Britain’s pubs are increasingly being bought up by foreign investors, and the drinks industry is worried Greene King has been snapped up by a Hong Kong conglomerate – will any brewery owned pubs survive Brexit?

Britain’s pubs are being bought by foreign companies. The latest deal was announced on Monday: Hong Kong conglomerate CKA will buy Greene King for a cool £2.7bn (£4.7bn with debt). It has again sparked murmurs in the industry that pub closures may well be on the horizon.

Greene King has been a part of Britain’s drinking culture for 220 years. The Suffolk-based company was founded in 1799 and employs 38,000 people. And it remains the UK’s biggest pub group, with around 2,700 sites across the country. The chain will soon be under the stewardship of Hong Kong’s richest family.

“CKA is an experienced UK investor and shares many of Greene King’s business philosophies,” said Nick Mackenzie, chief executive of Greene King.

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“They understand the strengths of our business and we welcome their commitment to working with the existing management team, evolving the strategy and investing in the business to ensure its continued long-term growth.”

Pubs or property investments

The CKA-Greene King deal comes seven months after fellow UK pub group Fuller’s sold its brewing business to Japanese firm Asahi. In 2017, Dutch beer giant Heineken bought Punch Taverns and its 1,300 leased locations, and UK-based Marston’s bought Charles Wells for £55m and could now be a target itself.

In July this year, Stonegate pub group, which is based in the Cayman Islands and operates well-known drinking spots such as Popworld and Slug & Lettuce, made a £1.3bn offer (£3bn with debt) for Ei, formerly known as Enterprise Inns. A mammoth 5,000-strong group may yet be created.

Such internal consolidation preceded outside investment; both highlight a relentless trend in Britain’s pub world: the days of family or brewery owned boozers is over. Some might say it has been for some time, but Brexit wreaking havoc on the pound is only solidifying a premise that might have been at least questioned before.

Beer and pubs expert John Porter said to i: “Pubs have always been seen as a good property investment because they’re generally freehold assets underwritten by a cash-generating business in the form of food and drink sales.

“With the pound so weak because of economic uncertainty over Brexit, a high quality freehold property portfolio like Greene King is very attractive opportunity to an international investor looking around for opportunities.”

Of course there is nothing acutely wrong with a company from Hong Kong buying a British company. Such thinking is one of the things that helped fuel Brexit in the first place. But publicans and analysts are worried that such deals could mark the end of a few of the country’s best pubs – namely ones in primary locations that have served communities for centuries but would, to developers, be much better removed in order to make room for luxury flats.

The next targets

The Grocer‘s drinks editor, Daniel Woolfson, said: “I think it’s pretty inevitable that some of Greene King’s pubs will close – at least those that aren’t overly profitable.

“Although it’s managed pub estate is for the moment, still very profitable, so I don’t think this will happen quickly – more of a natural slimming down.”

Mark Wingett, insights editor for hospitality newsletter Propel added: “It would be naive to think that property is not one of the key aspects behind some of these deals.”

And Mr Wingett supposed other pub companies could follow suit. He said to i: “With freeholds being the strongest pull for overseas investors, Mitchells & Butlers obviously comes under the main spotlight.

“Marston’s seems like the obvious next target and you wonder whether both Stonegate and CKA have already looked in its direction, especially with its strong asset portfolio and significant, and growing, drinks distribution arm.”

Mr Porter also thinks other pub groups could be sold: “If other overseas investors are running the slide rule over the UK pub and brewing market, in terms of standalone pub estates, Mitchells & Butlers, which owns brands such as Toby Carvery and All Bar One, would be likely to attract interest, as would the Young’s pub business in London.

“If investors are interested in acquiring beer brands alongside freehold pub businesses, then regional operations such as Shepherd Neame in Kent, St Austell in the west country, and SA Brain in Wales would be among the potential candidates.”

‘Dinosaur pub landlord’

While pub closures are a concern, the industry isn’t entirely negative. It is true that markets in Asia, particularly China, favour British beer brands in the same way they do our smoked salmon and cheddar cheese. What’s more, it is simply a matter of business: the pound is low – Brexit the cause – and so any investor with deep pockets would likely regret not buying a hefty property portfolio for less than they probably should do. It might be suggested firms abroad think Britain’s fluttering economy will bounce back. Tidy sums would be made.

But even if Britain’s pubs, by and large, are safe, even a handful of monumental closures would be seen as a serious loss. Where the country might have been clutching on to a semblance of historical styling, where pubs are run by rosy-cheeked types and ale is poured into customers’ own tankards, it could be argued that these locals are now more rapidly under threat. Some might be dismayed.

“Pubs are important,” said Guinea Grill landlord Oisín Rogers. “They’ve traditionally been societal centres, where all can drink at an equal level regardless of wealth or class.

“They’re levelling, fun, comfortable and quintessentially British. Most people don’t really care who the landlord might be, though traditionally many are brewery owned, the brewery guaranteeing supplying ale and lagers and underpinning the prosperity of both.

“Often overseen by British brewing families, pubs have had hundreds of years of prosperity, calm and sensibility. I’m worried, being a sort of dinosaur pub landlord. That this might have already begun to change.”