Case Study - Greene King Brewing Company

Case Study - Greene King Brewing Company

Introduction

Greene King is based in Bury St Edmunds, Suffolk, and has been brewing beer and operating pubs for more than 200 years. The organisation has 790 managed pubs, which are run by its Pub Company division, and 1,340 tenanted and leased outlets, operated by Pub Partners. From its heartland in East Anglia and the south of England, Greene King has expanded throughout the UK.

The company has a high reputation for its cask ales, including the well-known brands of Greene King IPA, Abbot Ale, Ruddles and Old Speckled Hen, which are produced by its Brewing Company division. It exports to more than 30 countries worldwide. Over the last five years, Greene King has pursued a policy of acquisition, buying organisations such as Morrells of Oxford and Old English Inns and the Laurel Neighbourhood business.

Q1. Describe the corporate culture at Greene King before the changes were made?

Greene King was a traditional British brewing company - conservative, hierarchical, loyal to products and ingrained habits. They had good beer, good brands and strong customer relationships, the people lacked in external focus they made up for in passion but the focus on production lacked urgency and looking at the outside world.

At the end of the 1980s, the market for beer in the UK was dominated by six national brewers (see Table 1) who accounted for over 75 percent of UK beer production, and controlled over half of all public houses and a substantial proportion of off licence sales. Owned public houses fell into two categories - managed houses where the publicans and their staff were employed by the brewery and tenancies where independent publicans rented the public house from the brewer. Under an exclusive supply deal, the 'beer tie', the tenants were required to retail their brewers' products, guaranteeing the brewer an outlet for their product. The remainder of public houses were owned by regional and small brewers or existed as free (from tie) houses. In many cases, however, these were in effect tied for supply by 'brewer loans' from the Big Six, usually for improvements and essential repairs (in particular, replacement roofs).

Greene King are making a significant investment in training and have recently launched their Get Ahead flexible-learning initiative, including a career progression ladder, a structured biiab industry-recognised qualification and a four-stage house-manager training programme. The scheme has won the IDG Food Industry Award for Learning and Development. They experience relatively low staff turnover for this industry, their investment in training paying off when they were recognised as the third best Restaurant, Drink, Pub and Brewery employer in the Management Today survey published December 2006.

The Director-General of Fair Trading, concerned about further brewer consolidation and the level of vertical integration (from production via distribution to retail and consumption) in the beer market asked the Monopolies and Mergers Commission (MMC) to investigate the market. Its report, The Supply of Beer, found that a complex monopoly existed working in favour of the brewers who ...