Small beer really is beautiful
Micro-brewing is the ideal occupation for business people who want a change of scene, Tony Gartland tells Peter Baber.
County Works off Dockfield Road in Saltaire in Bradford may be a Victorian industrial building being put to a new use, but it’s nothing that would set your pulse racing – certainly nothing to contend with Salts Mill just half a mile down the road, which still pulls in the visitors every weekend.
Most of them probably wouldn’t even notice this building, tucked away as it is behind a canal swing bridge and an electricity substation. It was, in fact, originally set up as a power station for the trams that used to carry Bradford workers out to the many dormitory towns along the Aire Valley. It is only when you get up really close to the building, past the Portakabins and lorries, that you begin to suspect what its new use might be.
Your nose is twitching, you can smell something sweet and musty, could it be – yes it is! The building is now being used as a brewery. Since 2005 the building has been home to the Saltaire Brewery run by Tony Gartland. He thinks it is a perfect occupation for a business professional who fancies a change of occupation. Before we go any further, we ought to correct two misconceptions you might already have made.
When we say brewing, it is not a mega-gallon multinational brewer Gartland is part of. Such organisations are relentlessly consolidating at the moment, and often losing their British identity, so probably would not be a good destination for mid-career professionals with eyes on a big prize.
Saltaire Brewery is part of a rapidly growing trend of microbreweries. It produces 300 nine-gallon casks a week, or 16,000 litres. A CAMRA spokesman told BQ this puts it at the larger end of the microbrewery community.
Secondly, this Tony Gartland is not the Tony Gartland of industrial investment group GWB fame, although he is based only a few miles away in Halifax. This Tony Gartland says being mistaken for someone who regularly makes it into the Sunday Times Rich List does have its advantages – although there can be problems too.
“My son looked me up on Google and came and asked me what had happened to my £75m,” he says wistfully. But this Tony Gartland still does have an impressive career track record. He says he “grew up in the Leeds legal fraternity”, becoming a partner at Ison Harrison in his 30s.
He then moved to be head of legal for the National & Provincial Building Society until it merged with Abbey National, and he decided he didn’t want to work for the bigger organisation and move to London which such a job would certainly have entailed.
So he moved back to private practice law, becoming a partner at Eversheds with a responsibility for building up its financial service team. On reaching his early 50s, however, he decided it was time for a change.
“I really felt I wanted to make something,” he says. “I wanted to create a product, bring it to market, and see how it went. I thought of a restaurant, and a vineyard, but that was too complicated.” So he came to brewing.
He did the Brewlab course at the University of Sunderland – a microbiology course specially tailored to meet the needs of the brewing industry – and followed that up with 12 months work placements among smaller brewers in the North East.
“The microbrewery business is very collaborative,” he explains. But why brewing, and why micro-brewing in particular? One reason, says Gartland, is location. “West Yorkshire is a hot spot for local brewers,” he says.
CAMRA would back him up.
In a survey it carried out in September last year the county came top of the nationwide brewery league table, with 34 in operation, including four that have just started up this year. North Yorkshire was third.
“There are a lot of good independent pubs,” he says, “and a good real ale tradition with lively CAMRA branches. People like to buy local.” But why then is the news often so full of stories of pubs closing down, the victims either of rapacious pricing by supermarkets or in many cases the smoking ban? Gartland says it’s the big chains of tenanted pubs which are suffering. The smaller specialist pubs which Saltaire targets directly for 30 percent of its business are thriving, and see real ale as a growth area.
“Wetherspoons and the like see coffee and real ale as being the two expanding sides of their business,” he says. Could that be a reason why one of the specialist beers Saltaire produces is a porter (a cross between a dark ale and a stout) that includes hazelnuts and coffee? Last year it won a gold medal from the Society of Independent Brewers (North).
“Beer is really the new wine,” says Gartland. “Twenty years ago, people were only drinking Mateus Rose and Mosel, and using the bottles afterwards for lampshades. Now look at the wine industry. The same will happen to beer.” Again, industry statistics prove him right. That same CAMRA survey suggested that, while it may be all doom and gloom for chain pubs, for independent brewers in the UK it is a different story. There are now 711 of them – more than at any time since the Second World War.
Some 71 have opened across the country this year alone. That could, of course, be people finding some use for their redundancy package, but Gartland says there is plenty of room for more.
“Two surveyors just opened up in Ilkley with a smaller plant than this,” he says. You will certainly see more people coming to the market.” But many business advisers would warn you against turning what may be a hobby (such as home brewing) into a business, because while you might think there is nothing better to do than the thing you enjoy spending your spare time doing, doing it all the time might just prove too stressful.
Gartland is perfectly aware of such dangers. “But I can sometimes leave it to someone else,” he says. “I deliberately didn’t set up on my own.” He employed Paul Simpson, whose career in brewing included working for Whitbread and Holsten, as a managing director.
“A lot of people who set up small businesses forget how running a business is often all about doing necessary administration,” he says. And he also brought in Derek Todd to the business – a man who was previously head of quality at Glaxo SmithKline.
“So we can certainly punch above our weight,” he says. As part of their research before starting the business, the trio went on an extended tour of the west coast of the USA, to see all the microbreweries there. Simpson now lists it as his favourite holiday ever. (For Gartland himself that accolade would go, with apologies to his family, to his visit to the Munich Oktoberfest in 2004. Again, essential research).
The brewery has built a reputation for producing speciality beers. These include fruit beers – strawberry, raspberry, and blackcurrant – and more exotic blends such as coriander and orange, and of course the hazelnut coffee porter. Aside from the 30 per cent of product that is sold to independent pubs, a further 30 per cent goes to chain pubs, usually as a guest beer on rotation, while another 30 per cent goes to wholesalers. The rest is bottled and retailed – Saltaire Brewery is currently stocked in Booths, Waitrose, Tesco and Asda, among others. But Gartland is not particularly keen to expand this part of the business.
“For the bottled market you really need economies of scale,” he says. But if this is sounding just too idyllic, before anyone goes rushing off to look for a hops merchant, it might be worth pointing out something else all wannabe microbrewers need: capital, and lots of it.
“The problem with brewing really is that there is so much capital involved up front,” he says. “You can go to investors but most of them are only interested in brewers when there is property attached. It’s really a property play.” Gartland admits that he is lucky in this respect because he did have capital.
Some years after leaving the building society industry to go to Eversheds he was approached by Peter Birch, then chief executive of Abbey National, who wanted to discuss the possibility of Gartland managing the society’s property portfolio.
One not widely reported result of the property price crash in the 1980s was that building societies were left with a heap of repossessed properties to deal with.
A common trend among them then was to divide the properties into groups and include them in new business enterprise schemes being launched by the Government at the time.
To get private investors interested in these, however, the building societies had to guarantee a rate of return, so they initially had to carry on owning the properties.
“But I think Peter could see that Abbey’s property portfolio could be managed more effectively on an outsourced basis,” says Gartland, and together with Lynne Charlesworth, now a non-executive director at the Yorkshire Building Society, he set up a company, Oriel, to manage what became a portfolio of 5,000 properties.
“Eversheds had been a good challenge,” he said, “but when the property opportunity came along I could see the play in that.” Eventually, they struck a deal to buy chunks of the portfolio from Abbey National, getting a discount because they were buying them in bulk.
Many were sold on in the early part of this decade, when the property market was considerably more benign. What remained of the management business was sold off, too, to Allsop.
Gartland claims it is now the largest residential management business in the UK, and it was part of the proceeds from this that helped him set up Saltaire Brewery. “I put more than £500,000 into this at the start,” he says. “Capital really is the main barrier to entry. But if you can get past that, as I did, you have a business with no partners, and no banks, and that’s the way I like it. It means that as an entrepreneur you can, for example, slow down a little bit for Christmas. You don’t have to justify that to anyone else.” He admits he might not always want to remain in the brewery.
He hasn’t as yet got any succession sorted. “It would be lovely for this to continue,” he says, “providing for six or seven families and helping the local community. But it is hard work. Opening a brewery was preferable to opening a restaurant because it is only a nine-to-five operation, although it is seven days a week because the beer doesn’t know it’s a weekend.
“The time will come when I will get sick and tired of being wet, cold and lonely, up to my knees in cold water, but for the time being I am very satisfied. Every time you walk into a pub and see the Saltaire logo, you feel a sense of pride. My wife thinks we could have had a ski lodge in the Alps. But I like doing things, I like a challenge and I like to create some value.
“My son thinks I should wear a suit and dress respectably, and he wishes he could be collected at school by someone who isn’t covered in yeast. He’ll get over it, though.” In the meantime too, he has ambitions to stay small.
He says he could take the brewery, which currently turns over around £750,000, up to £1m, but wouldn’t want to go further. There is little to be gained by consolidation in this industry,” he says.
“We have our own recipes, and if you aren’t successful you just fail.” The virtues of being small, he says, are also evident now in what has happened to the building society industry to which he once belonged.
“A lot of National & Provincial’s peer group were too small to survive independently,” he says.
“They floated and thought they would have a marvellous future, but the truth of that was they didn’t have the capital to weather the storms.
N&P wisely took the decision to go with Abbey National because they were a bigger organisation.
“But at the other end of the mutual scale, you still have mutual societies just involved in mortgages and saving. They didn’t get involved in wholesale bonding or capital raising. There will always be a requirement for local players. Staying small gives you a lot more flexibility.”