The Interview: Marston's Ralph Findlay

By SARAH BRIDGE FOR THE MAIL ON SUNDAY
Updated:

 

City sentiment is fickle when it comes to pubs. One moment managed pubs such as Wetherspoons and Mitchells & Butlers are being cheered and tenanted pub estates are the slops, while the next round sees the likes of Enterprise Inns and Punch Taverns all the rage.

Ralph Findlay

Inn place: Marston's boss Ralph Findlay at upmarket City bar Bluu.

Luckily for Ralph Findlay, the calm chief executive of Marston's, his 2,250-strong estate includes 506 managed pubs, with brands such as Pitcher & Piano and upmarket bar Bluu, close to the Bank of England, where Findlay sits sipping cappuccino as waiters bustle laying tables and putting out menus offering delights such as the 'Beast of the Day' meat dish.

'It's very good not to have all your eggs in one basket,' he says. 'You get to see all the different aspects of the market and it gives you flexibility so you can move assets around to make sure they're in the right place. It's the ideal structure when times are tough.'

Times are certainly tough now with pubs closing at a record rate, but 48-year-old Findlay is certainly not crying into his beer.

'Things aren't that jolly, but it's not depressing either,' he says. 'You have to be realistic. Life is difficult for most people in retail and I don't think pubs are any different. In fact, most pubs are probably doing better.'

And this is in spite of the Government's interference, according to Findlay. 'Pubs are small businesses and the Government is damaging them with increased legislation as well as clobbering the alcohol industry with rises in duty,' he says.

He also rails against the image of pubs and drinking in the media. It is unhelpful and unrealistic, he says. 'At the end of the day it's a unique British industry that employs a million people and deserves a positive, not a negative, image.'

If all this makes Findlay sound angry, it is really a passion for an industry that in his 14 years at Marston's has earned him a reputation as a pubs man rather than a financial whizzkid in an era when pubs have been seen more as assets to be financially engineered, rather than as watering holes.

While Findlay is too polite to criticise his rivals, he does say: 'Pubs are not spreadsheets.'

That said, Marston's figures compare well - it beat the FTSE 100 over the past month and its recent results show a 6% decline in tenanted profits, better than Enterprise Inns (down 8%) and Punch Taverns (down 12%).

Even Findlay's upmarket bars are not immune from the credit crunch. Bluu, for all its grand surroundings (until last year it was the Bank of Iran), is plastered with '50% off' posters.

'You have to do promotions,' he says. 'If you don't, you will lose market share. The question is, are you able to hold your margins, and I'm pleased to say we've done that.'

Another source of pride is the dividend. While Punch and Wetherspoons have scrapped theirs, Marston's is still rewarding its investors.

'We talk to our investors a lot and we know what's important to them, and that is the dividend performance,' he says. 'So we've always paid attention to dividends and that's one of the reasons why our financing has been relatively conservative.'

Compared with the massive debts piled up by some peers, Marston's has been positively sober in its approach to debt, which it recently successfully refinanced with its banks.

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'The vast majority of our debt is securitised for 20 years or so at an average cost of about 6%,' he says. 'Try to raise money at 6% now - you just couldn't do it. And then the rest is bank debt, backed by the brewing side. And while we have got a significant amount of debt it is manageable.'

Some debt was used in a recent run of acquisitions that has made Marston's seem like the saviour of the British real ale industry.

Many breweries are being closed down or swallowed by larger rivals that instantly switch the brewing away - Young's of London, George Gale of Hampshire, Hardy & Hansons in Nottingham and Tetley of Leeds being recent examples. Over the past few years Marston's has acquired Burtonwood, Jennings, Ringwood and Wychwood, all regional brewers and all increasing production and distribution since Marston's bought them.

'It was part of a plan,' says Findlay, who says his current favourite ale is Brakspear from the Wychwood brewery in Oxfordshire. 'We sat down and said, 'Where is the beer market going? What are our customers interested in?''

He adds: 'We took the view that they were moving away from mass standard beers towards regional products and quality cask ale. The way people are using pubs is changing, they are dining out in them more, and with cask ale there is a story behind it - you can have a conversation about it that you can't have with a pint of lager.'

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Findlay, married with two children, left Edinburgh University with a degree in geology and became an accountant qualifying with PricewaterhouseCoopers. Before joining Marston's, he worked at brewer Bass and food group Geest.

He won't be drawn on acquisitions, but struggling regional brewers Adnams and Shepherd Neame must surely be on his radar, though he says his priority is reducing expenditure and getting the most value out of the recent acquisitions in a changing market.

'More people drink at home than in pubs, which wasn't the case 20 years ago, so there are probably far too many pubs at the moment,' he says. 'I wouldn't be surprised if 10,000 to 12,000 pubs close because there are a lot of poor quality pubs out there.'

The ones that are left, he says, must work much harder to attract custom. 'But it's definitely working,' he says. 'One of the more interesting changes has been more attention on community activities and traditional pub games such as darts, dominoes and pubs quizzes - one tenant in Yorkshire held a barbecue in the snow the other week.'

So is he a pub quiz fan? 'Me personally? I'm useless at pub quizzes,' he says. 'They never ask the questions I can answer.'

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