Beer flows again, but Fuller’s glass still looks half empty

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SSomewhere in the depths of the historic Fuller, Smith & Turner brewery in West London are the company’s original “brew books”. Dating back to the 19th century, these leather-bound tomes recount the wisdom gleaned by its brewers and the decades of trial and error that have shaped beers like London Pride since 1845.

It’s hard to imagine what these books would say if they traced the 12-month period from March 2020. Pubs across the country have been closed for months and demand for new beers has slowed.

Even before the pandemic hit, Fuller’s was a very different company than the one founded 176 years ago. In 2019, Japanese giant Asahi bought the brewery for £ 250million, including the Chiswick plant whose distinctive malty aroma is known to anyone driving west London on the A4. .

There remains the pubs and hotels activity, which includes 212 pubs managed directly, 176 rented to tenants and 1,028 “boutique” hotel rooms.

Fuller’s beers are still flowing from taps, thanks to a sourcing deal with the company she sold – or at least under normal circumstances. But these are not yet normal times, as Thursday’s annual results will no doubt underline. In its last business update, in March, the company said its ads were only open, on average, on 27% of the 388 days between March 20, 2020 and April 12 of this year.

Covid-19 closures are expected to drop revenue to 80% below the pre-pandemic year, the company said, implying revenue likely to reach around £ 64million, from £ 320million sterling.

The pub group, which focuses on London and the south-east, appealed to investors for £ 54million in new shares as it warned £ 5million in cash was going up in smoke every day.

It’s the same story wherever you look in the advertising industry. The hospitality sector has been one of the hardest hit by Covid-19, and the full reopening, already delayed by a month, does not mean a return to full health.

Many advertising companies are still flexing under the pressure of the rent debt accumulated during the pandemic. The government has come up with a plan that would allow homeowners to share some of the pain by cutting money owed to them, but that may not be enough for some.

The most affected are the small urban and independent establishments, in particular those which do not serve food and therefore did not benefit from last year’s “eat to help” program, nor from the reduction in VAT on food. .

Rural pubs with outdoor breweries and larger chains with deeper pockets will be in better shape. These are often publicly traded companies that run their own venues, serve food, and have large areas they can use to cushion the damaging effects of social distancing.

Fuller falls somewhere in the middle. It’s small compared to pubcos that operate nationally, if not globally. Many of its places are in London, where outdoor space is more scarce. But with a market cap of over £ 500million, it has options, as evidenced by its ability to issue new shares and refinance debt.

If things get really perilous, Fuller’s could still issue more debt – this has already risen to £ 216million during the pandemic, from £ 152million – or sell some of his freehold properties.

In the last business update, Fuller’s had no idea yet that England’s “Freedom Day” – originally scheduled for June 21 – was going to be pushed back to July 19.

The effects of this will not show in Thursday’s results, which cover the year through the end of March. But its impact on recent trade may well make the company’s problems worse.

Fuller will be far from alone in this regard. Even though things look a little rosier in the beer garden, the pub business is far from out of the woods.


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