Carlsberg and Marston’s create £780m joint venture

Danish brewer Carlsberg will be able to sell more Pilsner to pub-goers in the UK now it has created a joint venture with producer and pubco Marston’s in a deal worth £780 million.

Carlsberg has started replacing beers in its portfolio with new products that have a premium feel. (Photo: Carlsberg)

The new business, called Carlsberg Marston’s Brewing Company, will have control of Carlsberg UK’s Northampton brewery, London Fields brewery, and national distribution centre; and Marston’s six national and regional breweries – Marston’s, Banks’s, Wychwood, Jennings, Ringwood and Eagle – along with 11 distribution depots.

Cees ‘t Hart, the chief executive of Carlsberg, said the new venture is “a step forward” for the brewer, which recently spent £20 million on a marketing campaign to advertise its new flagship beer.

“The joint venture’s brand portfolio will allow us to offer a significantly stronger beer portfolio to our UK customers,” he said. In addition, the combined business will bring our customers wider choice, greater capacity, product innovation and marketing and distribution efficiency benefits.”

The danish brewer is the majority shareholder in the business, with a 60% stake.

Carlsberg Marston’s Brewing Company will also have access to Marston’s pub estate for its beer portfolio which is “enshrined through a strategic, long-term supply and distribution agreement”, according to a statement from Carlsberg.

Carlsberg’s UK brands include: Carlsberg Danish Pilsner, Carlsberg Expørt, Poretti, Tetley’s, Somersby cider and the London Fields Brewery craft portfolio, brewed in Hackney, London. It also holds the brand licences in the UK for San Miguel, Mahou and the Brooklyn Brewery craft beer portfolio.

The brewer spent £20 million on an ad campaign last year as it changed the recipe for its flagship beer, which admitted its current lager is “probably not the best beer in the world,” The beer has now been replaced with Carlsberg Danish Pilsner.

Current Carlsberg UK managing director, Tomasz Blawat, will become the new venture’s chief executive officer, with current Marston’s PLC CEO, Ralph Findlay, appointed as non-executive chairman. Richard Westwood, current managing director of Marston’s Beer Company will act as Chief operating officer, charged with integrating and streamlining the joint venture.

Findlay said: “Marston’s strong heritage, extensive distribution platform and established reputation for brewing and logistics excellence, together with Carlsberg UK’s global brand portfolio and scale, combine the best attributes of both to create a compelling beer business with an outstanding portfolio of global and local beer brands, proven brewing expertise, strong distribution network and wholesale opportunity.”

Carlsberg’s sales fell by 7.4% in the first quarter of 2020, but CEO Cees t’Hart warned the worst is yet to come.

A rise in supermarket sales in the first three months of the year was not enough to compensate losses due to the widespread closure of bars and restaurants. Already, On-trade revenues have fallen 6% in Europe, but ‘t Hart warned there will be more trouble ahead if social distancing measures continue to be enforced throughout the year.

“Social-distancing requirements will continue and will impact consumer behaviour,” he said. “Consequently, volumes will decline further in the second quarter.”