to property development continues with
almost £4 million invested in refurbishment, small scale
sparkles and planned maintenance. With 18 development
projects completed we are making sure that our pubs are
the best of their style in the area and provide an
appropriate base for operators to build their business.
The Three CompasseS,
Aldenham
We saved over
£99k last year by
recovering beer from
the bottom of
conditioning tanks
that would otherwise
have been disposed
of as effluent
Prior to the recent development, The Three Compasses in
Aldenham had been operated as a drinks led business with
an Indian food offer. The business was struggling and the
retail offer was out of kilter with the affluent local
demographics so we planned an investment with
recruitment knowing that the pub needed to be
repositioned to achieve long term sustainability. We knew
we could get the pub right but we needed the right
operator and identifying Aspirational Pub Co as the right fit
for the business proved to be the turning point.
But businesses that are drinks led aren’t forgotten. We
felt that The Watts Arms, Hanslope was quite cold and
unwelcoming so worked on giving it a more ‘country pub’
feel where you’d happily go for a social drink or just to
read the paper- and the locals have responded with real
enthusiasm. And The Mill Hotel in Bedford had some
external decoration and new signage and stands out so
much better now.
Aspirational Pub Company run four other pubs and through
Jason Keen, the founder, was receptive to seeing the plans
we presented for The Three Compasses. It soon became
obvious that the two companies shared many of the same
values so the working relationship had a firm footing and in
February we started the refurbishment. With investment
from both Charles Wells and Aspirational Pub Company we
embarked on a £250,000 project.
It’s good to know that many of these projects have been
completed with licensees who run more than one pub and
our strength in working with operators of multiple sites
remains appealing to the best pub retailers.
Richard Bishop, Head of Tenanted & Leased Pubs
Every one of the refurbishment projects has an individual
style and is developed to fit its local community. Some
pubs require larger scale investment to accompany a
complete change in trading style and may be based on a
number of considerations. This is predominantly driven by
pubs that are introducing or improving their food trade.
The Three Compasses in Aldenham and The Tollemache
Arms, Harrington fell into this category and with The
Tollemache, work ranged from knocking through the bar
area to open up the pub, full internal and external
redecoration, landscaping including decking right the way
through to replacing the thatched roof.
We celebrated with
our publicans in July
after they smashed
their fundraising target,
generating over
£100,000 for Macmillan
Cancer Support.
We have the process in place to help small multiple
operators adapt to working with an established business
and this was a great example of bringing it to life. Although
we’re there to add value to their business, Jason is self-
We knew we could get the pub right but we needed the right
operator and identifying Aspirational Pub Co as the right fit
for the business proved to be the turning point.
sufficient and has the freedom to run the business the
Aspirational way, lifting the average weekly sales by around
500%. The mutual respect works both ways and they’ve
embraced the Charles Wells spirit with a great range of our
beers on the bar.
Meet Scott &
Clare, two of the
dream team at
The Three
Compasses
David Wilson, Retail Development Manager
“Our business approach is to provide a premium offer that
exceeds customer expectations with a high quality product,
service and interactions. It’s important for us to develop
lasting partnerships that are positive, have the same goals
and help us grow our business profitably. Our working
relationship with Charles Wells is proving to fit that remit
and as an organisation we are learning to draw on more of
the support that they make available to us.”
Aaron Moore-Saxton, Aspirational Pub Company
18
Charles Wells Annual Review 2015
www.charleswells.co.uk19
UK pubs
Charles Wells France
french
connections
the dragoon, brampton
The Dragoon had been on the market for some time, and
we were motivated to develop the ailing site into something
great.
We determined that the sports bar element of the site was
still worth pursuing and so our recruitment process was
guided by this model. We needed a local operator with a
strong following in the community, who was a keen sports
fan, competent in the kitchen and displayed high standards
and financial acumen.
Our main goals in the last financial year
were to open one new site, line up
other future acquisitions, and renovate
The Sherlock Holmes in Bordeaux – all
without neglecting our other ten
existing sites. I’m proud to say that we
achieved all these objectives,
consolidated a great Head Office team,
and challenged all of our suppliers to
provide us with the support we need to
ensure the continued growth of our
business.
I met Steve Bird over a chat in the bar at The Dragoon,
and he seemed to fit the bill; he had previously run a
sports and social club, his son Mark is an excellent
cook and his partner Carole has strong
administrative skills from her time in the NHS.
After Steve submitted a strong business plan, we
considered the site’s circumstances and decided
to extend our usual three-year contract to four
years, giving them ample time to turn the business
around. We also rented them inventory for the pub, to
free up the cash that purchasing up front would have
denied them and provided them with strong marketing and
financial support via our Retail Marketing team. In short, we
gave them every possible opportunity to succeed.
The Charles Wells
2015 Cycle Challenge
saw 20 of our colleagues
ride from the d’Parys in
Bedford to The
Bombardier in Paris,
raising over £20,000 for
our chosen charities.
We’ve opened a new site in Bordeaux this year - an
exciting new venture called the English Country Kitchen
Our new MD, Andrea Holton, joined us
in January and has had a very positive
impact; despite the travel time involved
we’ve made sure to incorporate
regular visits to each of our sites,
keeping communication with each pub
team open and their morale high.
Our faith has been rewarded – The Dragoon has been
transformed from a site struggling to take £1.5k a week
into one that averages £5-6k. Now the sales figures are in
good shape we’re working hard to ensure that the
business’s costs are well controlled, ensuring that as much
of this revenue is converted to profit as possible. I ensure
an open dialogue with Steve and his family at all times; I’m
passionate about ensuring that our family values support
theirs, as I believe this is a large part of what attracts
people to work with Charles Wells.
Without a doubt, the biggest challenge
we faced in France over the last twelve
months was the recession, sparking a
clear decrease in consumer spending
across the country. We combated this
by working hard on customer service
training, an engaging range of events
in each site and a real focus on beer
quality, ensuring that customers regard
us as the first choice when deciding
where to spend their hard-earned
money. We may not be the cheapest,
but we are excellent value and this is
reflected by meeting our annual budget
despite several months of challenging
trading, a great team effort.
It’s truly gratifying when a village such as Brampton
tells you that you’ve ‘given them their pub back’.
Colin Spilling, Retail Development Manager
Meet Steve Bird
and his partner,
Carole, the proud
new tenants of
The Dragoon.
20
The ECK was conceived when the
opportunity arose to purchase the
pizzeria next door to The Sherlock
Holmes. We had no food offer in
Bordeaux at the time, and thought this
was the perfect opportunity to create a
site offering the best in English cuisine
and cosy décor to the Bordelais; the
site is a perfect complement to the pub
next door, but also a great offer in its
own right. We offer a delicious range of
food – everything from light salads to
We opened a new site in Bordeaux this
year, soon after our DNA ‘pop up’ bar.
But this was an exciting new venture
called the English Country Kitchen
(ECK).
Charles Wells Annual Review 2015
www.charleswells.co.uk
hearty fish & chips – and of course a
frightfully English selection of teas,
scones and cakes.
We’re already seeing customers return
again and again, word of mouth is
spreading through the town, and the
French are really starting to enjoy this
uniquely English offer on their
doorstep.
Despite venturing into new territory
with the DNA and ECK, we have
not lost our focus on our
core business: pubs.
The Sherlock Holmes
opened in 2009 and has
been traded hard ever
since. It was time for a
‘Sparkle’ refurbishment –
our biggest renovation project
to date – and we worked hard to
complete this in time for the kick-off of
the Rugby World Cup. The pub has
been transformed – it now feels much
more modern and features a new bar
setup, furniture and a great food menu
prepared in the kitchen of the ECK.
Ariane Lapegue, Finance Manager CW France
21
Apostrophe pubs
A further two sites were added to our Apostrophe Pubs
managed house estate in 2015.
The Merlin’s Cave in Chalfont St Giles received a
£1.35m investment, almost tripling the size of the
building and creating a 130 cover pub restaurant. The
village is famous for being the home of John Milton,
the 17th Century poet. The site’s design celebrates
reclaimed materials such as railway sleepers on the bar
and snooker table slates as blackboards; there is also a
nod to the local Chiltern Hills, thanks to the open fires,
liberal use of chalk, candle wax and oak.
Cox’s Yard, Stratford upon Avon, is a site where
Charles Wells have long held the lease; it is directly
opposite the Royal Shakespeare Company, sitting
nicely beside the River Avon. This is the largest
Apostrophe site to date, with over 300 covers in the
various buildings that make up the pub restaurant and
coffee shop. The site was an old timber yard founded
by James Cox and Edward Foreham; the latter left to
found Flower’s Brewery, so you will be sure to see
timber and brewing feature in 2016’s refurbishment.
Meanwhile Apostrophe’s first pub, the d’Parys in
Bedford, has gone from strength to strength; it was
shortlisted for the prestigious National Publican and
Great British Pub Awards and was highly commended
in the local Food & Drink Awards.
We have put a lot of emphasis this
year on fine-tuning our people
training and development
programmes to support our
ambitious growth plans.
We’re aiming to create
common practices across
the group in terms of product
development, as well as
enhancing our promotional
activity to encourage our
guests to visit us more
frequently.
Managed pubs
pizza, pots
& pints
The ‘Pizza, Pots and Pints’ concept pioneered
at The Salisbury Arms was aimed at
transforming smaller community sites in great
demographics to offer a focus on crafted,
artisan food and drinks and menus designed
around sharing.
Think light crispy artisan pizza (cooked in our
amazing wood-fired oven), warming terracotta
pots of comfort food (bubbling mac’n’cheese,
anyone?) and pints of Wells beer.
Our objective was to keep the character of this
well-loved Cambridge pub, but improve the
layout to make it more retail focused.
Moving the bar towards the front of the
building ensured the staff were able to greet
our customers as soon as they stepped
through the door. Another inviting
element was the introduction
of a glass lobby which allowed
us to pin back the front doors
to present a friendly face to our
neighbours.
Prior to the pub’s relaunch in April last
year, we were already very focused on
our local community – we wanted to let
students and local residents know what
was happening via social media so they
could follow the story and become
invested in the pub’s relaunch. We
gained a lot of followers on Facebook
and Twitter from locals and commuters
who passed by and saw the
refurbishment works; whenever we
could we brought them inside and give
them a tour of the changes to come.
Many Cambridge locals hold this pub
dear to their heart and so were
understandably concerned that a
refurb would do away with their
favourite aspects of their local; we
used social media to both reassure
and excite them thanks to sneaky pics
of the décor - the bikes, the oven, the
new bar - people had some idea what
to expect on their first visit, but
were still delighted to see it in
its full glory.
social success
It is important that the pub feels like a
home from home for our customers,
and we worked to create a family feel
by featuring some of the people
passing through our door – everyone
from Tom who created our pizza oven,
to Marc who roasts our coffee, got their
star turn on social media. We worked
hard to arrange high-quality training in
the two weeks prior to the launch and
made sure to document this online,
showing the lengths we
were going to in order
to ensure a
consistently great
customer
experience.
Since opening, we’ve kept a keen eye
on TripAdvisor reviews – most are very
complimentary, while a few have
offered constructive criticism that has
enabled us to improve our offer – it’s
an invaluable source of feedback direct
from our customers. A personalised
thank you from the pub team means a
lot to our reviewers – they know that
they’re not just talking into the ether,
but that we really care about
what they have to say.
The ‘Pizza, Pints and Pots’ offer
was conceived as something
easy to replicate elsewhere, and we
are already in negotiations for new sites
to apply it to in the coming year. We feel the
retail concept has potential even on the
high street, it need not be limited strictly
to pubs.
Since
going live
with our fleet
management company
in 2013, CO 2 emissions
in our company car fleet
have fallen by 9 per
cent and are now the
lowest they have
ever been.
The team at The Salisbury Arms are
pivotal to its success- they’ve worked
really hard, shown great character
and the project simply would not
have succeeded without them. The
awards the pub has received already in
the six months since its reopening speak
volumes about their achievement.
22
22
Charles Wells Annual Review 2015
www.charleswells.co.uk
23
Cockburn & Campbell
French Free Trade
wine & food
With around 140 managed pubs in
London and the Home Counties, 80
tenanted and a group of 34 trading
under the Geronimo brand, Young’s
remains an incredibly important
customer for Charles Wells. Many of
these pubs have a focus on great food
so there’s a natural affinity with
Cockburn & Campbell’s range of wines.
same. Early signs suggest that the
Wine Ambassadors are every bit as
enthusiastic as we are.
Against an overall trading environment
in which sales have fallen -4% in the
London area (WSTA figures) sales
within the Young’s estate have risen
7% year on year, with some of the top
performers being The Castle in Tooting
Our third annual
Wellbeing Day
enjoyed its highest
attendance yet, with
employees enjoying
treatments alongside
some delicious healthy
eating options.
i’ve developed a series of ‘challenge’ events that pitch
wine against beer or cider to encourage customers to
explore their wine through a touch of friendly rivalry.
Much of my work revolves around
events in the pubs, whether that be
staff training, supporting launch
evenings or running wine tastings to
create some theatre with their
customers.
This year I’ve developed a series of
‘challenge’ events that pitch wine
against beer or cider and encourage
customers to explore their wine
through a touch of friendly rivalry.
These are aimed at driving sales across
the range, with food and wine pairings
giving the opportunity to introduce
more premium wines and encouraging
people to try something they might not
have thought about before. I work with
the chef to develop a suitable menu –
often five courses - and the Young’s
marketing team to get the publicity
machine up and running.
We’ve made good progress in the
French free trade market in the last
twelve months, building on the success
of our pub chain. Historically we have
been selling bottles of Bombardier in
France for some time, but the market in
France is now much more open to
foreign / craft beers, so this year
marked our first concerted effort to
promote our core brands in the free
trade. We’re focusing on Bombardier
and London Stout, with Charlie Wells
Dry Hopped Lager to launch in April
2016 (building on its successful launch
in our French pubs twelve months
prior).
We work with two importers in France.
The first is Tradelink, who we’ve
worked with for over two decades; they
sell Crest Super into French
supermarkets and the French West
Indies for us.
Due to changing marketing conditions
and the free trade opportunities we’ve
spotted, we’ve recruited a second
importer called Yummyz, a subsidiary
of Brasserie Licorne, who specialise in
selling Anglo-Saxon and American
beers in France. Their sales of our
products grew by 50% this year;
Yummyz have seven sales reps
covering the whole of France and a
range of complementary brands in their
portfolio, so are ideally placed to
promote our beers to best effect.
Part of our new structure is the creation
of a centralised distribution hub based
in Saverne in Alsace, widely regarded
as the ‘motherland’ for French
breweries. Our beers are shipped
there from Bedford and then collected
by the various local distributors who
serve our pubs and free trade
accounts. Establishing this setup has
not been without its teething problems;
selling through a third party has its
frustrations and we’ve invested a lot
of time in getting to grips with the
politics and relationships in the
industry, effort that is now really
starting to pay dividends.
It’s a good time to be selling beer
in France – the craft beer explosion
is catching on, the lower rate of duty
doesn’t hurt, but best of all French
consumers are beginning to develop
a real taste for interesting beers such
as ours.
Santé francais !
and The Bull in Streatham which have
both expanded their food offer and
outdoor trading areas. We’ve also
made some tweaks to our range this
year by listing some English wines in
direct response to a request from
Young’s who are keen to promote
British quality and our own focus on
excellence and customer service will
continue apace within the Young’s
pubs.
Meet Sarah Joll,
National Account
Manager
Meet
Neil Warnock,
Beer Development
Executive, French
Free Trade
Another important aspect of my role is
staff training, as they are at the
forefront of recommending and
promoting our wines on a day to day
basis. Last year I ran eight courses
across each of the three divisions
of the managed estate for the
members of staff who’d volunteered to
become a Wine Ambassador. Because
I’m hugely passionate about our wines
and their flavours, I want to share that
with others and enthuse them to do the
24
Charles Wells Annual Review 2015
www.charleswells.co.uk25
Scotland
Italy
very important pints...
After a lot of work in the last
financial year bringing new products
to market and revitalising existing
packaging, this year saw us kick off
with a solid range already in place,
meaning we could really focus our
efforts on driving awareness and
activation of our brands.
McEwan’s Export is the Charles
Wells group’s largest owned brand
and accounts for around 50% of the
volume of all McEwan’s beer sold,
therefore it is vital for us to protect
this. A key piece of activity we ran to
achieve this last year was an
outdoor advertising campaign; ‘The
Legend Continues’, that ran
across five major cities, and
coincided nicely with
Meet Tara
Karimian, Brand
Edinburgh’s population
Manager Scottish
exploding during its annual
Brands
August festival.
McEwan’s Party at the Palace
was our most prominent event of
the year and gave us the perfect
platform to launch the new
McEwan’s IPA keg to the kind of
younger consumers vital to keeping
the brand sustainable and relevant
in the long term. During the weekend
we saw 8,000 visitors enjoy over
10,000 pints from the McEwan’s
range as they danced in the
sunshine. In fact, the only time the
weather changed was when Travis
performed their classic tune ‘Why
Does It Always Rain On Me?’ at which
point the heavens obligingly opened!
Finally, McEwan’s Champion, the
best-selling bottled beer in the
Charles Wells range, has continued
to do itself proud for yet another
year. The brand, which had its
packaging refreshed this time last
year, is enjoying 12% growth and has
remained as one of the top ten
bottled beers in the whole of the UK
all year. More and more people are
discovering Champion, enjoying it,
and coming back for more.
I’m very proud of what the marketing
team in Scotland have achieved in
the last twelve months and we’re all
very excited for the year to come. It
will be the 160th birthday of
McEwan’s, so you can rest assured
we have some fun plans up our
sleeve to mark the occasion!
our italian job
As our business expanded into Europe
in the mid 1980’s a decision was made
to open an office in Italy and Charles
Wells Italia is still going strong 30 years
later.
Their drinking culture also leans
towards higher strength beers,
consumed in smaller quantities and
our best sellers are Bombardier, Crest
Export and John Bull Classic lager.
Industry veteran Marco Ferrini, our
National Sales Manager, is at the heart
of that success. Marco is born and bred
in Florence and worked for us as a
distributor before joining the staff in
1986. One of the first pubs we started
trading with directly in Italy was his,
Kikuya, in Florence and through
Marco’s friendship with the British
Consulate in the city he developed a
relationship and introduced our beers
to Italy.
The market is complicated and each
city may have five or six distributors –
but none of them will stock another
distributors brands. Italian pub
operators search for an element of
exclusivity and relationships are key to
success, but Marco’s experience gives
us a competitive advantage.
We now work with 22 distributors
including the original ones, Cippone in
Bari and Da Pian in Venezia, and in a
flat market Charles Wells’ beers grew
5.1% by volume on last year. Sales are
weighted more towards the north of
the country as they have a cooler
climate that suits ales but we’ve seen a
lot more UK competitors in the market
as Italian drinking styles have started to
shift from wine to beer.
As International Country Manager for
Italy I visit on a regular basis and
develop a plan with Marco to take
opportunities where we can. But with
local, cheaper craft beers starting to be
offered, pub operators have a lot of
choice – microbreweries in Italy have
grown 62% in the last two years and
there are now over 500.
Over the last year, Marco has taken
time to get a better understanding of
competitor activity and worked on
reinventing how we speak to
customers. We can offer better trading
variables than most competitors –
credit, incentives, promotions – and the
new beers coming through give us
something to reinvigorate our portfolio.
Meet Dave Patmore-Hill,
Export Country Manager
(centre); Marco Ferrini, Sales
Manager, Italy (left) and
Sandra Zorzato, Sales
Administrator, Italy
Charles Wells Italia has 4.5% of the
imported brands market. Sales have
grown 15% in the last three years and
with a total beer market of 17.7m
hectolitres there’s still plenty of room
to grow.
26
Charles Wells Annual Review 2015
www.charleswells.co.uk27
The
extended
Wells family,
spanning several
generations, gathered in
Bedford on 4th July 2015
to learn more about their
family business, its
founder, and our plans
for the future.
Tel: +44 (0)1234 272766
Fax: +44 (0)1234 279000
[email protected]
www.charleswells.co.uk
Charles Wells Ltd, Havelock Street, Bedford, MK40 4LU, UK
WellsBrewery
WellsBrewery
Charles-wells
The financial information included in this review does not constitute statutory accounts
as defined in the Companies Act 2006.
Full accounts for the year ended 26th September 2015, upon which the auditors issued
an unqualified opinion, will be delivered to the registrar of companies.