Notes on the Carlsberg UK/Marston’s merger

Some initial thoughts on the merger of the businesses of Carlsberg UK and the Marston’s Beer Company.

On 22 May 2020 it was announced that Carlsberg UK will merge with the brewing arm of Marston’s. Carlsberg will control 60 percent of the equity in the venture and Marston’s will hold the remainder.

The Twittersphere seems to believe that this is a “classic case” of “Big Beer” exercising control over the British brewing industry. Perhaps it is, but I would characterise it as more of an act of desperation on the part of Carlsberg. Not only will Marston’s continue to hold a large minority stake in the business, but they will receive a one off cash payment of £273 million.

As things stood, Carlsberg UK was undoubtedly in a position of weakness. Despite a major rebrand and overhaul of its recipe, Carlsberg lager remains stuck at third place in the standard lager market, behind Carling and Foster’s. Their only powerful brand in the premium lager market is San Miguel, which admittedly has enjoyed somewhat of a surge in popularity in recent years.

Other than the licence to brew Brooklyn Brewery products, Carlsberg’s most noticeable commitment to craft beer consisted of closing down their Leeds site, the largest cask ale brewery in the world, in 2008. The tie-up with Marston’s effectively reverses this decision, buying into a business that operates six breweries, largely producing cask ale.

Furthermore, the Marston’s tie-up represents a reversal of strategy for Carlsberg. They closed their own distribution network in 2016. Now, four years later, having access to the Marston’s distribution network is an appeal for them.

I honestly wish the venture success. I believe that both businesses are stronger together. Carlsberg has neglected its Tetley cask ale brand, which was the largest in the world as late as the mid-1990s, whereas Marston’s has nurtured and heavily invested in its own. Meanwhile Marston’s lacks strong lager brands, which Carlsberg provides.

Craven A cigarette: a history of Carreras

Carreras became the second largest cigarette manufacturer in Britain. The business made its owner, Bernhard Baron, one of the richest men in the world. Carreras introduced the Craven A cigarette brand, which is still sold across the world.

Jose Joaquin de Carreras
Jose Joaquin de Carreras (1824 – 1887) was the son of a Spanish nobleman who had claimed political asylum in Britain. Carreras had established a tobacconist business at 61 Princes Street, later renamed 7 Wardour Street, near Leicester Square, London, by 1853.

Carreras catered towards an affluent market, including George Craven, 3rd Earl of Craven (1841 – 1883), for whom he created a personalised tobacco blend in the early 1860s. The reputation of the product grew through the Earl’s social circle, and it was packaged in tins and sold to the wider public as Craven’s Mixture from 1867.

William Johnston Yapp
William Johnston Yapp (1861 – 1946) acquired the Carreras tobacconist shop for £3,525 in 1896.

The business was to prove successful under Yapp, although he would later claim that he simply got lucky. Business practices were certainly lax by the standards of today, and no financial accounts were kept.

Carreras continued to supply the quality upper-class market. It was a relatively small, though well-regarded business. The “Arcadia” tobacco that J M Barrie praises in My Lady Nicotine (1890) was later revealed by the Peter Pan author to be a placeholder name for Craven’s Mixture.

Bernhard Baron
Bernhard Baron (1850 – 1929) was born to a poor French Jewish family in Brest-Litovsk, now part of Belarus, but then a part of the Russian Empire. When he was a child the family relocated to Rostov-on-Don in Southern Russia. His father was keen for him to avoid military conscription, so the family emigrated to Maryland, United States, in 1866.

Baron worked in a tobacconist’s shop, then a cigar factory. He had established Baron & Co, cigar manufacturers, on Pratt Street, Baltimore by 1879.

An inventive man, Baron designed a cigarette manufacturing machine. After he failed to sell it successfully in the United States, he relocated to England in 1896. He sold the patent rights to John Player & Sons, and other manufacturers, and made £150,000.

Carreras becomes a public company
Yapp had previously approached Imperial Tobacco and the American Tobacco Company regarding a sale of Carreras, but his proposed price of £150,000 was regarded as too expensive.

Yapp registered Carreras as a public company with a capital of £200,000 in 1903. However control of the company largely remained in the hands of John Crowle (1841 – 1906), chairman, Baron, managing director, and Yapp.

Black Cat cigarettes were introduced from 1904.

Crowle died in 1906, and Baron took over as chairman and managing director.

Baron struggled for his first five years with Carreras, but maintained his faith in extensive advertising.

Black Cat cigarettes had national distribution by 1908.

A large new factory was established on City Road, London, from 1910.

The Craven A cigarette, based on the Craven blend, had been introduced by 1914. It was to prove an immediate success.

Carreras sales increased significantly during the First World War, and the factory had reached capacity by 1916.

The Baron cigarette manufacturing machinery was constantly improved. Baron claimed that Carreras had “the fastest, most efficient, and up-to-date cigarette-making machine in the world” by 1920.

Carreras became one of the first tobacco companies in Britain to package gift coupons with its cigarettes from the early 1920s.

The Carreras share price rose fourfold between 1922 and 1926. Half of production was exported by 1927.

Baron was notable for the exceptional treatment of his employees.

Baron established a new factory in Mornington Crescent in 1928, one of the most up to date in Britain. It was perhaps the largest tobacco factory in the world, with nine acres of floorspace. It was the largest reinforced concrete building in Britain, and boasted air-conditioning.

The former Carreras factory at Mornington Crescent (2016)

Baron established a charitable trust for hospitals in 1928 to which he donated £500,000. He gave away over £2 million across his lifetime, and was perhaps the most generous benefactor that Britain had known at the time.

Carreras was the second-largest cigarette manufacturer in Britain by 1928.

Bernhard Baron died in 1929 with an estate valued at £5 million. He was one of the richest men in the world. He was succeeded by his son, Louis Bernhard Baron (1876 – 1934).

Louis Bernhard Baron (1876 – 1934) by William Orpen in 1926

John Sinclair Ltd was acquired in 1930.

Carreras employed 3,500 workers by 1931.

Advertising claimed that Craven A was the most widely smoked cork-tipped cigarette in the world by 1932.

Carreras held 14 percent of the British cigarette market in 1933.

Louis Baron died in 1934, and he was succeeded as managing director by his nephew, Edward Samson Baron (1892 – 1962).

Yapp died in 1946 with an estate valued at £4.3 million. After making some bequests, he dedicated his fortune to charity.

Carreras acquired the valuable trademark rights to Alfred Dunhill cigarettes in the United Kingdom from 1952.

Acquisition by Rembrandt Tobacco Corporation
The end of quota controls in 1955 allowed Imperial Tobacco to increase its sales of Players cigarettes at the expense of Carreras’s Craven A and Dunhill brands. The Carreras share of the cigarette market had declined to just three percent by 1955.

In the face of steadily declining profits, Carreras was acquired by the Rembrandt Tobacco Corporation of South Africa, controlled by the dynamic Anton Rupert (1916 – 2006), for £1.3 million in 1958. Rembrandt merged the business with Rothmans, which it already controlled.

Edward S Baron retired as chairman and managing director of Carreras in 1958, but was retained as president and consultant.

Carreras Rothmans opened a new factory in Basildon, Essex, in 1959. The Mornington Crescent factory was unsuitable for modernisation, and was sold off and converted into offices.

Rupert was highly critical of the former Carreras management and board of directors. He suggested that brand sales had suffered due to “a lack of sufficient research, proper planning and packaging”. The company had not downsized its superstructure to reflect its declining sales. Much of the machinery was outdated.

Rupert outsourced some operations to lower costs, and decided to focus on the filtered cigarette market.

Edward S Baron, once reckoned one of the wealthiest tobacco manufacturers in Britain, died in 1962 with a net estate valued at just £20,549.

Carreras had captured six percent of the British filtered cigarette market by 1963. 90 percent of Carreras production for the British market was for filtered cigarettes. The Basildon factory produced half of all cigarettes exported from Britain.

A cigarette factory was opened in Jamaica in 1963.

A 1927 advertisement for Craven A cigarettes

A factory was opened in Northern Ireland in 1965, which doubled production capacity.

Carreras Rothmans profits increased fourfold between 1960 and 1966. Carreras Rothmans was the third largest tobacco manufacturer in Britain by 1967.

The company held the majority of the Jamaican cigarette market by 1972.

The Basildon factory was among the most modern in Europe by 1973 and employed 2,500 people. Carreras Rothmans accounted for 61 percent of all cigarettes exported from Britain.

A factory was opened in Darlington in 1977 to meet increasing export demands. The Spennymoor factory was opened in 1979.

Craven A cigarettes were produced in 17 factories in 14 countries by 1979. British-made Cravens were exported to a further 82 countries.

The Basildon site was closed with the loss of 1,200 jobs in 1984.

Carreras Rothmans was acquired by British American Tobacco in 1999.

As of 2020, Craven A cigarettes are still sold in various markets, including Jamaica, Canada, Australia and South Africa.

The vat of the land: Beaufoy & Co

Beaufoy & Co was the largest vinegar brewer in Britain.

Mark Beaufoy establishes the business
Mark Beaufoy (1719 – 1782) was the son of a Quaker maltster from Evesham, Worcestershire. The Beaufoy family claimed Huguenot ancestry.

Mark Beaufoy was apprenticed to a gin distiller in Bristol. A guilty conscience ultimately convinced him to leave the business, and he re-trained in vinegar brewing in the Netherlands.

Mark Beaufoy (1719 – 1782), from a Thomas Gainsborough portrait

Beaufoy leased a vinegar brewery on the site of Cupar’s Gardens at Strand Bridge, London from 1740. The brewery itself had been established in 1730.

In an age before refrigeration, vinegar was a much more important commodity than it is today, due to its preservative effect on foodstuffs. Beaufoy soon secured contracts to supply the Admiralty with vinegar.

The Dutch vinegar brewers used the waste from their indigenous raisin wine industry to filter and flavour their vinegar. No such industry existed in Britain, so Beaufoy was forced to buy raisins to maintain true to the method. He steeped them to extract their sugar and mucilage, and then used the remaining solids in vinegar manufacture.

It was Dr John Fothergill (1712 – 1780), a Quaker physician, who first suggested to Beaufoy that he might make raisin wine with this juice.  Beaufoy ran with this idea, and became a leading producer of “British wine”.

Mark Beaufoy died in 1782. His brother, John Hanbury Beaufoy (1761 – 1836), took over management of the business. John H Beaufoy was a cultured and erudite man.

Henry Beaufoy era
Henry Benjamin Hanbury Beaufoy (1786 – 1851) became senior partner in the business when he came of age.

Beaufoy & Co was one of the largest manufacturers in Lambeth by 1810.

Henry Benjamin Hanbury Beaufoy (1786 – 1851) by Henry William Pickersgill in 1848

The Beaufoy & Co site was subject to compulsory purchase for £34,705 in order to build Waterloo Bridge in 1812.

The brewery was relocated to Caron Place on the South Lambeth Road. The site was chosen as it was the closest place with a plot of land large enough to accommodate the works.

Beaufoy & Co was the largest brewer of vinegar in Britain by 1832, with 15 percent of the market in Britain and Ireland.

Beaufoy & Co was the fourth largest producer of vinegar in Britain in 1844.

H B H Beaufoy developed one of the finest private libraries in England. A Shakespeare First Folio was acquired in 1851.

H B H Beaufoy was a charitable man; he founded six scholarships at the City of London School, at a cost of £10,000, and spent £14,000 to build a ragged school (school for the poor) in Lambeth in 1851.

H B H Beaufoy died in 1851, and his brother Colonel George Beaufoy (1796 – 1864) took over management of the vinegar brewery. By this time the Caron Place site occupied over ten acres.

George Beaufoy enjoyed an annual income of around £6,000 by 1852.

A report commissioned by The Lancet in 1852 suggested that Beaufoy vinegar contained “an immense quantity” of sulphuric acid, an adjunct used to speed up the maturation process. Their vinegar was found to consist of 3.5 to 4 percent acetic acid.

One vat held 56,799 gallons of vinegar in 1855.

Mark Hanbury Beaufoy
Colonel George Beaufoy died in 1864 and left a personal estate valued at under £250,000.

Ownership of the brewery passed to his only son, Mark Hanbury Beaufoy (1854 – 1922), for whom it was placed in trust and managed by his uncle until he came of age.

Dr Samuel Johnson’s arm chair was acquired for the library in 1859.

Owing to public preference for a darker vinegar, caramel was added to the product by 1865.

Mark H Beaufoy was a cultured and genial man. He soon effected changes after he took over the business. He scrapped overtime, which had resulted in poor quality control from overworked employees. was scrapped. Beaufoy increased employee wages in order to compensate for the loss of overtime earnings. Beaufoy argued, “all the work I now paid was for good work; previously a large percentage of it was bad work”.

The firm employed 125 men in 1881.

M H Beaufoy introduced the eight hour working day for his workforce from 1889. With a half day on Saturday, this created a 45 hour working week. The change was regarded as successful, and Beaufoy was well-regarded by his workforce.

Vinegar production was 790,096 gallons in 1898.*

Pott & Co, vinegar brewer of Southwark, was acquired in 1902.

Beaufoy introduced a fixed standard of no less than four percent acetic acid in its vinegar from 1904.

The library was relocated to the family country residence at Coombe House, Wiltshire, from 1909. Some of the library contents were auctioned off. The Shakespeare First Folio was auctioned off in 1912.

Mergers and consolidation
Beaufoy was the oldest surviving manufacturer of vinegar in Britain by 1919.

Mark Hanbury Beaufoy died in 1922, and left a net personalty of £54,474.

The vinegar industry suffered from falling prices and decreasing demand in the post-war period. Consolidation seemed a reasonable defensive measure.

Beaufoy & Co merged with Grimble & Co to form Beaufoy Grimble, a public company with a capital of £160,000 in 1928. The head office was at Caron Place, South Lambeth. George Maurice Beaufoy (1893 – 1941) was appointed managing director.

Crosse & Blackwell merged their vinegar interests, including Champion & Slee and Sarson, with Beaufoy Grimble and Distillers to form British Vinegars in 1932. Beaufoy Grimble held a 21 percent stake in the venture, and G M Beaufoy became chairman of British Vinegars.

George Maurice Beaufoy was killed by the German bombing campaign of London in 1941. He left a net estate of £19,678. Beaufoy, who had married in 1940, had no children, and his only brother had died in 1925. His death ended the Beaufoy family association with vinegar.

Beaufoy Grimble & Co was based at Leith, Scotland by 1954.

The Beaufoy vinegar brand was phased out after around 1961.

The Beaufoy site was closed in the 1970s. The brewery building still stands, and has been converted into housing.

The Scottish business was closed in 1983, and all production transferred to British Vinegars plants in England.

Beaufoy Grimble was voluntarily wound-up in 1986.

Source
* ‘Beaufoys of Lambeth’, David Thomas and Hugh Marks, Greater London Industrial Archaeological Society (2014).

Taking the biscuit: a history of Peek Frean (Part II)

Peek Frean pioneered the modern British biscuit. The business introduced the Bourbon, Custard Cream, Marie and Garibaldi biscuit varieties.

You can read the first part of this history here.

Peek Frean becomes a limited company; introduces the mass-market biscuit
Peek Frean & Co Ltd was registered as a limited company with a share capital of £500,000 from 1901. The business sold through 45,000 outlets.

Peek Frean held a Royal Warrant to supply biscuits to King Edward VII.

The shortbread-based Pat-A-Cake biscuit was launched in 1902. The first biscuit marketed at an affordable price, it was to prove a major success for the company. First week sales totalled over twelve tons.

Nearly 400 million Pat-A-Cake biscuits weighing a total of 6.5 million lbs were sold in 1906. Annual sales for this single type of biscuit amounted to £160,000. As well as the Pat-A-Cake, 250 different varieties of biscuit were sold.

Arthur Carr (1855 – 1947) became chairman and managing director of Peek Frean from 1904. Carr massively increased the company’s advertising budget.

The company employed 1,200 to 1,300 men, 900 to 1,000 girls, and 250 office staff by 1907.

Production of the Pearl biscuit ended in 1907. The Bourbon, a cocoa-flavoured cream sandwich biscuit, was introduced in 1910.

Peek Freen's Family Circle biscuit assortment. The box likely dates from the 1980s
Peek Frean’s Family Circle biscuit assortment. The box likely dates from the 1980s.

Peek Frean was an enlightened employer for the period. Staff received in-house medical and dentistry care (to which the company paid £3,000 a year in 1911), and a staff canteen which the company subsidised to the level of hundreds of pounds a year. By 1911 a third of company profits were spent on employee welfare, and wages were among the highest in London.

A Bermondsey carman’s strike closed down the Peek Frean factory in 1911. 2,500 employees were temporarily thrown out of work.

A Bermondsey women’s strike in August 1911 saw 1,200 employees refuse to work. The strikers wanted higher pay and the abolition of short shifts. However Peek Frean management countered that strikers had intimidated non-striking staff and that their wages were higher than the Bermondsey average.

Peek Frean produced nearly 100 million shortbread biscuits in just three months in 1912. This was understood to constitute a record for the sale of biscuits.

Over 3,000 people were employed by 1912.

Peek Frean established the Meltis chocolate factory in Bedford in 1913. 130 people were employed there.

Peek Frean introduced the Custard Cream biscuit in 1913.

Between 1900 and 1913, sales doubled and profits almost quadrupled.

Huntington Stone, a major shareholder, died in 1916 and left a gross estate valued at £239,580. He bequeathed around £200,000 to Christian missionary charities.

The Drummond Road site covered six acres by 1917. 4,000 people were employed.

Peek Frean claimed that Pat-A-Cake was the most popular biscuit ever produced by 1920. As much as 75 tons, or ten million biscuits, could be produced in a single day.

Peek Frean merges with Huntley & Palmer
High income tax and death duties convinced Huntley & Palmers of Reading to accept Peek Frean’s invitation to merge in 1921. A holding company, Associated Biscuit Manufacturers, with a capital of £2.5 million, was formed.

Peek Frean acquired Britannia Biscuits of India, with a factory in Mumbai, in 1924.

Peek Frean had introduced Vita-Wheat, the first British wheat crispbread, by 1927.

Arthur Carr retired in 1927.

Twiglets, a savoury snack, were introduced in 1930.

Ellis Carr, a major shareholder, left a personal estate of over £1 million in 1930.

Peek Frean acquired the English subsidiary of Suchards of Switzerland, based at Bedford, in 1932.

Peek Frean had established an Australian subsidiary by 1934.

The Peek Frean site covered twelve acres by 1939, and employed over 4,000 workers. Over 300 different varieties of biscuit were produced. The company manufactured its own biscuit tins; some three million a year.

Arthur Carr died in 1947 with an estate valued at £630,206.

Peek Frean provided one of three wedding cakes for the Royal Wedding of Princess Elizabeth, now Elizabeth II, in 1947. It weighed 600 pounds and stood six tiers tall.

Peek Frean built a factory across a seven-acre site in Ontario, Canada from 1950. The factory supplied the Canadian and the North Eastern United States markets. Manufacturing in America allowed Peek Frean to reduce its wholesale prices by 25 percent.

The Bermondsey factory employed 3,700 people by 1954.

Peek Frean acquired the Ashley Vale Biscuit Company Ltd, with a factory at Avonmouth, Bristol in 1955.

There were 1,750 employees at Bermondsey in 1964.

Peek Frean closed the factory in Bristol in 1965 and relocated production to Bermondsey. 350 to 400 employees were made redundant.

The Meltis confectionery site at Bedford employed 1,300 people by 1966. The factory had extended to cover five acres, and Meltis was the largest producer of Turkish Delight in Britain, and the second largest producer of liqueur chocolates.

Meltis merged with Chocolat Tobler to form Tobler Meltis in 1967. Interfood, the owner of Suchard, acquired Tobler Meltis in 1975.

Peek Frean grew in the early 1970s due to rising sales of the Club biscuit, shortcake and Christmas puddings.

Peek Frean (Australia) held around seven percent of the Australian market, but became loss-making, and was sold to rival Arnotts in 1975.

Nabisco of America acquired Associated Biscuits for £84 million in 1982.

Peek Frean was the largest manufacturer of Christmas puddings in Britain by 1984. This was due to the fact that they were relatively low-priced, as they did not contain alcohol. Over 4.5 million Christmas puddings were sold every year.

The Peek Frean brand had become primarily associated with commodity and children’s biscuits by the mid-1980s.

Acquisition by BSN, closure of the Bermondsey site
Associated Biscuits was acquired by BSN of France, proprietors of the LU biscuit, in 1989. Nabisco retained the Canadian business, which continued to produced biscuits under the Peek Frean brand.

The Bermondsey factory was closed with the loss of 1,022 jobs in 1989. The factory had high overheads due to its inner-city location and age, and was operating at just 50 percent capacity. Meanwhile, the biscuit market had been in decline. Production was transferred to Aintree and Leicestershire.

The India and Pakistan subsidiaries were divested for $44 million in 1989. Britannia was the largest biscuit manufacturer in India, and English Biscuit Manufacturers was the largest biscuit manufacturer in Pakistan.

All advertising support for Peek Frean branded products in the UK ended from 1990, and the brand began to be phased out from 1991.

BSN (now called Danone) sold its UK and Irish biscuit operations to United Biscuits for £200 million in 2004.

Although no longer sold in Britain, Peek Frean branded products continue to be manufactured in Canada and Pakistan.

The Peek Frean Family Circle biscuit assortment is still sold. It was initially rebranded as Crawford’s, and latterly as McVitie’s.

Wheeler & Co

Wheeler & Co became one of the largest soft drinks producers in Belfast.

Walter James Wheeler (1830 – 1890) and Dr Henry Whitaker (1833 – 1912) acquired a chemist’s business at 38 Apothecaries Hall, opposite Bridge Street, Belfast, in 1858. Whitaker had previously served as an apprentice pharmacist with Grattan & Co.

Wheeler & Whitaker acquired the lease to a factory on Murphy Street, Belfast, which had access to the Cromac springs, in 1864.

Wheeler & Whitaker was the first Belfast soft drink manufacturer to utilise the Cromac springs, and it was to prove well-suited for the production of carbonated drinks due to its purity and mineral content.

Wheeler & Whitaker was ranked as one of the “Big Five” producers of soft drinks in Belfast by 1871. An extensive export trade had been developed by 1877.

Wheeler & Whitaker was subject to a break-up in 1882. Dr Whitaker took control of the chemists’s business, and Wheeler took control of the soft drinks business.

W J Wheeler died in 1890 and left an estate of £16,932. He was remembered as a kindly man.

Frederick Wheeler (1862 – 1939) succeeded his father as managing director of Wheeler & Co. A driven and determined man, the business expanded substantially under his direction.

Wheeler converted the firm into a private limited company, with capital of £20,000. He led a focus on the export trade.

The First World War was to have a negative impact upon Belfast soft drink producers. Businesses struggled to import ingredients, and to export produce.

The Republic of Ireland gained independence in 1919, and erected tariffs against imported British goods.

Norman Walter Frederick Wheeler (born 1892), son of Frederick Wheeler, placed the business into voluntary liquidation in 1923.

Wheeler & Co was acquired by George A Davison. He was declared bankrupt in 1927.

Wheeler & Co was still in business as late as 1942.

Magnate personality: John Ellerman

John Ellerman was by far the richest man in Britain. How did he become so wealthy, and why is he so little known today?

Early life
John Reeves Ellerman (1862 – 1933) was born in Hull, a large port town on the Yorkshire coast. He was the son of Johann Herman Ellerman (1819 – 1871), a shipbroker and corn merchant who had emigrated from Hamburg by 1847.

His father died in 1871, and left a relatively modest estate of £600. For reasons that remain obscure, Ellerman subsequently spent much of his childhood in France. He was then educated at the King Edward VI School in Birmingham.

Ellerman inherited around £14,000 from his maternal grandfather in 1879, and with this money was able to train as a chartered accountant under William Smedley of Newhall Street, Birmingham. Smedley was a successful speculative investor, and almost certainly inspired the young Ellerman.

Ellerman subsequently became an accountant at Quilter Ball & Co, headed by Sir Cuthbert Quilter (1841 – 1911), one of the great accountants of the era. Quilter regarded Ellerman as one of the most promising accountants he had ever employed. Ellerman was offered a position as partner, but declined in order to establish himself independently.

J R Ellerman & Co, accountants of Moorgate Street in the City of London, was established in 1887. Ellerman soon enjoyed an annual income worth thousands of pounds.

Shipping interests
Frederick Richards Leyland (1832 – 1892), owner of the Leyland shipping line, died suddenly in 1892. Ellerman capitalised on the opportunity, and with a group of investors acquired the line for £770,000. This was an excellent price, as profits during the previous four years had averaged £121,159.

The new company had a share capital of £450,000. The assets acquired were excellent, and the modern fleet boasted a gross tonnage of 60,511. Existing management was continued.

Hard work, shrewdness and good luck would see Ellerman amass great wealth. He divested his accountancy business in order to focus on capital investment from 1895. Ellerman was the first prominent investor to have received formal accountancy training, and this was to afford him a significant advantage with regards to financial and legal knowledge.

The Leyland shipping line was sold to J P Morgan (1837 – 1913) in 1901. Morgan was paying “reckless prices”, and Ellerman gained £1.2 million in cash for his stake, a sale that represented a 33 percent premium over market prices.*

Ellerman established the London, Liverpool and Ocean Shipping Company with a share capital of £1.3 million. He invested a capital of £500,000.

Ellerman acquired the Leyland Mediterranean fleet of eleven vessels. He also acquired the Papayanni Steamship Co of Liverpool. Both assets were significantly undervalued. These lines formed the basis of the Ellerman shipping line.

Ellerman then acquired the City line, which ran between Glasgow and the West Indies, and controlled 400,000 tons of shipping. It was estimated that the purchase cost nearly £1 million.

Later in 1901 Ellerman acquired the Hall line and the Westcott and Lawrence line (with nine steamers and a gross tonnage of 15,000 tons).

Ellerman extends his interests to include brewing and the media
Ellerman was a quiet, unassuming figure. He avoided leading an ostentatious lifestyle and spent just five percent of his income, and reinvested the remainder. He was a modest man with great attention to the smaller details of a large business. He was remarkable for his kindness in offering business advice towards those who sought it. He retained the most highly-skilled managers from the businesses he acquired, and respected the decisions that they made when he was absent.

Ellerman identified the brewing industry, with the exception of the global brands of Bass and Guinness, as stagnant. Perceiving the industry as undervalued, he began to invest in breweries from 1897.

Ellerman became the largest shareholder in the Financial Times and one of the largest shareholders in the Daily Mail in 1904.

Ellerman was created a baronet in 1905.

Ellerman acquired the Bucknall line, which had 28 vessels and a large freight trade with South and East Africa, in 1908. Following the purchase Ellerman controlled 108 vessels with a combined tonnage of over 420,000.

Ellerman became the third largest shareholder in The Times in 1912. He also acquired the Sphere and Tatler.

Ellerman acquired over a third share of the Illustrated London News and Sketch in 1913.

Ellerman rendered valuable assistance to the Ministry of Shipping during the First World War. He also equipped and maintained the Ellerman Hospital at St John’s Lodge, Regent’s Park, London.

Ellerman made his most significant purchase with the acquisition of Thomas Wilson & Co of Hull for £4.1 million in 1916. Thomas Wilson & Co was the largest privately-owned shipping line in the world, with a fleet of 70 ships.

Following the Wilson & Co acquisition, Ellerman-controlled lines owned 204 vessels.

Ellerman was the richest man in Britain by 1916, worth, at his own estimate, £20 million. His income that year was estimated at £3 million.

Ellerman owned one eighth of British mercantile shipping tonnage by 1917.

Unfortunately, the Wilson purchase was to prove a rare misstep for Ellerman, due to a slump in global shipping following the First World War.

Ellerman was extremely shy of publicity. He sold his house in Eastbourne in the early 1920s after double-decker buses were introduced which would have allowed passengers to glimpse a view of his home.

Ellerman sold his controlling interest in the St Clement’s Press, owner of the Financial Times, to the Berry brothers in 1919. He sold his holding in The Times to John Walter and John Jacob Astor (1886 – 1971) in 1922.

Ellerman divested his illustrated newspapers, which included the Sphere, Tatler and Eve to the Inveresk Paper Company for around £3 million in 1926.

Ellerman controlled over two million tons of shipping and was the third largest owner of shipping in the world in 1927.

The Inland Revenue privately assessed Ellerman as easily the richest man in Britain in 1929, with a fortune valued at more than twice that of the next wealthiest individual.

Ellerman died in 1933 with a British estate valued at £36,684,994. It was estimated that he paid between £17 million and £20 million in wealth taxes during his lifetime.

Notes

  1. ‘J P Morgan in London and New York before 1914’ by Leslie Hannah (2011).

Milk the profits: a history of Mackeson Stout

Mackeson & Co was the first brewery to introduce milk stout.

The Hythe Brewery and the Mackeson family
The Hythe Brewery was established on High Street, Hythe, Kent in 1669.

Overseas version of Mackeson Stout

William Mackeson (1774 – 1821), a surgeon, became junior partner at the Hythe Brewery from 1801.

Following his death in 1821 the business was continued by his brother, Henry Mackeson (1772 – 1860). Mackeson employed nine men at the Hythe Brewery in 1851.

Henry Mackeson died in 1860, and his son, Henry Bean Mackeson (1813 – 1894) took control of the Hythe Brewery.

Henry Bean Mackeson was gentlemanly, genial, courteous, and well-respected. He employed 37 men in 1871, and 36 men in 1881. He served as Mayor of Hythe for nine consecutive years.

Henry Mackeson takes control of the business, and milk stout is introduced
Henry Mackeson (1861 – 1935), studied chemistry at Edinburgh and London. He became the head of the business following the death of his father in 1894.

Mackeson was persistent and hard working, and helped to develop the business. He invested in new buildings and machinery, and updated the range of beers provided in order to meet changing customer preference.

Henry Mackeson was joined in partnership by his brother, George Lawrie Mackeson (1864 – 1950).

Mackeson & Co was incorporated with a share capital of £120,000 in 1900.

Mackeson & Co acquired various patents relating to using lactose, or milk sugar, in brewing from 1908. Using these patents, the brewery introduced Mackeson Milk Stout, the first milk stout in the world, from 1909.

Stout was already recommended as a source of energy during convalescence, and Mackeson hoped that the addition of lactose would further increase its nutritional value. 9lbs of lactose were used in each 36 gallon barrel.

Mackeson Milk Stout was an immediate success.

Henry and George Lawrie Mackeson sold their shareholdings to H & G Simonds, a large brewery based in Reading, in 1920. The two brothers took the opportunity to enter into retirement.

Mackeson was a well-established brand throughout Kent and the brewery employed 120 people by 1929.

Mackeson is acquired by Whitbread
Whitbread, a large London brewer, acquired Mackeson & Co in 1929. Simonds sold up as the offer price was simply too good to refuse.

Whitbread afforded Mackeson Milk Stout nationwide distribution. Over 50,000 barrels were sold in 1939, and the beer accounted for nearly ten percent of Whitbread production.

The name was changed to “Mackeson Stout” from around 1942 onwards.

Sales gained momentum following the Second World War, when the stout began to be marketed towards women, who it was reasoned would appreciate its smooth and sweet flavour. Mackeson also benefited from increasing demand for bottled beers, which, although more expensive, provided consistent flavour and quality.

103,000 barrels of Mackeson were produced in 1948.

Mackeson Stout contained eight percent lactose in 1954.

Whitbread bottled beers were available in over half the licensed houses in Britain by 1955. Demand was such that Whitbread had to subcontract around a fifth of its bottling to other companies.

60 percent of the £850,000 Whitbread advertising budget was dedicated to Mackeson in 1957. Mackeson accounted for almost half of revenue at Whitbread by 1960. 425,000 barrels of Mackeson were sold in 1961.

Mackeson held a 25 percent share of the stout market in Britain by 1963. Whitbread briefly experimented with a draught version of Mackeson.

A reciprocal agreement was signed with Bass in 1965, who agreed to stock Mackeson Stout across its estate of 4,100 public houses in exchange for Whitbread selling Bass beers throughout their estate.

Mackeson was launched in South Africa in 1967.

Mackeson had an ABV of over four percent in 1968, and sold for a premium price.

The Hythe brewery was closed in 1968 and Whitbread relocated production to the Exchange Brewery in Sheffield.

Mackeson had been introduced in cans by 1971.

Mackeson was withdrawn from sale in South Africa in 1972.

Mackeson was brewed under licence in Jamaica and Trinidad from 1973. It began to be brewed in Singapore from 1978 and Nigeria from 1979.

British Mackeson had an ABV of 4.3 percent in 1988.

The Exchange Brewery was closed in 1993, and Whitbread relocated production to their Castle Eden, Co Durham and Samlesbury, Lancashire plants.

Mackeson XXX Stout was brewed under licence in the United States by the Hudepohl-Schoenling Brewing Company in Cincinnati, Ohio from around 2000.

The former Mackeson malthouse in Hythe (2007)

Whitbread sold its beer operations to Interbrew of Belgium for £400 million in 2000. Interbrew merged with AmBev to form Inbev from 2004.

Mackeson Stout was produced under contract by a number of brewers from 1999, including Young’s of Wandsworth, Ridley’s of Chelmsford, Cameron’s of Hartlepool and Hydes of Manchester. Since the closure of Hydes Brewery in 2012, the production location has been unclear.

The ABV of Mackeson’s was reduced from 3 percent to 2.8 percent from 2012 in order to qualify for duty relief.

According to information kindly provided by InBev, Mackeson Stout contains 600g of lactose per hectolitre of final product.

Sources
* British Newspaper Archive
* The Times Historical Archive
* The Story of Whitbread PLC 1742-1990 by Nicholas Barritt Redman
* Census, birth and death records
* Martyn Cornell
* Ron Pattinson

Beer we go again: E Smithwick & Sons

How did Smithwick’s rise from relative obscurity to become the largest ale brewer in Ireland?

Origins and the Edmond Smithwick era
The Smithwicks were a well-established and highly-respected Catholic family in Kilkenny, Ireland.

John Smithwick (1763 – 1842) entered into business as a wholesale and general grocer with premises on Kilkenny High Street. From modest beginnings Smithwick grew wealthy, and he leased a distillery at St Francis Abbey, Kilkenny, on behalf of his eldest son, Edmond Smithwick (1801 – 1876), from 1827.

St Francis Abbey is a ruinous former Franciscan abbey built in the early 13th century.

The brewery was built around the historic St Francis Abbey, as seen in this 2007 photograph

An adjoining brewery was acquired on lease from 1833. Ireland had relatively few breweries, numbered at just 207 in 1831, against 5,419 in England. Kilkenny was to prove an advantageous location for the production of beer, given that it was situated in one of the most advantageous barley growing regions in Ireland. The brewery soon overtook the distillery to become the predominant business.

Edmond Smithwick hosted Daniel O’Connell (1775 – 1847), the Catholic emancipation campaigner, in 1840. Amongst this fervour of nationalistic mood, there was a revival of a campaign for Irish consumers to purchase Irish-made goods. Smithwick himself argued that if the middle classes supported Irish industry, lower taxes would ensue, as there would be fewer unemployed to support.*

Highly-regarded by the community, Edmond Smithwick was elected Mayor of Kilkenny in 1844.

Edmond Smithwick greatly extended and modernised the brewery in 1851. He also hired a highly experienced brewer.

Edmond Smithwick funded an all-expenses paid trip for over 100 employees to the Great Exhibition of Dublin in 1853.

His brother, Daniel Smithwick (died 1869), established a bottling works.

Edmond Smithwick had commenced exports to the British Empire by 1855.

The business traded as E Smithwick & Sons by 1861.

Edmond Smithwick was re-elected Mayor of Kilkenny in 1864 and 1865.

Edmond Smithwick had spent thousands of pounds on improvements to his site by 1867. It was one of the foremost industrial concerns in the south of Ireland. The brewery employed hundreds of people. Smithwick had a reputation as a fair employer who paid a good wage.

Edmond Smithwick acquired the precinct of St Francis’s Abbey for £3,100 in 1867.

Edmond’s sons take over the business
Edmond Smithwick died in 1877, and the business was continued by his three sons, John William Smithwick (died 1894), Edmond Smithwick (1839 – 1912) and Daniel Smithwick (1840 – 1883).

The business was incorporated as E Smithwick & Sons in 1890.

The brewery employed about 400 people in 1900.

The market consolidates
The success of the company in the beginning of the twentieth century was credited to its chairman, Michael Buggy (1855 – 1935), a solicitor.

E Smithwick & Sons was one of only 25 breweries remaining in Ireland by 1917, and one of only 15 to brew stout, porter and ale.

James Sullivan & Co, a rival Kilkenny brewery with a production capacity of 20,000 barrels a year, entered into receivership in 1917, and the assets were acquired by E Smithwick & Sons in 1919. The purchase left E Smithwick & Sons as the sole surviving brewery in Kilkenny.

Strong growth under W A Smithwick
Walter Aloysius Smithwick (1908 – 1993) became a company director from 1931. He was responsible for introducing a large sales team to the business, which was to prove highly successful in increasing revenue. Smithwick’s products had national distribution by 1935. Over 400 licensed establishments in Dublin were supplied by 1937.

E Smithwick & Sons was the oldest and most important industrial concern in Kilkenny by 1937, and employed over 140 people in the city.

E Smithwick & Sons won first prize for best bottle conditioned beer in a British Commonwealth competition in 1937.** Shortly afterwards, the beer was rebranded as Smithwick’s No.1.

The Second World War hampered production, with output reduced to just 6,000 barrels in 1942.

Walter Smithwick became chairman and managing director from 1947. He continued to practise as a solicitor in Kilkenny despite his commitments to the family brewery. Sales grew quickly under his dynamic leadership, and improved distribution saw annual production reach 50,000 barrels by 1952.

The Great Northern Brewery in Dundalk was purchased for £37,500 in order to supplement brewing capacity in 1954. The news was greeted positively, as it presented an opportunity for W A Smithwick to introduce his superior management skills to the acquired business.

Smithwick’s Brewery was registered as a public company with a capital of £500,000 in 1956. That year Guinness, the large Dublin-based brewery, took a stake in the business.

The Dundalk purchase was to prove problematic. Public taste increasingly favoured keg beer, and Smithwick’s lacked sufficient capital to convert the Dundalk brewery for this purpose. The Dundalk brewery was sold to Guinness, who invested to convert the plant to lager production.

E Smithwick & Sons held over 60 percent of the Irish ale market by 1960, a total of around 60,000 barrels a year. The four products were Smithwick’s No.1, a deep gold ale, Smithwick’s Export Ale, Smithwick’s SS Ale, and Smithwick’s Barley Wine.

Vintage bottles of Smithwick’s Barley Wine

Smithwick’s Barley Wine won the Olympic Gold Medal at the World Beer Olympics in 1963.

Takeover by Guinness and investment
Guinness acquired a controlling interest in Smithwick’s in 1964.

Smithwick’s had been slow to anticipate the increased demand for draught beer. It introduced a lager brand, which failed, in part because it lacked the marketing power of Guinness and rival English brewers. Smithwick’s was also struggling with the capital demands of investing in draught beer. Amidst these conditions, Guinness assumed full control of the company in 1965.

Walter Smithwick did not regret his decision to sell the brewery. He knew the business needed large amounts of capital if it was to remain competitive, and to fail to take the business public would have seen it struggle to survive. Smithwick understood that a workforce of 250 were dependant on the brewery for their livelihood.

A new brewhouse was established from June 1965.

Some Smithwick’s bottling had been transferred to Dundalk by 1968.

The Smithwick’s brewery was expanded in 1969.

Hop varieties in use in the early 1970s included Irish-grown Fuggles, Goldings and Bullion. Hop pellets were in use by 1985.

Budweiser was produced under licence at the Kilkenny brewery from 1987. A £1 million investment was made to enable lager production at the brewery.

Growth as an export brand
Kilkenny Irish Beer (c.5% ABV) was introduced, originally as an export-only product, from 1987. The Kilkenny name was chosen as opposed to Smithwick’s as it was easier for non-native English speakers to pronounce. The initial market was Germany.

Draught Smithwick’s for the Northern Ireland market was brewed at Dundalk by 1988. Smithwicks Ale bottling was transferred to Dundalk as part of a rationalisation drive from 1989.

Export sales of Smithwick’s and Kilkenny increased by over one third in 1994, with a large market in Canada.

Domestic sales of Smithwick’s declined every year from the mid-1980s, and ale, excluding stout, comprised just ten percent of the Irish beer market by 1995.

A reduced-strength (4.3% ABV) version of Kilkenny Irish Beer was introduced to the Irish market from 1995. A Guinness executive explained that it was a different beer from Smithwick’s. It was a premium-priced product, and was intended to revitalise the declining ale category, and prevent the newly-launched Caffrey’s, a rival Irish ale from Bass, from taking market share.

Dundalk brewed all bottled and canned Smithwick’s, including the Barley Wine, by 1995.

Production of Smithwick’s beer for the domestic market had been transferred to the Guinness-owned Cherry’s Brewery in Waterford by 1997.

43,000 hectolitres (75 million pints) of Kilkenny Irish Beer had been sold across 53 different countries in 1999. The beer was sold in 1,860 domestic Irish pubs.

The Kilkenny Brewery employed 150 people in 2000. It was an efficient site, but was suffering from capacity constraints.

Smithwick’s Barley Wine was discontinued in 2001.

The front of the St Francis Abbey brewery, Kilkenny (2012)

The Kilkenny and Dunalk breweries were closed in 2013, with production relocated to St James’s Gate, Dublin, the home of Guinness.

Ale (all ale, not just Smithwick’s) held a seven percent share of the Irish beer market in 2017.

Notes
* It remains unclear exactly which Mr Smithwick was speaking at this Kilkenny meeting, but Edmond Smithwick (1801 – 1877) is the most likely.
** The name of the awarding body was the Brewing Trade Review Bottled Beer Exhibition

Water way to go: Apollinaris

Apollinaris was the highest-selling mineral water in the world.

Establishment of the company and growth
The Apollinaris spring is situated in the German Rhineland. It is an alkaline and highly-aerated water, and contains sodium chloride and calcium, sodium and magnesium carbonates.

The Apollinaris spring began to be commercially exploited, in a modest way, from 1852 onwards.

George Murray Smith (1824 – 1901) was a successful London publisher. He first encountered Apollinaris spring water whilst dining with Ernest Hart (1835 – 1898), the editor of the British Medical Journal, in 1872. Smith appreciated its taste, and determined to acquire the spring.

George Murray Smith (1824 – 1901) in 1901

Smith partnered with Edward Steinkopff (1838 – 1906), a Frankfurt-born merchant, to establish a British company with the worldwide distribution rights to Apollinaris water in 1873.

The Apollinaris Company Limited had its head office at 19 Regent Street, London. Steinkopff became company chairman and Julius Charles Prince (1851 – 1914) was appointed as managing director.

Murray Smith was a skilled businessman, and he organised faster, more efficient and safer distribution of Apollinaris from Germany. Meanwhile, Steinkopff was praised for his high energy, and his bold and prudent business decisions.

Company growth was to prove swift; just under 1.8 million bottles were sold in 1874, rising to over ten million bottles in 1881.

The brand soon established a prestigious reputation. Queen Victoria used Apollinaris as a mixer for Scotch whisky or claret.

Over 19.5 million bottles were sold in 1895.

Foundation of a public company
Apollinaris acquired Johannis, a rival German mineral water producer, for around £400,000 in 1897.

Apollinaris & Johannis was formed as a public company with a capital of £2,380,000 from 1897. Steinkopff and Smith divested their shares, largely to Frederick Gordon (1835 – 1904), the pioneer of the first modern hotel in London. Gordon became president of the company.

Apollinaris & Johannis merged with A & F Pears, a struggling soap manufacturer, in 1898. The amalgamation was organised by Gordon, who insisted that there were cost-efficiencies in distribution and sales between the two companies, although the contemporary press remained sceptical.

Apollinaris & Johannis held Royal Warrants to supply the King and the Prince of Wales by 1902.

Over 30 million bottles of Apollinaris were sold in the 1905-1906 financial year.

Steinkopff died in 1906 with an estate valued at £1.2 million.

Apollinaris was a popular culture staple, especially among the middle and upper classes. It was referenced by many leading novelists of the era, including Henry James, Edith Wharton and James Joyce.

A & F Pears was acquired by Lever Brothers in 1914.

War time troubles
Only Perrier could rival Apollinaris as the best known sparkling mineral water in Britain by 1914.

Apollinaris & Johannis Ltd had a capital of over £3 million by 1915. The company employed about 100 clerical staff and 60 to 80 warehouse staff.

Post-war economic chaos in Europe severely hampered company operations, and exports faced the challenge of increasing import tariffs across the world.

Apollinaris & Johannis was forced to diversify, and a range of British-produced soft drinks had been introduced by under the Presta brand by 1930.

The company changed its name to Apollinaris & Presta from 1931.

The increasing value of the German currency in the 1930s made Apollinaris increasingly expensive. The German government had introduced a moratorium by 1936, which prevented Apollinaris & Presta from withdrawing funds from the Nazi-controlled country.

Exports from Germany had been highly restricted by 1939.

Apollinaris & Presta were appointed sole distributors of Perrier water in the United Kingdom and Ireland from 1938-9.

Decline
The Apollinaris spring was expropriated by Heinrich Himmler’s SS from 1943.

British rationing controls also restricted the company from producing Presta soft drinks between 1943 and 1948.

Control of the Apollinaris spring and bottle works were regained in 1947-48. The site had been starved of investment during the war years.

Apollinaris & Presta entered into financial difficulty, and lost its stock market quotation in 1955. The spring and bottling works were acquired by Dortmunder Union, a German brewery. Schweppes acquired Presta and the distribution rights for Apollinaris across the British Commonwealth and the Americas.

Schweppes took a 28 percent stake in the German parent company from 1991.

Schweppes acquired the 72 percent of Apollinaris that it did not already own from Brau & Brunnen, the successor to Dortmunder Union, for €151 million in 2002.

Apollinaris was acquired by Coca-Cola for an undisclosed sum in 2006.

Apollinaris remains popular in Germany, where it is the second-highest selling sparkling mineral water. Presta is also still sold in Germany.

Meta post #3: historical context

When the media reported on the failure of the Thomas Cook travel company in 2019, I saw a spike in page views for my history of the business.

The quality of business news in British broadsheets is generally very good. However what journalists often overlook is the historical context of huge events such as when a business enters into administration.

Just look at when Stead & Simpson, one of the largest shoe retailers in Britain, entered into administration in 2008. Nobody reported that the 174 year old business had once been the largest footwear manufacturer in the world. This was information that a busy journalist, working to a deadline, simply does not have the time to find out. So the story was reported as a high street misfortune, rather than as the culmination of a slow and steady decline for a once huge and influential business.

Stead & Simpson was not just another high street brand; it had historically employed thousands of people, and the Gee family, who controlled the company in the early twentieth century, played an influential role in the establishment of the University of Leicester.

Stead & Simpson represented a rare survivor of the once-vast East Midlands shoe-making industry, and had managed to avoid being swallowed up by the J Sears & Co business that came to control much of British shoe retailing in the mid to late twentieth century.

I would argue that a greater awareness of historical context helps us to better understand the future and the present, as well as the past.