Fri 17th Jul 2015 - Batemans plans lower barrelage and more managed pubs future Batemans plans lower barrelage and more managed pubs future: George Bateman is planning to reduce production at its historic brewery in Wainfleet, Lincolnshire, to take full advantage of Progressive Beer Duty tax benefits. The brewer produces about 18,000 barrels a year, down from 30,000 barrels a year at its height, but is set to reduce production to around 7,000 barrels per annum, which would be worth £18 a barrel in increased beer duty benefits. Managing director Stuart Bateman told Propel: “Progressive Beer Duty has been a tremendous thing for innovation. But one drawback of Progressive Beer Duty is that some smaller brewers have used it for discounting, which has left some middle-ground brewers struggling for margin. The savings in reducing production to 7,000 to 8,000 barrels are significant. We are now appraising some of our low volume brewing opportunities which may well result in us walking away from those opportunities. We would mothball part of out brewery plant. We have every confidence that the government will eventually see that middle-ground brewers need support – and that will allow us to spring back to our previous volumes. But I am passionate about brewing beer – and Batemans will stop brewing beer over my dead body.” The company’s planned production reduction comes as it prepares a major expansion in managed pubs – and the introduction of a franchised model, called the Pub Operating Agreement, within its tenanted division. The company has run five of its tenanted pubs on a managed basis in the past few years to allow it to learn managed house skills. Bateman told Propel: “Changing a company’s culture from tenanted to a managed and franchised culture is very difficult. But I don’t believe you can just buy-in the expertise – that why we’ve been running pubs on a managed basis that aren’t entirely suited. It’s meant we’ve learnt a lot.” Bateman said the company hoped to be running an estate of ten newly-acquired managed pubs by the end of 2016 – and will launch its first franchise agreement next week with a view to having between ten and 15 in the estate by the end of 2016. There will always, though, be traditional tenanted pubs within the Batemans estate, he stressed. Bateman said the company has very low gearing and a facility in place to allow its managed acquisition plan. “We have a lot of backing to help us purchase more managed house properties,” said Bateman. “The plan here is still 100% based on longevity and producing beer.” George Bateman reported turnover of £15,617,000 in the year to 31 January 2015, a 2.5% drop from the year before. Operating profit was £191,000 compared with the previous year’s £200,000. Pre-tax profit was £89,575 compared to £168,135 the year before. Total remuneration for its 11 directors rose to £620,071 compared to £599,543 the year before. In its statutory accounts, the company stated: “Turnover and gross margin were both down on the previous year. This was another challenging year and the swing in performance is attributed to the continuing move within tenanted pubs towards free trade pricing, the testing and development of mange house operating procedures, increased competition in the bottled beer market as well as more intensive competition in the on trade from producers benefiting from low duty rates.” In a press statement, the company added: “While it has been another challenging year for the brewer, Batemans has a comprehensive development strategy in process to secure its place in the market for the foreseeable future. A key element of this revolves around upgrading the tenanted estate and extending the managed estate, which began with the employment of a retail director, Linda Green, in April this year, and continues with investment into existing venues and acquiring new pubs. This includes a major investment into The Woolpack, located in Wainfleet, near the brewery, which has closed for refurbishment this week. Batemans is also close to completion on two acquisitions, one near Doncaster, and the other near Sheffield. Additionally, Batemans will soon be launching its new Pub Operating Agreement franchises, and is looking at opportunities for further managed pubs. Batemans remains passionate about brewing beer and in line with this, will continue building its niche beer brands and current favourites with the future of some of its more periphery brands under review. The team at Batemans is confident that with a continued focus on ensuring the pub estate and product range is as strong as it can be, the family brewer will remain a key player in the sector for many years to come.”