Jonathan Adnams: Let the City pour forth with its bar-room philosophy. He just wants to talk ale

Shareholders can put consolidation on the table but the head of the brewer tells Rupert Steiner that everything is geared to the perfect pint
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The Independent Online

It's 3am at the freshly revamped Adnams Brewery in deepest, darkest Suffolk, and just like a scene out of Wallace & Gromit, the machinery whirrs into life and starts making beer all by itself.

But this is not a movie and our hero is not a piece of plasticine. Fast forward a few hours and sitting in front of me is Jonathan Adnams, the flesh-and-blood chairman of the quoted drinks group that invested 4m in a state-of-the- art brew house which can turn itself on. The builders are still on site doing finishing touches.

"It's a bit like a teasmade, except the only beverage it produces is beer," says Adnams, perched on a purple sofa in the corner of his modern wood-and-glass office.

The shiny new technology is a far cry from the traditional equipment used by his great grandfather George and great uncle Ernest in 1872, when they bought the Sole Bay Brewery in Southwold, 30 miles north of Ipswich. It was Ernest who went on to grow the business; George was eaten by a crocodile in Africa.

The extended family still owns a majority stake in the business, which is listed on the Plus Market, previously known as Ofex. It has a pint-sized market capitalisation of 92m and makes profits of 4m on sales of 46m.

The core business, of course, is ale with Bitter, Broadside and Explorer the key products. Adnams also owns a tenanted pub estate with 80 properties, as well as two boutique hotels, a wine distribution firm, and Cellar & Kitchen, an upmarket retail chain with seven outlets in Suffolk and ambitions to expand nationwide.

Earlier this year, the business pulled off something of a coup with a new appointment. And it didn't just find any non-executive director but a Marks & Spencer non-executive director, in the form of Steve Sharp, the retailer's marketing guru. He has been brought in to advise on the ambitious growth plans.

The new brew house is part of a five-year renewal programme to replace much of the old equipment, and the company has just constructed a new distribution warehouse, one of the most advanced eco-friendly facilities in Europe.

But the case for beer is becoming blurred. Brewing is in decline, the industry is consolidating and there is a trend towards breweries spinning off their pub estates.

And just because the business is in one of the remotest parts of the country doesn't mean the harsh realities of the City don't come knocking on the door in Southwold. In May, Guinness Peat, the increasingly activist shareholder group, built an 8.9 per cent stake in Adnams.

I start by asking the chairman whether there has been much dialogue with Guinness Peat. It has a track record of piling pressure on brewers, having tried to push Young & Co into reforms.

But Adnams has other ideas of what he wants to talk about.

He has come equipped with giant cue cards and launches forth with a spiel on business strategy and future direction.

"We are trying to create an independent business delivering shareholder value over a long period of time and in a sustainable way," he says, barely drawing breath.

Dressed in jeans held up with a Mumm Champagne belt, he has a tightly clipped goatee beard and a self-assured manner. "We have developed a written set of values," he continues, waving his first cue card. "This revolves around building respect with the community, consumers and the environment. People who ignore the environment will find their consumers and the community will change their buying habits and desert them.

"We didn't see building our business in a sustainable way as a box you tick. We don't think like that. It was a natural evolution that felt right because of our heritage and the part the brewery has played in its surroundings."

When it came to building the new distribution centre, the thought of taking muck and turning it green was uppermost: a site was chosen outside town in a disused gravel pit. Its roof is lined with grass, solar panels and reed beds that filter the rain-water for use in the toilets and for cleaning lorries.

"When we pressed the button four years ago, it cost a 20 per cent premium for a sustainable building rather than a crinkly tin shed," says Adnams. "We foresaw how the world was changing and how our customers were changing."

He didn't stop there. He cut the amount of glass in a 500ml bottle of beer by 34 per cent and, forget organic wine, Adnams goes further by importing something called "biodynamic" vintages. Apparently, the vines are only pruned when the planets are in the right moon phase.

He is hot on conservation as well. "At the new brewery, we spent 12 per cent extra to include an energy-recovery kit. That means we are able to recycle the heat from our first brew to use again in the next. This might cause a higher upfront cost, but the longer-term energy savings will have a real impact on shareholder value."

But how does he manage to persuade shareholders to buy into his long-term visions when most are in it for short term gain?

"This is where the rub is. Yes, this costs more in the short term but most of our investors are third generation and they believe in us taking a long-term view."

Now seems an excellent moment to raise the new arrival to his share register. Does Guinness Peat have ambitions to become part of the family?

"I think if you look at their website, you get an idea of where their interest lies," he says. "We have had a small amount of dialogue. Our mantra and creed is well known to all, and we have huge shareholder support to run the sustainable model."

Adnams, 51 today, lives and breathes the brewery. Apart from a year as a deep-sea fisherman, he has worked in the business all his life. He showed early entrepreneurial flair: in his school holidays, he sold fish caught from a small trawler boat that his father had bought for him.

"All I ever wanted was to be a fisherman." he recalls. "I kind of slipped into the family business".

He retained his link with the ocean by serving at his local lifeboat station, but now, at the helm of his company, Adnams has big fish to fry. He is planning to roll out 30 Cellar & Kitchen stores around the country, with Richmond set to be his first in London. He is also following rivals in selling off bits of his pub estate, with nine on the block currently and more expected.

But that's as far as he is willing to go to conform to market trends. Don't expect the business to be taken private, or Adnams to be at the forefront of industry consolidation. As he says: "We'll skip on that bid for Scottish & Newcastle this time round."