Cafe bars, mega-pubs with video-wall technology, children's play barns - is there no limit to what Greenalls' MD will do to attract the modern drinking public? asks Andrew Davidson. And this from someone whose background is the epitome of what used to be known as 'the Beerage'.
Perhaps it runs in the blood. Barely a few seconds after entering Henry's Cafe Bar in London's Piccadilly on a warm weekday evening, Peter Greenall, scion of one of Britain's most famous brewing families, has his puckish nose in the air, twitching. Something is wrong.
The place seems fine to me, packed with office workers happily filling the bar's groaning tills, but Greenall has spotted an empty table complete with dirty plate and crumpled napkins. A discreet word to the deputy manager sorts it out, then it's on with the tour.
I had only asked for a quick glimpse of one of Greenalls' establishments. In a trice it's let's-find-the-chauffeur and off we go to Henry's, possibly the most profitable of the Greenalls Group's growing empire of pubs, bars, hotels and off-licences. It's on a tour like this, others had told me, that you see the real Greenall in action, chatting easily with his staff, ascertaining in the briefest glimpse how things are going, running through the outlet's margins and takings - £45,000 a week, £400,000 a year net profit - as fluently as a master brewer might cite the ingredients of his favourite bitter. Except, of course, that Greenalls the company, which had built its reputation on brewing beer for umpteen generations, doesn't do that any more.
In fact, since Peter Greenall rose to be managing director of the family firm, joining chairman and chief executive Andrew Thomas at the top of the company, Greenalls Group doesn't do a lot of what it did, and now does a whole lot more besides. Famously, after the Government upturned the drinks industry with its Beer Orders, prising apart brewers and pub-owners for the greater consumer good, Greenalls stopped brewing to concentrate on becoming one of Britain's biggest pub-owners, and ditched its antiquated family-first share structure to become a thoroughly modern business.
Since then it has proved one of the drinks industry's go-go outfits, buying a host of regional pub-owners, including Devenish and, in a £527 million bid in October, Boddington, as well as building itself up to number three in the off-licence trade behind Allied's Victoria Wine and Whitbread's Threshers. It also owns a handful of luxury hotels, including the famous Grand in Brighton, as well as The Belfry golf-course.
In December it broke the £100 million pre-tax profit barrier (on a turnover of £766 million). Once it has swallowed Boddington it will be just outside the FTSE-100 with a turnover of nearly £1 billion and a market cap of half a billion more - not bad for what 15 years ago everyone thought was just another middle-ranking family brewer stuck in the provinces (Warrington, to be exact).
Not bad, either, for Greenall himself, still only 43, and one of the leisure industry's more colourful characters. As an Old Etonian, former champion amateur jockey, eldest son of Lord Daresbury, and member of one of the richest families in Britain, he is, of course, the epitome of what used to be known as 'the Beerage', the old-style toffs who used to hand Britain's beer businesses from father to son.
But whereas other famous brewing families have been eased into extinction - or at least non-executive directorship - this Greenall, it appears, has undergone a bit of Darwinian evolution. A diminutive figure, spruce and chipper, with a plummy voice and mischievous countenance, Greenall has, by reputation, an energetic and radical (some say ruthless) business style. Anyone who thinks he must be far too upper-crust to dirty his hands with the operations side of business, or far too conservative to understand the modern drinking public, should perhaps reconsider their opinions.
We are sitting in a meeting-room of his public relations firm off London's High Holborn. He was, after all, spending much of his time down here, briefing institutions on the Boddington bid which was just going through. The schedule was a quick interview followed by dinner at Wilton's in Jermyn Street, a very Beeragey sort of place ('Been coming here since I was nine,' says Greenall, perusing the menu. 'Nothing's changed'). Henry's Cafe Bar, a rather different kind of place, was squeezed in on the way. It sounds tough, I know.
Yet mixing old and new, not tripping over the baggage of the past, is what Greenalls is all about now. The weight of history hangs heavily over the company, not least in the entwined histories of family and firm. Established by Thomas Greenall in 1762, the company made its name brewing beer in the North-West. Since when seven generations of Greenall have sat in the chairman's seat, while strict control of the shares has made it impervious to takeover. The only outsiders allowed in were the Whitleys, given a stake in the business after Peter Greenall's great-great-grandfather had taken a shine to his general manager, one Mr Whitley, and added his name to the brewery. Gradually economic power gained the family a prominent social position. The same Greenall was MP for Warrington for 39 years. His son got the hereditary peerage in the 1920s for services to agriculture. By the 1970s, however, the business interest was beginning to stretch a bit thin. Peter Greenall's father, the current Lord Daresbury, a passionate brewer but not a man who wanted to run the company on a day-to-day basis, resigned his chairmanship and retired into tax exile in Jersey, where he had another little brewery to run. Remarkably, he installed his solicitor as chairman and his accountant as managing director, and told his jockey son he was welcome to work his way up from the bottom. Which is what Peter Greenall has done.
He wasn't totally unprepared for the challenge. After Eton, Cambridge and his stint on the horses he got a graduate traineeship at Whitbread, a position he freely admits was a 'Beerage' favour. Then came a stint at London Business School. By the time he joined the finance and planning department of Greenall Whitley, as it was known, he was 27, and brimful of ideas of how he wanted to change the company.
Quite how much of the radical reorganisation of the company was down to Peter Greenall himself remains a moot point. It is said, for instance, that his chairman and chief executive, Andrew Thomas, who in most cases is quite happy to let Greenall soak up as much publicity as he can get, has been somewhat piqued by the amount of credit given his young managing director recently over the brewing decision. 'If I were Andrew, I'd sometimes feel like giving Peter a smack in the gob,' one Greenalls' adviser tartly told the Sunday Telegraph four months ago.
Yet equally, despite its plc status, many still see it as a family company and it is no secret that Greenall himself is cast as the engine of the firm's success in the City - not just because of the family name or any old-school-tie effect, but because, according to analysts, he is obviously such a good manager and communicator and because Thomas, rightly or wrongly, will always be seen as Lord Daresbury's placeman. He was, after all, his accountant. 'For most fund managers Peter Greenall is the number one appeal of the company,' one analyst told me bluntly, and added that the City already saw him doing the chief executive position in all but name.
A curious state of affairs, without doubt, but one which both Greenall and Thomas seem content to live with. Certainly Thomas confirms that the board had been thinking of pulling out of brewing long before Greenall argued the case, but adds that it was difficult to do so until he had a Greenall on his side to persuade all the other family interests.
Hence it was Greenall who flew to Jersey to help persuade his father, a major stakeholder under the old voting-share arrangements, that pulling out of brewing was the only sensible business route for the company, even though it was a very unpopular decision in its base-town of Warrington, where hundreds were laid off. And it was Greenall who helped convince the rest of his family and the Whitleys to cede control of the company, allowing it a conventional plc share structure - a move possibly even more radical than giving up brewing. For the first time in many generations, the company was an easy takeover target.
It was a controversial strategy which some of the Whitley family, in particular, were not enthusiastic about. They were bought out, according to Greenall, for around £25 million. 'The thing about Peter Greenall,' says one City admirer, 'is that so far he has always grasped the nettle.' Some find his energy alluring - Greenall is reputed to be a bit of a flirt with women. Others find his drive combined with what they take as upper-class arrogance rather less attractive, but that is probably to misunderstand his desire to prove himself.
For while the family connection got him into Greenalls, his rise to the top has been strictly on merit, according to his chairman. 'He would probably have found it easier to be promoted if he had had another name,' chuckles Thomas. Greenall himself admits that he was lucky in that he came in with one good idea fully-formed: to push the company into the fruit-machine business. 'I had watched what Bass had done with its fruit-machine business and put a proposal to the board that it develop its own business. It was a completely new area that I could cut my teeth on.'
Somehow the idea of the chirpy Old Etonian running the slot machine business seems faintly incongruous, yet he proved the doubters wrong. The machine operating subsidiary, Stretton Leisure, now makes a substantial contribution to Greenalls' drinks and leisure division's £110 million turnover. It also provided Peter Greenall with the credibility he needed within the company. 'Let's say I had a bit of a wind behind me when I went in to run the pubs.' And it was his experience there that confirmed his view that the company could not continue splitting itself between production and pubs. Being involved in both made it hard to get a decent deal on what the retail side bought in, and led to endless push-me-pull-you antics on the Greenalls board. So, once the Beer Orders were pushed through, the board bit the bullet and shut down the famous Warrington brewery. The arguments for and against have been well-rehearsed over the years but no one doubts that, at the time, with all that baggage of history to contend with, it was a brave decision.
'It got a lot of bad PR,' agrees Greenall, 'because people didn't understand about the overcapacity inherent in the industry. Now when everyone is closing breweries they are saying it was rather foresighted.' But the key point remains, he continues, that it made financial sense. 'Basically beer is a commodity product, it's actually number seven on the list of reasons why people go to a pub.' Because of overcapacity and the lack of added-value brands, it would always be a struggle for the smaller breweries to make money, whereas running the right pubs can be a highly profitable business. And subsequent financial results have proved Greenalls right. 'In our business 5% profit or earnings growth is typical, and we have overshot that in the last few years. If the brewers get that, they run the flag up.' More tellingly, perhaps, Greenalls used its exit from brewing to put itself in a prime position as the market consolidated. Out of the host of medium-sized regional brewer/pub-owners, a major had to emerge. Greenalls pipped rival Boddington for Devenish, then it waited for a weakness in Boddington's results to swallow it too last autumn. The move took the City by surprise, as many thought Greenalls would have to wait at least two years to prove the Devenish deal was working. But being slow in coming forward is not Greenalls' style.
'We were waiting for a crack to appear at Boddingtons,' says Greenall, 'which it did in their results.' The company couldn't hang around, nor has it since. Even before the bid was fully accepted Greenall was in Boddington's head office giving the board - including all the executive senior management - their cards. 'Peter rushes in where angels fear to tread,' laughs Thomas, adding pointedly, 'From my point of view that is a great strength.' It is not all pubs - Greenalls' wide base of interests range from a toehold in the hotel business to burgeoning divisions like white spirits manufacture (it now exports its 'vodka from Varrington' to Russia), off-licences and drinks wholesaling - but it is its adventures in the on-trade that has won over sceptics in the City. Peter Greenall's expertise at squeezing maximum revenues out of the firm's ever-growing stable of outlets, invariably selling the tenanted pubs that Greenalls acquires (average profit per year around £27,000) and investing in the managed outlets (average profit £65,000), has driven the financial results. Pre-tax profits before extraordinary items have leapt nearly £40 million since 1993 alone.
It also means that the company, which has bought massively in the last few years, is involved in a constant churn of assets, selling between 100-150 pubs each year. Despite the fact that the market is oversupplied and the quality of outlets is variable - many of Britain's 70,000 pubs are simply in permanent decline - there never seems to be a shortage of buyers willing to take a crack at it.
But it is what Greenalls is prepared to do to the pubs it keeps that is intriguing. Recently it has been in the vanguard of those making the sort of changes that horrify pub traditionalists, opening cafe-bars, mega-pubs with video-wall technology, children's play-barns - none of which is what you would expect, of course, from a man with Peter Greenall's very traditional background. If, as people say, Britain's beer business is a conservative one now going through a revolution, then Greenall appears the ultimate example of its adaptability.
'I like pubs and I enjoy going into them,' he says with a smile, 'but I am not a sentimentalist and I'm fairly realistic about un-traditional treatment.' If that means that quaint but unprofitable old pubs, which hardly anyone goes to, get completely made over then that, surely, is a good thing, he argues. The business, like most others, is about giving people what they want, and if they want huge city-centre drinking emporia with gizmos like revolving video wall cubes, then that is what they get.
It seems a shame, I start to say, but then can see from his look of bemusement that he is not, as he has said, going to brook any sentimental argument. Yet isn't this the same man who professes to me later that he likes Wilton's simply because it hasn't changed? Doubtless you could argue that Wilton's pays for itself rather more handsomely than the average quaint but empty pub, yet there is some kind of contradiction here.
Just as unclear is what drives Greenall on. Beerage friends like David Thompson, managing director of Wolverhampton and Dudley, who read 'arch and anth' (archaeology and anthropology) with Greenall at Cambridge, say his dominant characteristic is his sheer energy. To succeed in the pub trade, you have to put in long hours in the office and long hours going round the outlets in the evenings. Some might laugh and say 'work?' but it takes its toll. 'Anyone who requires eight hours sleep a night is simply not going to cut the mustard,' says Thompson drily.
Other friends back that up, pointing to what Greenall was like when he was racing. He was twice National Hunt amateur champion in his early days, proving himself obstinately brave and obsessively competitive in a sport where the wealthy usually own the horses, not ride them. Greenall himself plays down the racing angle - he laughs and says he got good rides because he was more articulate than the average jockey, and owners like talking about their horses - but the point is that he is nobody's spectator.
For obviously he doesn't have to work at all. He admits his father bankrolled him when he was riding, and with a large stake in the family fortune (no one will say how much but the Greenalls wealth, mainly held in shares in the company, was estimated at around £130 million last year) he could quite happily swan around the world for the rest of his life.
Yet clearly that is not in his character. Friends say he keeps taking on extra interests as if afraid of getting a moment's peace. There's the 160 cows on his family farm in the North-West to look after, as well as his chairmanship of Aintree racecourse, the endless squash - twice a week - tennis, golf and skiing. And that's all fitted round knocking bits off the latest takeover victim, rushing round the City of London preparing for the next one and hobnobbing with the royals. It is a wonder he ever gets to see his wife, or his four sons (all down for Eton, naturally enough).
He says he is not really ambitious. He describes his mother, a formidable huntswoman who separated from his father when he was young, as ambitious for him, and he remembers from an early age always wanting to prove himself in the family business. But he says his dominant characteristic is not energy but competitiveness. He just wants to win at everything he does. His weakness is impatience.
Those who know the family well say that the competitiveness extends to all three of Lord Daresbury's sons (there is also a daughter).One of Peter Greenall's brothers, Gilbert, a doctor, also sits on the Greenalls board. 'Why do you think he does that?,' laughs one close to the Greenalls. 'To keep an eye on Peter, of course.' That is why the rest of the family is very keen that Thomas holds Peter Greenall's empire-building urges in check. But where would the Beerage be without ambition and a little sibling rivalry? Staring morosely into half-empty pints of lager, no doubt, as some of the old families already do. If you want to stay in control, you have to stay sharp.
Peter Greenall says he doesn't see himself moving from his family firm, nor does he think there are any potential predators on the horizon, so one might surmise that his 'competitiveness' means that Greenalls is set for a lot more expansion yet. 'From now on we are going to grow organically,' he says cautiously, no doubt for the City's benefit, where many think consolidation should now be the order of the day. Unfortunately, I am not sure if that is Peter Greenall's style.
1953 Born 18 July
Educated Eton, Magdalene College, Cambridge and London Business School
1977 Graduate trainee, Whitbread
1981 Joins Greenall Whitley in finance department
1984 Joins main board of Greenall Whitley
1988 Managing director, Greenalls Brewery
1992 Managing director, Greenalls Group
Peter Greenall is also chairman of Aintree racecourse and a non-executive director of First Leisure
What people say
'I have enormous admiration for what he and Andrew Thomas have done at Greenalls.' David Thompson, managing director, Wolverhampton and Dudley
'I have known Peter since he was 15 and his abilities have not surprised me at all. He loves country pursuits and sports, and embraces the challenges of the business world, which seems a bit of a contradiction, but what has always interested me is the ease with which he communicates with people.' Andrew Thomas, chairman and chief executive, Greenalls Group
'For a number of fund managers Peter Greenall is the number one appeal of the company. He has got drive and good judgement - at least that is what he has shown so far - and he has a surprising ability to understand middle-class lifestyles and desires, and he is also very good at getting on with line managers and communicating his knowledge of the business. There are not many like him around.' An analyst
'If I were Andrew, I'd sometimes feel like giving Peter a smack in the gob. It's not that Peter deliberately takes credit for Greenalls' success, but the plaudits come his way because of the name and because he is naturally more outgoing. Andrew should be a little more aggressive in coming forward.'
A Greenalls adviser reported in The Sunday Telegraph.