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Carlsberg and Marston's may be winners in UK JV, but there are losers - comment

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Since COVID-19 started its worldwide creep earlier this year, the impact of measures introduced to curb the coronavirus has weakened a vast swathe of businesses. In drinks, industry observers have been holding their breath in expectation of a splurge of M&A activity, at bargain-basement prices.

First in the firing line in the UK have been on-premise operators, almost all of whom have had to furlough staff in recent weeks to stay afloat.

Against this backdrop, Carlsberg's plan to consolidate its UK operations into a joint-venture with brewer and pub operator Marston's - and paying up to GBP273m (US$332m) for the privilege - appears counterintuitive. However, with the global brewer taking majority control of the venture and only Marston's brewing presence moving across and not its pubs, this is a low- to no-risk move for Carlsberg.

The Danish group has suffered a turbulent few years in the UK, where the brewer has transferred its distribution services to DHL Tradeteam, suffered a delisting of SKUs at supermarket powerhouse Tesco, and embarked on a repositioning of its flagship namesake lager brand, admitting it had focussed on volume over value, to the detriment of Carlsberg's quality. The consolidation with Marston's is just another chapter in Carlsberg's idiosyncratic approach to the UK. Theoretically, a stronger presence in UK pubs - the JV will have access to Marston's 1.400-strong on-premise estate - awaits; provided the on-premise survives the coronavirus.

For Marston's, today's news will act as a soothing balm on its current wounds, offering hope in the months to come. With a traditional leaning towards the off-premise in the UK, Carlsberg is well-placed to push the presence of Marston's brands such as Hobgoblin and Wainwright on to supermarket shelves.

So who are the losers here? Traditionalists with a long-held suspicion of consolidation of the UK's beer scene are already out in force, as is the trade association for the country's smaller, craft brewers, for whom on-premise listings will soon become that bit smaller. 

My sympathies are with Estrella Damm, Erdinger and Warsteiner - three European brewers with lager brands that Marston's has handled in the UK... until now.

How the post-COVID-19 beer industry will look - Click here for a just-drinks comment


Expert Analysis

Beer & Cider in the United Kingdom

Beer & Cider in the United Kingdom

Beer & Cider in the United Kingdom industry profile provides top- line qualitative and quantitative summary information including: market size (value 2014- 18, and forecast to 2023). The profile also ...

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