Marston’s commits to £75m expansion strategy

Pubco and brewer Marston’s has outlined plans for a £75m investment into new pubs and restaurants during the second half of the year.

The focus of much of its investment is Yorkshire, where it has revealed plans to open outlets in Harrogate, Leeds and Sheffield.

The move comes after the Wolverhampton-based group revealed it was investing £55m in the acquisition of rival brewer Charles Wells.

In its interims statement, Marston’s said it plans for the next year include the construction of at least 20 pub-restaurants, three premium Revere bars and eight lodges.

“In recent years we have invested in, and developed our skills and expertise in our Premium pub business, comprising Pitcher & Piano and Revere.  In the second half year, we will be opening in Harrogate, Leeds and Sheffield, the latter being a Pitcher & Piano,” said the statement.

“In addition, in May of this year we acquired the Pointing Dog Group, comprising three premium dining pubs in Sheffield, Cheadle Hulme and Bakewell which will be integrated into Revere.  Going forward, we will seek to grow the premium estate by around five sites per annum.”

The expansion of the Destination and Premium would appear justified because of the strong revenues generated by the division.

Total revenue increased by 4.5% to £202.6m in the first half, which it said reflected the continued strong performance of its new-build pub-restaurants and growth in like-for-like sales.  Underlying operating profit of £34.6m was up 3.3% (2016: £33.5m).

The capital expenditure has been boosted by a successful fundraising associated with the latest acquisition.

It has placed 57,600,995 new ordinary shares with bookrunners J P Morgan and Numis Securities at a price of 137.0p, raising approximately £78.9m (before expenses).

In its brewing operation, total first half revenue increased by 1.9% to £94.4m, primarily reflecting continued growth in ale volumes.  Underlying operating profit increased by 4.0% to £10.4m.

Meanwhile, real ale lobby group CAMRA has given a cautious welcome to the Charles Wells deal.

Tim Page, the group’s chief executive, said: “CAMRA is always concerned about any consolidation in the brewing industry as it could result in a reduction in choice, value for money and quality for beer drinkers.

“We’re also wary of one company increasingly controlling a larger and larger share of the market, which is seldom beneficial for consumers.

“Marston’s has a positive track record of keeping the breweries it acquires open, in situ, and in many cases investing in the sites to increase capacity, and we urge them to continue that policy. We’d also encourage them to protect the brands that they have acquired and increase the range available to beer drinkers, by continuing to supply them alongside the existing beers produced by Marston’s owned breweries.”

He said the group was reassured that Charles Wells intended to continue brewing in Bedford, ensuring that whatever Marston’s chose to do with the brewery and brands it has acquired, local people would continue to be able to enjoy locally brewed beers.