by Ian Walker
Our bottling line was particularly badly affected. People were no longer drinking as many bottled beers as they once did. One of the reasons for this decline was that keg beer was now replacing cask ale and landlords couldn’t adulterate keg. With cask ale they would water the beer down and put the contents of the drip trays back via a filter. In the past, people had drunk bottled beer because they knew that it would be a product that hadn’t been interfered with. Sometimes, they added a bottle to a half pint of draught in order to liven it up. Sometimes, they would just drink bottled beer. Either way, they no longer needed to do this now that there was keg. By the mid-1960s, keg was king.
As if this wasn’t bad enough, there was also the increased use of non-returnable bottles, something our old-fashioned bottling plant couldn’t cope with. The obvious thing to do would be to close the plant down. But that would involve eight people losing their jobs. Many of them I had known since I was a boy, people like Marge, even though she still called me Little Dick.
It was whilst I was wrestling with these problems that I went out for a drink with Sprout one evening in spring 1965. I asked him how things were going even though I knew the answer to my question. Things were going extremely well for his business, and he had already opened two more supermarkets, one in Sheffield and one in Mansfield.
After exchanging some pleasantries, it was inevitable that our conversation would turn to business. Sprout told me that they were planning on opening another fifty stores over the next five years. I looked at him in absolute astonishment.
“How on earth are you going to fund an investment of that size?” I asked him.
“Easy,” he replied. “The bank really likes what we’ve done so far and have offered to fund the whole thing.”
“I don’t know how much it’s going to cost and I really don’t want to know,” I continued. “But if it’s anywhere near as much as I think it will be, the interest payments must be absolutely crippling.”
“There won’t be any interest payments,” Sprout replied. “The bank is going to take a 45% equity stake in the company. Georgina has already arranged it with them.”
I couldn’t help but be impressed. It was yet another example of Sprout and Carrot’s perfect partnership. He had come up with the original idea for the supermarket. But it was Carrot who had come up with the way of turning that idea into reality. I was really envious of them both. Not only that but they were still having sex on a regular basis, which was something I could only dream of.
“How does the bank make its money?” I asked, interested to discover more about this financing package.
“That’s the clever bit,” he replied. “In five years’ time when we have over fifty supermarkets, we will list the company on the stock exchange and the bank will sell its shares for a healthy profit. Our own shares should also be worth a lot of money by then and, by being listed, it will give us access to new ways of raising finance, which we can use to continue expanding.”
“You make it sound so easy,” I said. “What could go wrong?”
“Well, other than something like Britain going to war again, I think there’s very little that can go wrong,” he replied. “After all, supermarkets are the future of grocery shopping. Nothing can stop that. We were one of the first to recognise the opportunity. We’ve had a head start over most of our competitors and now we have the funding. Everything tells me that we are going to be successful.”
It was great to see his optimism about his business, which contrasted markedly with my own pessimism. The conversation then moved on to my company and I explained the problems I had and how there was no easy solution to them.
“What you need is to spot the next big opportunity and get in quick,” Sprout said, “and because you’re my best friend I’m going to tell you what that opportunity is. It’s lager. You may think that keg bitter is the future. But mark my words, lager will overtake it in a few years’ time.”
“Lager,” I scoffed. “You do know that lager only accounts for 3% of the UK beer market, don’t you?”
Sprout was undeterred by my argument and continued.
“When we opened our first R and G store, supermarkets only accounted for 2% of Britain’s grocery sales. That figure has already gone up to 11% and the latest forecast is that in ten years’ time over half of all groceries will be purchased through stores like ours.”
I could see why he was so optimistic. Yet, I was far from convinced about lager, so I asked Sprout to explain why he thought it was the future.
“Do you know what the age profile of the people who shop in our supermarkets is?” he asked.
I admitted I didn’t.
“Well, it’s far younger than the people who shop in our fruit and veg shops,” he continued. “Our typical supermarket customers are young professionals aged under thirty. They want the latest gadgets in their homes like washing machines and freezers. They set the trends that others follow and we accommodate them by stocking the type of things they want to buy.”
I was intrigued by what he was saying and begged him to continue.
“Well, all I’m saying is that when we opened the first R and G outlet three years ago, we only stocked one line of bottled lager. Now we are up to eight. You might not notice the trend because your pubs are all full of middle-aged men. But you can bet your bottom dollar that what we are noticing today will affect you tomorrow.”
I thanked him and told him that he had given me something to think about. But it wasn’t just what he’d had to say about lager that had interested me. It was also Sprout’s comments regarding bank funding that had captured my attention.
I had an appointment with the bank manager the following week at which I decided to ask him about the possibility of the bank converting its loan into equity in the company. I was disappointed though, as it was not the type of thing the Westminster Bank was interested in. However, the manager did offer me one crumb of comfort as he provided me with a contact in a merchant bank called WRD. He told me that equity sharing was the type of thing that WRD specialised in, whilst at the same time leaving the day-to-day banking still in the hands of a high street bank like the Westminster. However, he warned me that WRD was only interested in companies with ambitious expansion plans and a clear vision of the future. I thanked him and decided to go back and do more research about lager.
The more I looked into it, the more I became convinced that Sprout was correct and that lager was the future. For a start, more and more Brits were taking their holidays abroad and were acquiring a taste for lager in the same way that they were acquiring a taste for foreign foods such as pizza and pasta. Lager was also seen as a more sophisticated drink than bitter and as a result even people who had never set foot outside of the UK wanted to drink it. In addition, lager was different. In an era when young people were rebelling against everything that their parents had sworn by, lager stood out from the bitters, milds and brown ales their fathers drank. In short, it was the perfect product to be of interest to venture capitalists.
I spent the next three months doing more research and pulling together a business plan. One of the downsides of producing lager was that it is a bottom fermenting beer. By contrast, the ales that we produced were all top fermenting and for this reason we would need to buy a new type of fermenter. These were called cylindroconical fermenters and they were extremely expensive. We would also need a new yeast culture, but that was a relatively simple thing to acquire.
In order to boost my chances of success, I employed a firm of marketing consultants from Sheffield called Richardson and Bell. They assigned a girl called Amanda McDonald to my account. She was young, blonde and pretty. I wasn’t old myself at 37 years of age, but she made me feel like my grandfather. She wore a miniskirt, whereas I wore a pinstriped suit. She was part of the new way of doing things, something that I clearly was not.
She suggested that we call the new lager Gutjahrbrau as it sounded foreign and sophisticated. In reality,
it was Goodyear’s brew directly translated into German, which I thought was quite clever. I was concerned that people wouldn’t be able to pronounce it, but she convinced me that it would become a talking point that would certainly add to the intrigue and mystery of the new product.
Amanda also suggested that we go with a phased launch starting with the bottled product, in both returnable bottles for our pubs and off licences, and non-returnable bottles for supermarkets. The former would help to save our bottling line, but the latter would have to be contract bottled in Nottingham. If this proved to be a success then we would launch the draught version two years later, after which we would follow this up with a canned version.
Amanda designed a label for the new product, which had a German gentleman dressed in lederhosen holding a foaming stein of lager in his hand. I was a little concerned that he looked a bit like me, but Amanda told me that I was becoming paranoid.
Four months later, we had a sound proposal to put to WRD, which is why I found myself sitting in a room with Amanda, Mark Stephens, and four gentlemen from WRD who were all dressed in identical dark suits.
Our objective was simple. The company’s loan from the Westminster Bank had risen to £225,000 and we required £25,000 to launch Gutjahrbrau and carry out repairs to our pubs. In other words, we wanted £250,000 from them and in return we were prepared to give them a 40% equity stake in the company.
The meeting started off well. They were clearly interested in our proposals. However, things took a turn for the worst when we started to discuss finance.
“So, Mr Goodyear,” said one of the men in the dark suits. “We understand that the last offer you had for the business was £350,000. Therefore, simple maths tells us that our proposed investment of £250,000 should equate to 71.4% of the company rather than the 40% you are offering. And since we would require a safety net, I have to tell you that the minimum we would require would be 80%.
I was shocked. “But that was more than four years ago,” I said. “The value of the company may well have increased since then and it will further increase once we’ve invested the money.”
“But it may well have gone down rather than up,” came the reply.
We carried on discussing the matter for what seemed like an eternity. Every time I came up with an argument, they came up with a counter-argument. In the end I was about to give up.
“Look gentleman,” I said. “I am not prepared for my family to give up control of our company. Therefore, the maximum share I am prepared to offer you is 49%.”
I expected the meeting to end there and then, but there was another twist. To my surprise, the men from WRD made another proposal. They offered us £250,000 of which £150,000 was to be for a stake of 49% of the company and £100,000 was to be a repayable loan. It also contained a clause guaranteeing WRD a minimum of 20% return on their investment, for which both Rebecca and I had to sign personal guarantees.
This was obviously their final offer and the three of us went away to consider it. I say the three of us, but in reality the decision had nothing to do with Amanda and Mark since they didn’t own the company. Instead, that decision had to be made by my sister and I.
In the end we decided to accept. There were too many benefits for us not to. For a start, the interest on the loan was 1% less than we were paying to the Westminster Bank. In addition, it was repayable over a longer period of time and since it was a smaller loan, the net result was that our monthly repayments fell by two thirds.
Then there was the fact that we would now have the funds available both to launch our lager and to carry out all the necessary repairs to our pubs. How could we refuse?
Of course with WRD owning 49% of the shares in the brewery they wanted a seat on the board, but since Rebecca and I still owned the other 51% we knew that we could always outvote their representative.
We signed on the dotted line just before Christmas 1965. At last I had grounds for real optimism. The next year was going to be the start of a whole new chapter in the story of Goodyear’s of Chesterfield.
Chapter 22
“Add all the bottles to the auction pile,” said Molly.
Once that had been done, the shelves were finally bare leaving only a trophy cabinet, which was filled with various cups and framed certificates. Some of these dated back to the nineteenth century.
Nigel pulled the first one out, which was a certificate for Best India Pale Ale at an exhibition held in Cape Town in 1892. There was also a trophy for best mild from a competition held in Burton-upon-Trent dated 1883 and other certificates that had been won from places as far afield as Berlin, Glasgow, Strasbourg, Bristol and Dublin. All of them were more than a hundred years old.
All of them that was apart from one, which was dated 1966. This was a framed certificate, which said:
Chesterfield Chamber of Commerce
Award for the Best Product Launch of 1966
Gutjahrbrau lager
******
The launch of Gutjahrbrau lager wasn’t without its problems and yet, on the whole, it was a big success. Initially it sold well in both our off-licenses and in supermarkets, but less so in our pubs.
Lager needs to be served cold and in 1966 very few of our pubs had any form of refrigeration. Nobody wanted to drink a warm lager and as a result some of our customers renamed it Gut Rot Brew. We soon realised our mistake and made sure that each of our pubs was equipped with a cooling tray. Our tenants thought that this was a great idea as it meant they now had somewhere to keep their milk cold.
Mind you, they were even happier when we told them that we were going to carry out the long overdue repairs to their pubs.
Sales were increasing and due to our lower loan repayments our profits were increasing as well. In fact things were looking far better than they had for a long time.
In October 1966 the Chesterfield Chamber of Commerce informed me that we had won an award for Gutjahrbrau and that it would be presented to us at its annual dinner dance the following month at the Station Hotel.
Goodyear’s Brewery always took a table of ten for this black-tie event, which was Chesterfield’s premier social occasion of the year for businesses in the town. At our table were Herman and Rebecca along with Mark Stephens, Alf Parkes and both their wives. There was also Stuart Datcheler with his wife. He had finally taken over as head brewer after Bill Jones had retired the previous year. Amanda and I took up the final two places. I was really pleased she had accepted my invitation, partly because I would have been the only one without a partner otherwise, and partly because she looked absolutely stunning in her ball gown.
Sprout and Carrot were also there with their own table for what was certain to be a great night. The guest speaker was Freddie Laker who had founded Laker Airways earlier that year. The theme of his speech was ‘seizing new opportunities’, which was very uplifting.
At the end of his speech, Mr Laker presented the business awards for 1966, which included the one that we were to receive for best product launch.
I was as pleased as punch to have my photo taken with him presenting me with my certificate. The photo made the front page of the Derbyshire Times the following Thursday.
I returned to the table only to find that my colleagues had ordered a bucket with three bottles of champagne in it.
“Right, that’s the serious part over with,” I said. “Now let’s start celebrating.”
Mind you, nobody at the table needed an excuse to start consuming copious volumes of champagne. We worked for a brewery, so drinking large volumes of alcohol was the norm for us.
The one exception to this of course was Amanda. She’d never been to a brewery function before and her speech became more and more slurred as the evening went on. In the end, she dragged me to the dance floor not knowing that I wasn’t at all comfortable with the new style of dancing. Give me a quickstep or a waltz and I’d show everybody what I could do, just as I had back in 1944. However, modern dances such as the twist or the typ
e they did in the new style discotheques just left me cold. I’d never tried modern dancing before and when I did it took me quite some time to get the hang of it.
“You need to relax and let your hair down,” said Amanda.
I realised what she meant, but instead I joked that I couldn’t let my hair down as I’d had a short back and sides earlier that day.
“You ought to grow it a little. It would make you look like Mick Jagger,” she replied. “I think it would suit you.”
“What? A 39-year-old with a young man’s haircut? I don’t think so.”
She brushed her hair back and started to laugh.
“Miles, you are still a young man,” she said.
I hadn’t enjoyed myself so much in years. Amanda was not only stunningly beautiful, she was also fantastic company and I was really enjoying dancing with her. The last time I’d danced with anybody had been with Sarah at the Licenced Victuallers ball back in 1954. This was a completely different experience though.
The band started playing a slow number and Amanda wrapped her arms around me and held me tight. I spotted Sprout and Carrot, who were also on the dance floor. Sprout was looking directly at me and gave me a knowing wink.
I was in seventh heaven. I was excited by the aroma of Amanda’s perfume and the sound of her breathing in my ear. In fact I was a little too excited.
“Is that a gun in your pocket or are you just pleased to see me?” said Amanda doing an impersonation of Mae West.
I went red and started to apologise.
“There’s no need to say you’re sorry,” she said. “I’ll take it as a compliment. It would be rude and insensitive of me to ignore it and my parents taught me never to be rude.” She laughed.
Then she whispered in my ear, “I’m staying in room 306. I’m going back to my room now. If you want to you can follow me up in ten minutes time.”