By Connor Murphy, Manchester Beer Week organiser
Jaws hit the floor when the news emerged this week that Halewood had acquired a controlling interest in Hawkshead Brewery.
The purchase of an independent brewer by a multinational drinks firm is not shocking in itself - after all, it is only the latest in a long line of buy-outs - but the sense of surprise was sparked by the identities of the two protagonists.
On the one hand, Hawkshead is a stalwart of modern, independent brewing in the UK, equally beloved by traditional ale drinkers and the craft beer crowd. From humble beginnings in a barn at the heart of the Lake Distict, the brewery grew to produce a million litres of beer in 2016 while retaining a strong identity grounded in local provenance.
Halewood, on the other hand, is a manufacturer and distributor perhaps best known as the owner of Lambrini and Crabbie’s Alcoholic Ginger Beer, with little direct interest in the brewing industry.
To the impartial observer it isn’t the most obvious fit and certainly doesn’t fall in line with the typical narrative of big brewing acquiring another independent, following on from the sales of Meantime and Camden. But this is exactly why Hawkshead managing director Alex Brodie believes it represents a positive move.
A former BBC foreign correspondent, Brodie established Hawkshead after moving to the Lake District in 2002 and will remain in his role to oversee the company’s transition and growth under Halewood.
He said: “I’m 67 this year and I’ve run the brewery from scratch since 2002 so it was incredibly important that I began to think of an exit strategy.
“I know I can’t go on forever and I couldn’t go on remortgaging my house to fund the brewery so investment was necessary to protect jobs and to allow the brewery to continue growing. We’re at the point where demand for our beer outstrips supply so we had to make a decision whether to stand still or to fulfil our true potential.
“I didn’t want to go down the crowdfunding route as that whole thing seems quite fragile, so the only option was sale of equity and to find an investor. As a consequence, I’ve met a lot of people recently and I turned most of them away because I didn’t believe they were a good fit.
“The deal with Halewood is a good one for us because; A) it’s not big beer and B) it’s not private equity.
“We will not be subsumed into a larger brewing operation and will effectively operate as Halewood’s UK brewing arm.”
The full implications of the deal remain to be seen.
One thing is certain, Hawkshead is set for rapid expansion with Halewood investing to increase the size of the current brewing plant - from 20BBL to an expected 40BBL - and install a new canning line.
The deal will also open up significant new distribution channels for the brewery, with Halewood already clocking up annual sales worth £230million in turnover across 88 countries.
But the great unknown is how this move will affect Hawkshead’s reputation, particularly among its current customer base.
Given the often DIY nature of UK craft beer and the idea that it represents revolt against the status quo, a number of drinkers value independence highly. Consequently, such deals are often viewed with suspicion, even creating a sense of betrayal among the more fervent fans.
Fear will also linger around possible changes to the product, considering the way in which brands such as Goose Island have suffered on the back of high-profile takeovers but Brodie remains defiant that nothing will change when it comes to the beer itself.
Hawkshead will act as a stand-alone business within Halewood’s stable of North West ‘craft’ drinks makers that also includes mineral water producer Willow Water, the Liverpool Gin distillery and North Wales whisky distillery Aber Falls.
And, more importantly, head brewer Matt Clarke and his brewing team will stay in place with assurances that they retain full creative control over brewing output.
“I took a long time to choose the right investor and I genuinely believe Halewood offers a good fit for our business,” he said. “The company may be known for Lambrini but it has taken an interesting turn recently and, under the current leadership, has shifted focus to upmarket, small and premium products, which is a big departure.
“I’m also a northern chauvinist so the fact it is a Liverpool business appealed to me. I am convinced they share our values and want to help us continue to play to our strengths. We will remain niche and that will not change.
“I also want to make one thing clear. This is not a case of us ‘selling out’.
“I started this business with my wife in 2002 and we now employ 30 people so this is about giving them a future and making this business sustainable in the long term. The only way we can ensure we don’t get left behind is through ongoing investment and we have never had that kind of serious backing in the past.
“The craft beer industry is incredibly competitive today and there are a number of breweries that have entered the market with significant financial backing, allowing them to grow very quickly. We don’t have such resources internally so we had to seek external backing.”
Another motivating factor behind the deal is an underlying concern for the future of the craft beer industry in the UK.
Brodie still sees huge potential but, at the same time, remains wary of threats to growth, particularly in the form of the large, multinational brewing companies. These beer giants have made an increasing number of incursions into the craft market, both here and in the US, and are making a big push in the on-trade through brands such as Goose Island, Lagunitas and Meantime.
Brodie added: “We have an advantage in that we have grown on the back of cask beer, which still represents 65 per cent of our trade. Cask is the cake and our more modern craft beers are the icing. We manage to tread on both sides of the line and that has helped us.
“The market is changing and growing but it is also febrile and there is a threat from the international brewing giants, particularly looking at the way they are hoovering up breweries in the US.
“We will start to see the likes of Goose Island and Lagunitas appear in pubs a lot more due to the routes to market provided by their parent companies and this is already a major challenge, particularly for brewers in London.
“They are able to offer volume for discount and sweetheart deals that will make the modern craft market increasingly tough. We haven’t felt the breeze quite as strongly up north because of the strength of cask beer up here.
“The current situation is possibly analogous to the States in the 80s and 90s as there are some very well-funded craft breweries coming through that are in a position to keep getting bigger and bigger.
“They are in a good position to fill the void left by many of the regional family brewers who have possibly not moved with the times. But in the tier below, market conditions will be difficult and we didn’t want to get left behind.”