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What business qualities make an SME successful? We’ve been visiting various businesses to bring you some insightful case studies. This month it is Hook Norton Brewery, a proudly independent family business and No 84 in our SME 100 listing
Hook Norton Brewery: An attractive blend of tradition and progress
Heritage can be a double-edged sword but Hook Norton Brewery has made its traditional attributes cut both ways in its favour by skilfully combining its handcrafted brewing heritage with a progressive modern approach to business.
But, it has had to – competition today in the licensed retail sector is fierce.
Despite a steady decline in pub numbers, one of the most remarkable UK industry success stories of the last decade has been the rise of the small brewing sector.
Today over 1,000 breweries operate in the UK, the highest figure for more than 70 years. Brewery numbers have quadrupled in the past 30 years, led more recently by local micro-sized craft breweries providing fresh, attractively different beer brands to tickle the tastebuds of a new generation of drinkers.
“People are now drinking less, but wanting to try more types of beers,” explains joint managing director James Clarke.
Hook Norton Brewery (popularly called ‘Hooky’) knows all about craft-brewing. It’s been doing it since 1849, when Clarke’s great great-grandfather built his brewery near Banbury to slake the thirsts of workmen building the railway through Oxfordshire and the Cotswolds.
The brewery – the finest example of a Victorian tower brewery in England – is a natural attraction in itself evidenced by its 10,000 annual visitors and the creation of a modern visitor centre in 1999. “It’s a lovely brewery building but it’s very expensive to run. Fortunately, the visitor centre has seen phenomenal growth.”
‘Hooky’ unashamedly trades on its centuries-old history, traditions and provenance. And why not? “We have an unbroken succession of my family being involved in making hand-crafted beers,” notes Clarke.
It also markets its historic appeal well to ramblers, tourism, school educational groups, and those looking for an interesting event venue.
From its manpowered beer-making; its local water, barley, and hops; its endearingly named beers – Old Hooky, Hooky Gold, Haymaker – redolent of
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satisfied rural drinkers; its brewing awards; its shire horse deliveries; its 40 local pubs – it’s a heritage that delights a 21st century consuming public.
Catalysts to the greater commercial exploitation of that heritage and fresh dynamics within the company from the turn of the millennium, explains Clarke, were rising costs and the untimely deaths of Board members, including his father.
Notably, in more recent years, the employment of industry-aware talent and acumen including joint managing director Adrian Staley, chairman Jonathan Paveley, financial controller Ian Rae and different professional advisers, has helped a newly galvanised Board to set a tough progressive agenda. This is now constituted within a simple five-year plan begun in 2010: reduce fixed costs, increase beer sales.
Management structure and focus have been introduced, market proactivity rather than reactivity, flexibility and a willingness to change.
Internal reviews have targeted cost-efficiency and effectiveness. Staff now work flexible and annualised hours, customer-facing delivery teams have been retained but vehicles are contract-hired, the 40-strong pub estate is being enhanced.
Shareholders have shown their belief in the business through additional equity funding, allowing investment in the core business of brewing, despite its Grade 2 Listed home. “We align ourselves with English Heritage, because it’s much better having the brewery producing beer rather then sitting here as a museum piece.”
Clarke predicts that brewing output will grow from 65% to 75% capacity by 2014.
Like all UK beer producers ‘Hooky’ suffers the agony of beer duty and legislation. “42% of our beer sales turnover is duty, ten times that of Germany, and US brewers fall off their chairs laughing when we tell them.”
The beer portfolio has been broadened and marketed better, including online sales and social media links, to suit wider and differing markets. Last month, to great acclaim, Hook Norton Brewery launched its new Lion brand cask ale, brewed with all-British hops.
James Clarke
The company is also mining the rich vein of niche-brand beer drinkers. It is developing a new specialist beer pilot-plant to assist R&D and has recently starting kegging two brands to meet fresh export demands – exporting is currently Hooky’s best performing division.
Hook Norton is certainly not deserting its cask- conditioned ‘real ale’ roots (still 75% of production volume), merely expanding its beer range to take in bottled and keg brands that can be sold in distant bars or UK supermarkets, in Brazil, Norway or Australia, or wherever there are buyers.
“While reducing our costs, we are changing with the developing ‘craft-beer’ market, aiming to consistently deliver enjoyable beers in good condition to discerning consumers.”
Clarke summed up the change at ‘Hooky’: “We now tend to think more like an emerging micro- brewer aiming to sell everywhere, rather than a long-established regional family-brewer supplying its tied estate.”
SME-to-SME tips from Hook Norton Brewery
• Change is led by Board level commitment
• Reducing fixed costs and selling more, drives both top and bottom line.
• Establish your assets and opportunities
• Be brave, expand sales beyond traditional markets
• Invest astutely in core infrastructure and R&D
• Focus on key customer-facing areas, they reflect your standards
• Be lean, ready and able to adapt. Details:
www.hooky.co.uk
www.businessmag.co.uk
THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2013
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