How not to break up a monopoly: 'The Big Six', and the 'Lost Three'
Words by Paul Crowther; Illustration by Reena Makwana
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Don’t ask me why, but I’ve recently been reading a lot of competition rulings on merger acquisitions and monopolies, potentially a serious subject until you realise that much of the anonymous briefings and objections are simply the adult equivalent of a couple of big kids in a playground being accused of ganging up on the smaller ones, while they look contrite and claim it wasn’t them. Except spread out over 10,000 words of legal speech. Like a school teacher, the Competitions and Markets authority then has to make a decision about who is telling the truth ─ as Michelle Meagher (lawyer, author and Vittles contributor) recently pointed out in the Guardian, more often than not they make the wrong decision.
In Tom Stoppard’s play Arcadia, a character explains chaos theory in this way: “When you stir your rice pudding, Septimus, the spoonful of jam spreads itself round making red trails like the picture of a meteor in my astronomical atlas. But if you stir backwards, the jam will not come together again.”. The same is true of trying to reverse monopolies. The creation of them is simple ─ acquisitions which happen piecemeal until a corporation has become so large you can’t possibly ignore it. It’s only at that point that governments think of intervening, but de-monopolising isn’t that simple. People do not give up power easily ─ the tactics of companies to cling onto it create consequences that no-one, perhaps not even themselves, can fully predict.
Today’s newsletter by Paul Crowther is a story of monopoly and a failed attempt to break it up: not of tech companies but of beer breweries. Even if you haven’t read any of Paul’s work, you are already familiar with one of his greatest achievements: the milkshaking of Nigel Farage with a Five Guys shake, which would guarantee him pints for life in any pub in London. As he shows, the attempted break-up of the breweries left its mark on the local beers of three UK cities, very much against their intention, and in a wider sense changed the high street of every city and town in the UK forever. It’s a story of power, bad governance, cities, pubcos, creamy heads, and some of the best British adverts of all time.
How not to break up a monopoly: ‘The Big Six’, and the ‘Lost Three’, by Paul Crowther
If you walked into a pub in the late 80s, the chances were that not only was your beer made by one of six companies, but the pub was owned by one of them too. Together, the breweries known as ‘the Big Six’ had amassed a monopoly over the beer market through a system where they either owned the majority of pubs in their areas outright or had sole rights to sell their beer to pubs through a system of loads or leases; these were so-called ‘tied’ pubs.
From today’s vantage point thirty years later, the UK brewery scene seems unimaginable. The six companies which had come to dominate the entire market were each a merger of local breweries in a unique combination of cities: Allied Breweries (Leeds, Birmingham and Burton), Bass (Burton, Sheffield and London), Courage (Reading and London), Grand Metropolitan (London), Scottish and Newcastle (Newcastle and Edinburgh) and Whitbread (London). As well as a stranglehold over distribution, the Big Six had also quietly bought up some of the UK’s smaller breweries and consolidated them into larger companies. Beloved local brands were actually part of larger breweries without the majority of drinkers even realising it.
In 1989, the Conservative government commissioned a report from the Monopolies and Mergers Commission about the current problems in the British brewing industry. The report concluded that larger brewers were overcharging for their beer because of a lack of competition, that smaller brewers were restricted from access to selling in ‘tied’ pubs, meaning that pub landlords were unable to respond to customer preference. This was not the free market competition that Thatcher’s government wanted. Later that year, Lord Young, Secretary of State for Trade and Industry, enacted what was called ‘The Beer Orders’, which sent shockwaves through the industry. It stipulated that the number of tied pubs for each brewery be limited to 2000, and enforced that a tied pub must serve a ‘guest ale’ from a brewery other than the controlling one.
The effect on the UK beer market was utterly transformative, at least superficially. Of those Big Six, only Whitbread still exists and it no longer makes beer, while the rest have been sold off and broken apart. You might, therefore, say the beer orders had their intended effect; they broke up the power of the Big Six, pub ownership is now largely not in the hands of breweries and, when you walk into a pub, you have a diverse selection to choose from. However, not only was its effect on three loved local beers ─ Newcastle Brown, Boddingtons and Bass ─ profoundly against its stated intent, it has led to a new type of consolidation within the brewing industry that even Thatcher couldn’t have foreseen.
Before the advent of pale malt in the eighteenth century, most British beers could have been classified as ‘brown ale’. Using brown malt, the beer was given its darker colour and had a lot of unfermented sugars, lending it thick body and caramel flavour. When Newcastle Brown Ale was launched in 1927 it represented a resurgence for the style, as most drinkers had come to prefer paler beer. Newcastle Brown used caramel to colour it rather than relying on brown malt and so it had a much lighter and refreshing body. Generously hopped, it had a bitter aftertaste that mirrored the IPAs of the day.
Newcastle Brown Ale was brewed in Newcastle upon Tyne by Newcastle Breweries, which later merged with Scottish Breweries to form one of the Big Six: Scottish and Newcastle. I’ve lived in Newcastle since 2005 and it’s hard to overstate the influence of ‘Newkie Brown’ on the city’s identity. The brewery sponsored Newcastle United for an entire decade, the football shirt bearing the iconic blue star worn by legends like Alan Shearer and Kevin Keegan.
Scottish and Newcastle was the last of the Big Six to still make beer and kept brewing in Newcastle until 2008 when it was bought out by Heineken, the second largest brewer in the world. Within two years all production of Newcastle Brown Ale had been moved out of the city. Domestic production was outsourced to John Smith’s in Tadcaster, North Yorkshire. Brown Ale brewed for international export was moved to Zoeterwoude in Holland and in 2017 shifted to Lagunitas brewery in California. A beer that is part of Newcastle’s identity was no longer local at all, but a corporate commodity. Scottish and Newcastle was a big corporation but it did understand that a local beer should be locally produced ─ like many Geordies, I’m left feeling hollow when I drink a Newcastle Brown and know its brewed nearly 100 miles away. Thirty years later, the old brewery opposite St James Stadium was demolished by Heineken, and student accommodation now stands in its place.
When Whitbread acquired Boddingtons in 1989, soon before the Beer Orders became law, it had been brewed at Strangeways Brewery in Manchester since the mid-nineteenth century. It marketed itself as ‘The Cream of Manchester’, referring to its thick, creamy head. Boddingtons is a traditional English bitter, using British hops that give it an earthy character and an assertive bitterness. Its advertising heavily reinforced its local nature with a campaign featuring a local model, now TV presenter, Melanie Sykes. It was unashamedly and absolutely a Manchester brand.
During Whitbread’s tenure of Boddingtons, production stayed in Manchester and maintained its local identity. But when Whitbread was bought by Belgian company Interbrew in 2000, the production of Boddingtons was moved to Samlesbury, where it was brewed alongside Budweiser, Stella Artois and Brahma. Cask When Boddingtons was discontinued in 2012, five years after the demolition of Strangeways, any association between The Cream of Manchester and its birthplace was ended for good.
Another beer temporarily brewed by Interbrew at Samlesbury was Bass. The infamous red triangle that adorns Bass’s bottles is the oldest trademark in the UK, even appearing in Manet’s famous painting A Bar at the Folies-Bergère. Founded in 1777 in Burton-upon-Trent, within a century the brewery was the largest in the world, and at the height of British colonialism Bass was exporting beer throughout the Empire. Yet when the Beer Orders came in, Bass decided to get out of the brewery business entirely so they could retain their pubs. Bass was initially sold to Interbrew but the government intervened and forced Interbrew to sell the brewery to the US company Molson Coors while retaining the rights to the Bass brand. Unlike Boddingtons and Newcastle Brown, Bass production stayed in its local area, but this is more likely down to an inability or unwillingness to produce cask ale at its own production facility, rather than a sense of connection to history.
You might think the disconnection of Newcastle Brown, Boddingtons and Bass from their birthplaces was a justified casualty in the breaking up of the Big Six because it would surely lead to smaller, local breweries taking their place, de-monopolising the market? Well, that’s not what happened; in fact, the opposite happened.
Allied Breweries merged with the Danish company Carlsberg, the fourth largest brewer in the world responsible for 6% of all beer sold worldwide. Grand Metropolitan merged with Guinness to form drinks giant Diageo, which now focuses on its spirit brands and is the world’s second largest distiller. Scottish and Newcastle was bought out by Heineken. Whitbread sold its brewing arm to Interbrew. Bass sold out to Molson Coors and Interbrew, which later merged with Anheuser Busch to become AB InBev, the largest beer company in the world, controlling 30% of all global beer sales.
The result led from a Big Six to a ‘Big Four’, with AB InBev, Carlsberg UK, Coors and Heineken UK occupying a similar market share that the Big Six did in the 1970s. These brands dominate tap line-ups in the majority of UK pubs. The loss of three local brands from their home cities, removed from breweries they had been brewed in for decades and centuries, hardly seems a worthwhile price for having an array of macro lagers to choose from in a series of pub chains that used to be breweries.
Luckily this wasn’t the end of the tale of UK brewing – we don’t currently live in a bland beer market occupied entirely by multinational corporations brewing out of centralised mega breweries. Big beer will always seek to consolidate, expand, buy out and gut local businesses but there will always be dissenters. People want to drink beer made in their own city ─ drinkers didn’t just like Bass or Boddingtons or Newcastle Brown because of the taste, but because they knew it was local and supported local jobs and the local economy, tasting a bit of their own history. And consequently, there will always be brewers ready to make that beer. However, it was not the Beer Orders of 1989 but Gordon Brown’s Progressive Beer Duty of 2002 that has allowed this to continue – taxing smaller breweries less and levelling the playing field.
The result was profound, and the past 18 years has seen a boom of microbreweries. Locally produced beer is very much alive: in Newcastle we have Alpha Delta, Brinkburn Street, Out There, Errant, Stu Brew, Full Circle, Tyne Bank, Newcastle Brewing and many more across Tyne and Wear. Newcastle breweries are making some of the best beer in the country, with a cornucopia of styles including American IPAs, lip-puckering sours, and thick and sweet imperial stouts. Traditional styles remain revered too with Brinkburn Street even brewing Byker Brown Ale as one of its core beers (its cheeky tagline is ‘Brewed in Newcastle, Not Yorkshire’).
Manchester, meanwhile, has seen the founding of world-famous breweries like Cloudwater, and Alphabet, along with Beer Nouveau, Beatnikz Republic, Wander Beyond and many more. Much like Newcastle, Manchester breweries are producing some of the best British beers, innovating new styles and bringing back traditional ones. And while tied pubs have given way to bland pub chains on cloned high streets, these breweries are opening taprooms and brewpubs to give us an alternative.
So in the thirty years since the Beer Orders, what has actually changed? I was five years old when it happened, but in a roundabout way they have shaped my life. My parents were pub landlords at the time, in a pub owned by Allied Breweries. Our pub, The Railway Pub in Marsden, West Yorkshire was one of the ones sold by Allied to another brewery in the mass sell-off that occurred after 1989. The patrons were used to Tetley’s, brewed by Allied at the time, and with their favoured beer taken away they simply stopped coming. My parents couldn’t make a living out of the pub anymore and we moved away.
It was not beer but pubs and the high street which the Beer Orders actually changed irrevocably. Breaking up monopolies is no easy task; like a hydra you cut off one corporate head and two more will appear. Cask Bass may still be brewed in Burton, but far more interesting is what actually happened to Bass itself. Its non-brewing operations became a company called Six Continents, a hotel group which demerged in 2003 to form mega group Mitchell and Butlers. You will now find its former pubs under much more familiar names: Harvester, Toby Carvery, O’Neill’s and All Bar One. Meanwhile Enterprise Inns was formed in 1991 by purchasing 300 pubs from Bass. It saw a rapid rise to become the largest pub companies in the UK, currently owning 5000 pubs. The landlords of Enterprise pubs are effectively tenants but forced to purchase much of their stock from Enterprise. If you’ve wondered why so many pub tap line-ups across the UK look identical it’s because so many are owned by the same company. Earlier this year, Enterprise was bought out by Stonegate Pubs to create an even larger pubco, registered in the Cayman Islands and owned by a private equity firm.
Meanwhile the space vacated by the Big Six was a boon for rising pub chains: a 1995 article in the Independent cites a ‘south-east based pub retailer’ reaching 100 pubs and an 81% increase in its profits, having eschewed the tactic of buying up the pub surplus and instead creating its own out of old buildings. Eight hundred pubs later and it seems clear that the real winner of the Beer Orders was not the tenant, the consumer or the brewery, but JD Wetherspoon.
Paul Crowther is a beer and culture writer based in Newcastle. He enjoys homebrewing, video games and horror movies. He’s partial to a good milkshake. He lives with his wife, step son and three dogs.