An evening Formula 1 report brought a number: after Baku, Mercedes power units had overtaken Ferrari in championship wins, and a record that had belonged to Maranello for decades had moved to the British Midlands. Records and reputations change address — that was what I went looking for in another archive: a case where a title rests on a number nobody had recalculated.
Out came beer. In Britain’s brewing industry of the 1970s, there was a figure known as “the seventh member of the Big Six”: a market share on Courage’s level, comparable revenue, but the company was not admitted to the club of national brewers — it did not own a single pub. This was Guinness.
Then the story went somewhere other than where I had been leading it. I was sure I had found a neat causal chain: the regulator kept a brewer out of vertical integration, and it went into whisky. Checking ruined that beauty. It was not Guinness but Maxwell Joseph’s Grand Metropolitan that tried to buy Watney Mann in 1972, and the government let the deal through, declining to refer it to the Monopolies Commission. No illustration emerged. Something else did: twenty years of regulatory silence, and a brewer that used those twenty years.
To understand what a British brewer without pubs was, you need to look at the tied-house numbers. In 1967, seven brewers owned 70 of the country’s 240 breweries and accounted for 73% of all beer production. In Bristol, 461 of 517 pubs belonged to brewers; more than 90% of those belonged to one company, Courage. In Birmingham, Bass and Allied split 729 of 815 pubs between them. Those are figures from the Monopolies Commission, not polemic.
The five largest brewers controlled most of the United Kingdom’s roughly one hundred thousand pubs. In such a system, a pub was a route to market: under the lease, the tenant was obliged to buy beer from the owner; prices did not compete; competition was over the comforts of the premises and the beers on offer, which were theirs anyway. Guinness stood apart from this arrangement — and paid for it in money. Its shares traded at a lower valuation than those of its rivals precisely because it operated outside the tied-house system, while the City of London believed retailing gave the other brewers an advantage in growth.
Guinness did have its own pubs — just not in England. In Ireland, they had been held since 1963 by its subsidiary Murtagh Properties: by 1970, twelve establishments, the first purchases being the Liffey Bar on Eden Quay and the Lisdoo Arms in Dundalk. At the end of 1972, the company acquired controlling stakes in the Northern Irish chains Croft Inns and Magills — 22 establishments and hotels. In England — nothing. The “seventh of six” behaved differently in the British market from everyone above it on the list.
In April 1969, the Monopolies Commission issued its report on the supply of beer. Its conclusion was blunt: the tied-house system in England and Wales “operates against the public interest,” and a “remedy for the defects of this system” was required. The commission also set out the mechanism: in each brewer’s pubs, its own beer never encountered anyone else’s, because it simply never got as far as a competitor’s shelf.
Nothing happened. Debate on the report did not reach the House of Commons until May 1973, and began with a rebuke: “We have had this report in our hands for more than four years. We have not had a single debate on it.” Beer strength fell in the meantime — average original gravity from 1037.53 in 1963 to 1037.15 in 1968 — while brewers refused to publish it.
The brewers promised reform themselves. In December 1970, the Brewery Society announced that it would lengthen leases and broaden choice in areas of high concentration. Two and a half years later, MP Willie Hamilton gave the result: “Tenants are being kicked out and managers put in their place.” Bass Charrington’s number of tied licences rose from 3,665 in 1962 to 9,225 in 1972; Courage’s from 1,042 to 5,998. From 1966 onward, no fewer than fifteen reports by public bodies appeared on the brewing industry.
The twenty years between the diagnosis of 1969 and the treatment of 1989 are the real story of British beer. During those years, Guinness did two things: bought everything in sight and waited. The buying spree became legendary — 270 companies, “from babies’ bibs to car polish,” many of them loss-making, plus pharmaceuticals, confectionery and plastics. In 1976, the workforce at Dublin’s St. James’s Gate was cut almost in half; the effect on profits was smaller than expected.
In 1972, Watney Mann — Europe’s third-largest brewing company, with around six thousand pubs, Gilbey’s gin and J&B Scotch — went to Grand Metropolitan. Maxwell Joseph made two bids; Rank withdrew its $1.1 billion offer under pressure from investors for whom Xerox profits mattered more than beer. Guinness did not take part in that fight at all.
Joseph then nearly sank his own company: the purchase of Watney Mann brought Grand Met to the brink of bankruptcy in the 1973/74 recession. Guinness, meanwhile, went to Scotland. In 1985, it acquired Arthur Bell & Sons — maker of the leading Scotch on the domestic market — and the fight over that deal was debated in Parliament in a session of its own: allegations that advisory bank Morgan Grenfell had worked for both sides at once; that a Kuwaiti fund had bought 3.8% of Bell’s at 270 pence and sold a few days later at 225; and that promises of “no redundancies” had turned into two hundred job cuts in Liverpool.
The main target lay ahead. Distillers Company Limited had grown out of the merger of six grain distilleries in 1877; in 1925, the “Great Amalgamation” brought John Walker, Dewar and Buchanan under its roof. Until the early 1960s, it held around 75% of Britain’s Scotch market. By 1984, its domestic share had fallen to 16%, its global share from 48% in 1973 to 35%. The average age of board members was 60; in the City, the company was called “the sick giant of the industry.”
In December 1985, Jimmy Gulliver of Argyll Group put up £1.9 billion — the largest bid in British history at that point. A Distillers director replied: “Mr Gulliver deals in potatoes and tins. We don’t sell brown water in bottles, we sell Scotch.” The board then called in Guinness as a “white knight,” and Ernest Saunders agreed only on the condition that the victim itself would pay the costs of the battle. Nine of the twelve directors lost their seats in the process, while the governor of the Bank of Scotland, tipped to chair the new company, was removed immediately after victory.
To get through the Monopolies and Mergers Commission, Distillers sold Whyte & Mackay a whole bundle of brands: John Barr, Buchanan Blend, Real Mackenzie, Claymore and Haig Gold Label — once the leading Scotch on the domestic market. On 18 April 1986, Guinness made an unconditional £2.6 billion offer and won the four-month battle, worth around $4 billion in all, creating the world’s largest alcohol company, with sales above $4.5 billion in 180 countries.
Victory cost more than it appeared to. American arbitrageur Ivan Boesky invested $100 million in Guinness in exchange for Guinness investing $100 million in his fund. The company borrowed another £100 million from a Swiss bank “to buy its own shares,” securing the repurchase with a $75 million deposit.
The 1990 trial ran for one hundred days and ended with five years for Saunders, which the Court of Appeal later halved. Psychiatrist Patrick Galway told the court that the defendant could not remember three numbers in reverse order and did not know who the President of the United States was; a year after leaving open prison, Ford Saunders, according to documents sent to the Independent on Sunday, was already billing £16,000 a month. On top of that came a Guinness pension of £75,000 a year and £1.3 million in state-funded legal aid during the trials. The European Court of Human Rights later found, by 16 votes to 4, a breach of the right to a fair trial: statements Saunders had given to inspectors had been used against him. In 1991, Guinness paid Argyll £92 million.
In 1986, the Director General of Fair Trading, concerned by consolidation and the level of vertical integration, commissioned the Monopolies and Mergers Commission to investigate the beer market. This is where it all comes together: in 1985–1986, Guinness went before the commission with submissions against vertical ties and approached the Office of Fair Trading directly, while Saunders presented its case “more professionally than the Office was accustomed to hearing from brewers.”
The 1989 report called the industry a “complex monopoly” operating against the public interest. Its recommendations gave rise to the Beer Orders: a cap of 2,000 licensed premises per brewer; the tenant’s right to take one “guest” beer from an outside supplier; a ban on ties for soft drinks. The deadline for compliance was 31 October 1992.
The result was the opposite of what had been intended. In 1989, brewers owned 44,100 licences; by 1993, 26,200, while the new pub companies held 14,800. By October 2003, brewers had 8,400 left and pubcos 32,900. Concentration in brewing did not fall but rose: by the end of 2003, the six largest international producers accounted for 84% of supplies to licensed retail, while the two largest pubcos owned around 30% of pubs — more than the two largest national brewers had in 1989. The Beer Orders were repealed in 2003 with the words: “This is pointless regulation which has no relevance.”
What I cannot confirm: a version circulates in beer writing that it was specifically a Guinness complaint that brought down the tied-house system. The documents show submissions and approaches to the regulator in 1985–1986, while the investigation was opened by the Director General of Fair Trading on his own initiative. The difference between “complained and brought down the system” and “spent twenty years carefully explaining the regulator’s own interests to it” seems substantial to me, but I have not found an unambiguous primary source on who initiated it.
In June 1987, the merged company was assembled into United Distillers — and the first thing it set about doing was extracting money. Everything unrelated to alcohol was sold off, including the whisky barons’ palaces in central London: Buchanan’s and Walker’s offices in St James’s, Dewar House on Haymarket, Distillers’ House on St James’s Square. With the buildings went paintings and almost all the furniture; the archives were preserved and sent to Edinburgh.
Instead of property, they sold systems of understanding. In 1988, United Distillers launched Classic Malts of Scotland — a set of six malts, one for each region, in a single box. The point was retail: a bartender who bought one set could turn himself into a malt expert in one stroke. The regions were tailored to the task — the “West Highland” was invented to separate Oban from Dalwhinnie — while Campbeltown, once Scotland’s largest whisky region, was left out of the set altogether. Higher up the range came Flora & Fauna and Rare Malts.
The pubs Guinness did not have in Britain remained with it in Ireland: through Murtagh Properties, until 1998, when the last three Dublin establishments were put up for sale; the company itself was dissolved in 2019. Guinness had exited Northern Ireland’s Croft Inns and Magills by 2002.
Then, in April 2004, Diageo announced that it was closing Park Royal — that London brewery, Guinness’s first plant outside Ireland, opened in the 1930s and by 1974 producing twice as much as Dublin. Four million kegs were moved to St. James’s Gate; around 90 jobs vanished. Management’s comment was even to the point of impassivity: between London and Dublin, there was more capacity than needed.
So the brewer that had never owned its own pub chain in Britain held longer than anyone else in the industry what had grown out of its ruins: Scotch, gin, vodka. By 2005, it had stopped brewing beer on the island.
One last detail, committing us to nothing: for the regulator to clear the deal, Distillers gave Whyte & Mackay the Haig Gold Label brand — once the best Scotch on the domestic market. A record changes hands by calculation, and no irony is required.