Brewer Marston’s has secured a major deal to provide drinks to rival Punch Taverns, the Burton-based pub operator.
The agreement will see Marston’s become the exclusive distributor for drinks to roughly 1,355 Punch Taverns pubs, the part of the latter company’s estate which is not being sold to Heineken. Heineken is buying approximately 1,900 pubs from Punch.
Chief executive Ralph Findlay said the deal was signed this month and would take effect from September.
Crucially, Marston’s will earn money from the deal even if all the Punch pubs decide to stock drinks made by other companies, although publicans will have the option to choose to sell one of the tipples made by the Wolverhampton-based business.
The deal comes after Hobgoblin and Brakspear brewer Marston’s said it had bought rival Charles Well Brewing for £55m – money it raised by issuing 57.6m new shares.
Charles Wells generated £92m in sales for the year to September 30 leading to operating profits of £6m.
Mr Findlay said the purchase gave his company better access to the London and south east region of the UK while the McEwans brand would mean it could expand into the Scottish market.
The purchase will mean the market share Marston’s commands in ale will rise from 11pc to 16pc.
The chief executive said Marston’s had been planning on spending £6m on installing machinery to produce cans of beer at its Burton upon Trent site but this would now no longer be necessary because Charles Wells already had the necessary capabilities.
These deals come as the company reported a 2pc rise in sales to £451m for the six months to April 1 although the like-for-like rises across its divisions slowed.
Mr Findlay said the reason for the slowdown in sales growth was purely because of strong comparative figures in the same six-month period last year rather than evidence of a consumer spending squeeze hitting the company.
He said the pub sector tended to be robust even when consumers’ purse strings were tight.
“The pub sector has a good history of tending to be very robust when consumers are under more pressure,” he said. “People generally still do want to go out and they want to go where it is affordable and where they don’t feel guilty about spending the money.”
Concerns have been raised this week about the potential pressure on consumer spending as the pace at which prices are rising has overtaken the how fast wages are growing.
Elsewhere, the company now has roughly 1,100 hotel rooms and has a long-term plan to reach 4,000.
The company said it expected to open 20 pub restaurants this year as well as eight lodges and three premium bars, which often trade under the Pitcher & Piano brand. Mr Findlay said it planned to open 10 lodges, which sit on the same sites as its pubs, per year from 2018.