All Shep-shape

Five days before an early August visit to 320-yearold brewer Shepherd Neame, its home town of Faversham in Kent was the hottest place in a record-breaking heatwave that singed the UK.

Therefore, arriving at the entrance to the home of Britain’s oldest brewer – camouflaged on the market town’s medieval streets apart from a generous clutch of decorative hops dangling from its façade – in torrential rain and looking like I’d been for a dip in the nearby Thames Estuary came as a shock.

The absence of a shepherd at the presently Neame family-run Faversham brewery may well explain the missed red sky warning.

Current chief executive Jonathan Neame represents the fifth generation of his family spearheading the business after ancestor Percy Beale Neame joined the company in 1864.

The company’s boardroom is adorned with grand portraits of the Shepherds and Neames – including Jonathan’s father Bobby who stepped down in 2005 after 35 years at the helm – the families that have steered the company through more than 300 years of business.

Significant opportunities

Though the brewer and operator’s history is ubiquitous among the Faversham brewery’s stone and more recently installed polished steel, the current chief executive and qualified barrister’s chapter in it was never inevitable.

“I wasn’t sure that I wanted, necessarily, to go into the business because the industry felt quite stagnant,” says Neame, who joined in 1991. “But the Beer Orders did present significant opportunities for small companies like Shepherd Neame, there’s no question about that.

“We bought an enormous number of pubs through the 1990s as the big brewers had to sell them off. There were various different packages that we ac-quired from companies that no longer exist, like Allied, and some of Whitbread as they were exiting the pub market.

“That’s been a big backbone for the business, and then, of course, since the economic downturn in 2008, we’ve also acquired some very good, high-quality pubs and progressively weeded out smaller wet-led community pubs that the world’s moved on from.”

Shepherd Neame now manages around 300 pubs across the south-east as well as a brewery that produces enough beer to fill an Olympic swimming pool every month.

According to Neame, the family brewers that shared the marketplace with Shepherd Neame around a quarter of a century ago are unrecognisable from the ones we see today.

“Everybody is trying to modernise. Any businesses still surviving today are trying to modernise every day of the week – the pace of change is extremely fast.

“I am very proud of the way we’ve built up our pub estate. Thirty years ago, Kent was an industrial environment and we had a very successful pub estate that suited that time, but that pub estate was largely built around male boozers, if you like.

“Now the business is much more positioned around lifestyle type pubs – food-led, accommodation-led, unique pubs in unique locations – much more open to families, to women, much fresher environments. We’ve repositioned the profile of our pub business quite significantly.

“Ultimately, I’m pretty proud that we’re still here. I do think that surviving, not just existing, and still being a successful business, moving forward, having growth opportunities and being independent – not just physically but independent of spirit – is not easy.

“You’re constantly reinventing yourself. Every day, you’re constantly look-ing forward for those new opportunities, constantly trying to anticipate the next consumer trend and trying to make sure all parts of your business area relevant for those trends.”

Relentlessly creative industry

Shifting his reflections from the company he joined in the early 1990s to the pub landscape we see today, Neame describes a “relentlessly creative industry” constantly forcing his business to adapt.

“The design of pubs is a remarkable transformation over the past 10 years,” he says. “The smoking ban really stimulated the need to move away from really bland environments where you just let the building do the talking to really injecting things that customers want – great design, interesting features, comfortable seating. That’s been very impressive.”

In keeping with this, Shepherd Neame has invested in flagship sites across Kent this year, with the water-side Boathouse pub in Yalding; the Market House in Maidstone, and the Spitfire in Kings Hill, each benefiting from near £1m revamps.

Moreover, the shortlisting of the company’s Chatham Docks site Pier Five in the 2018 Restaurant and Bar Design awards is testament to this adjustment.

Aesthetically, it’s not just Shepherd Neame’s estate that has modernised. The Faversham brewery, while retaining rustic stonework and wooden beams, is awash with new technology and signs of changing products as well as pubs.

“The branding of beer has been remarkable,” says Neame. “People relied on above-the-line advertising to promote their beers before, now a lot it is about packaging design and letting the product and packaging do the talking.

“Some of the can design going on at the moment is very impressive. It’s fascinating to see cans coming back when people rather thought that they were the ‘cheapo’ thing.

“If you just take beer itself, the change in beer profile, the hop-forward beers that are coming through at the moment is also very revealing.

“You can call it craft, you can call it what you like, but there is no doubt at all that consumers want far more taste and flavour in their beers, they’re much more willing to experiment, they like the aromas you get from beer in the same way they like the aromas you get from gin or from Aperol.

“People want their drinks and their products to be exciting and the beer ranges available for customers now have probably never been so diverse, high-quality and exciting.

“The proof really is in the pudding, the better operators are still enjoying growth even when trading conditions are tough, the beer market is flat having had a lot of years of decline, the value of drinks generally is going up as people are premiumising.

“These are all, in my view, signs of a fundamentally healthy industry.”

Widespread positivity?

Is this optimism shared by the operators Neame meets?

“Certainly my personal experience is that the licensees, by and large, that we meet in our business are positive,” he says. “Clearly not everybody is, but I’d say the majority have strong businesses and can see opportunities to grow those businesses.

“I find some of the debate that is played out in parliament or occasionally in the trade press about licensees misguided. There is a significant silent majority who are very positive about their business, have a good working relationship with their landlord and are making a decent business in their local community.

“But clearly individual locations, individual communities, will have challenges, and clearly not every relationship works. Not every licensee has got the skills to be able to take advantage of that but, by and large, there are more positive trends than not.

“Notwithstanding all of that, it is a fact that the overall hospitality sector is materially overtaxed and the industry could move faster, invest more, drive standards and career paths and create more opportunities if it did not have the tax burden it has on it – which is higher than anywhere else in the world.

“That’s the challenge. It’s absolutely right that the industry raises these issues. The level of beer tax is just a joke in this country and the VAT on top and all the other bits and pieces such as the rates is inappropriately high.”

Unique Brexit experience

Neame, who describes himself as a ‘remainer’, continues: “I suppose everyone is going to mention Brexit. Brexit is never far away.

“It is rather worrying that we’re so close to this major event and frankly nobody quite knows whether this is going to be a damp squib or a fundamental shift. I guess most still think that not a lot is going to change, but if there is a disorderly exit then I could it could be very worrying for people.

“There could be some big challenges on supply chains for manufacturers around the country and that could be very problematic.

“Ultimately, these things do tend to get sorted out in the end, whatever the politics.”

Shepherd Neame’s home county voted overwhelmingly in favour of leaving the EU in 2016, with 59% of its population opting to do so.

With the port of Dover welcoming 11.7m passengers and seeing the passage of 2.6m lorries and 2.2m cars from Europe last year and with Kent having 207 miles of continent-facing coastline, Brexit is something that looks likely to have a unique impact on the county.

Does this mean it poses unique challenges for Kent’s biggest brewer?

Neame highlights that while the sites sharing Shepherd Neame’s 294 rooms across the county have thus far benefited from a weakened pound and currently undisrupted transport links with Europe, potential issues remain.

“I think for local people within this part of the world a big concern is the frictionless border issue, whether the M20 is going to be permanently blocked,” he says. “There’s quite a lot in the media about it and that clearly would be disruptive, but I guess it would get sorted out in time.

“I would say generally our geography is an opportunity. Kent, in the 1980s, had a lot of industrial decline – pulling away from shipbuilding, shipping, coal mining – and where we stand today, Kent is all about opportunity.

“It has had lower GDP per capita and lower economic activity than some other parts of the south-east, but there’s a huge amount of house building and infrastructure development going on here – whether it’s further extensions to High Speed 1, the Thames Crossing below Dartford or the major development around Ebbsfleet, which will ultimately put Ebbsfleet on Crossrail too.

“We’ve got a lot of business outside of Kent – only two thirds of our pubs are in Kent – and we can see a lot of infrastructure, development and economic activity that is beneficial to our business particularly if in each of these areas where there is economic activity we either own the best pub or can have the opportunity to develop the best pub.

“By and large I see, very positively, that Brexit is an issue in the short term but, over the medium term, I don’t see those things particularly changing.”