Cains: The Story of Liverpool in a Pint. Chapter 9: Full Circle

The following chapter is taken from my book Cains: The Story of Liverpool in a Pint. It was re-written in the aftermath of the collapse of the Cains brewing company in August 2008 and published in December that year. NB. Although this is close to the final published text, it is nevertheless different. Please do not quote from this version.

Chapter 9: Full Circle

In 1887 when he was at his peak as a brewer, an entrepreneur, and as a man of influence, Robert Cain offered this advice to would-be entrepreneurs:

The great thing is in being able to recognise an improvement when you see it. But a man who is to be successful, when he does see an improvement, begins at once to strain every nerve and to take the risk of carrying it out. If a man remains quite satisfied with what he has and is always afraid and nervous of laying out money in this way, and has no ambition to go ahead, he is not only stationary but begins to be so far outstripped by more enterprising rivals that he ultimately finds himself out of the hunt altogether. (Liverpool Review, 10)

This is the essence of Robert Cain’s approach to business and to life: to take opportunities where they come, to ‘strain every nerve’ in carrying out improvements, and not to be afraid of doing so. But as the last fireworks of the millennium celebrations fell back into the Mersey, Cain’s advice rang hollow. During the 1990s Liverpool had seen some new development. The Museum of Liverpool Life opened in 1993 and Paul McCartney’s Liverpool Institute for Performing Arts was founded in 1996. But progress was slow and while regeneration projects for the city were planned, not far from the main streets boarded up shops and crumbling warehouses told a different story of poverty and decay. The economic recovery of the late 1990s faltered as the new century began and faced with mounting losses the Danish parent company considered the future of the brewery and the Cain’s brand.

By then the brewery was losing in the region of £2 million a year and before long the news was out in the city that it was in trouble. It was impossible for brewing alone to cover those kinds of losses, but a campaign was set up to urge drinkers to buy Cain’s beer and show support. It didn’t work and by late summer 2001 the parent company had decided that enough was enough. Brewing stopped and the brewery was put up for sale. Just as Liverpool seemed to be recovering from decades of neglect and division it looked like it would finally lose its brewery.

What happened next is a story typical of Liverpool and a classic tale of modern Britain. As Christmas 2001 approached the sale of Cain’s brewery came to the attention of two brothers, Ajmail and Sudarghara Dusanj. They were entrepreneurs who over the previous few years had turned around the ailing Gardner-Shaw soft drinks firm in the West Midlands. Sudarghara, the older of the two, was born in 1965, and his brother Ajmail in 1966, in Chatham, Kent. Their father, who arrived in Britain from the Punjab in 1962, was part of a wave of immigration from India, Pakistan, and the West Indies that helped sustain Britain’s economy in the 1950s and 1960s.

Like economic migrants from earlier times he worked as a labourer, in his case on construction projects such as the M1 motorway, on the Dungeness nuclear power station, and in a foundry. Surinder Dusanj could not speak English when he arrived in England aged 23. By the late 1970s, with the country in turmoil and his two sons growing up fast, he realised he had to do something to secure a living for his family. In 1983 with money he had saved over the previous twenty years, and from re-mortgaging the family home, he bought a chip shop in Chatham for £35,000 and became a businessman.

Sudarghara and Ajmail helped in the shop after school and by the time they were leaving college in 1986 the family had bought a convenience store and then an off-licence. They expanded the business by buying failed high street shops and converting them to takeaways and later newsagents and off-licences. But the family found it difficult to manage more than four shops at any one time. Beyond that number the separate businesses became difficult to control. In all, between 1987 and 1992 the Dusanj family ran nine shops, buying them cheap, building up the business, then selling them on to relatives.

The brothers had taken business courses at Dartford College in Kent and the shops had been a valuable source of experience. But by the early 1990s they were looking for a new challenge. In 1992 they were running their own newsagents’ shops and would spend their time scanning the papers in between customers. A story in the Financial Times about Gardner-Shaw going into receivership caught their eye. They thought that if they could run a company from one place there would be more opportunity to develop and expand. The pair admit that at the time they had no real management experience, but this looked like the ‘next step’ and they learned fast. With help from their father they sold everything and bought the troubled soft drinks firm.

Moving north was a risk. The brothers joked about how they felt: ‘The first day we arrived at Gardner-Shaw we realised what a huge risk it was. … If there had been a get-out clause we would have taken it’. But it didn’t take long for them to work out what to do. The first step was to rebuild the brand. Gardner-Shaw sold traditional soft drinks in returnable glass bottles, but within a matter of months the Dusanjs had introduced new lines and diversified into supplying pubs and off-licenses. Soon they had distribution centres around the West Midlands, had added beer and spirits to the range, and had raised the annual turnover from £450,000 to £8 million. By 2001 they had begun to sense that it was time to move on to a bigger challenge and the following spring they bought Cain’s brewery for around £3.5 million.

In Liverpool in early 2002 it was feared the Cain’s brewery would be closed down for good. When several bidders expressed an interest the feeling in the city was that asset strippers would sell it off bit by bit. Nobody was really sure what the Dusanj brothers would do with the brewery, but right from the start they threw themselves into reviving the brand and rebuilding Cain’s as a modern, innovative craft brewer. They have said on many occasions since that this was a once in a lifetime opportunity and one they could not pass up. With experience of the packing and distribution side of the brewing business and with an intuitive sense of how Cain’s could be saved, the brothers took on the brewery with an eye to the long term.

At first the brewery workers were unsure about their future, especially when restructuring meant that 30 employees were laid off. But the Dusanjs quickly earned their trust with their enthusiasm, passion, and willingness to work. As they saw it they were ‘just two guys with no money’ trying to make the brewery a success. And unlike the Gardner-Shaw experience Cain’s was a challenge they relished and understood from the start. They knew the value of the brewery to the city and that they were committing themselves to developing it as a going concern. Most of those early weeks were spent establishing a relationship with the workers and with making their intentions known. Their informal and straight-talking attitude, together with their ambitious plans, could hardly fail to win over the people of Liverpool. And their acceptance was marked in true Scouse style; it wasn’t long before they had been renamed Bill and Sid by the brewery workers.

Although they had a working brewery, a known brand, and a solid product, the Dusanjs knew that the mindset of the company was holding it back. The Robert Cain brewery, one of Liverpool’s best-loved buildings, had been at the heart of a brewing empire at a time when Liverpool itself was a powerful and wealthy city. The fortunes of local brands such as Cain’s can make a real impact on the atmosphere and mood of a place and the revival of the brewery at the hands of ambitious and confident entrepreneurs went some way towards changing the mindset of Liverpool itself. The fact that the company’s new owners were not from Liverpool also says a great deal about the city’s openness and willingness to ‘see an improvement’ when it comes along. But for years the brewery and the city had struggled and a culture of survival and ‘getting by’ had set in.

After 2002 new branding emphasised Robert Cain’s forward-looking values while remembering the remarkable heritage of the city and the brewery. Out went the old logos and in came a fresher design. Daniels’ glowering portrait of Cain, which had been used in advertising during the 1990s, was replaced with a silhouette of the founder. This kept Robert Cain and his achievement at the centre, but also suggested that the past was no longer staring down the present. Delicately drawn hops curled their way around the lettering of the Cain’s name. In the twenty-first century the brewery would return to the idea of brewing as a natural process, focussing on quality ingredients and care.

The introduction of a continental-style lager is a case in point. As a result of Higson’s expansion, the brewhouse was designed for brewing lager, with a mash converter and lauter tun, which separates the grains from the wort, rather than a traditional mash tun.  So Cain’s Finest Lager, first produced in 2004, seemed a good addition to the growing range, which included a bitter, mild, and IPA, and specials, such as the award-winning Raisin Beer. As Higson’s and other regional brewers found out, the lager market is a difficult one, but as lager drinkers themselves, the Dusanj’s were better placed than most to understand it.

Brewed with malt made from Maris Otter barley, generally thought to be the best malting barley in the world, Cain’s Finest Lager was the first ever British premium lager. The Dusanj brothers like to joke that they started in the chip shop with Maris Piper potatoes so Maris Otter barley was the obvious choice. On the advice of beer writer Roger Protz, the beer was to be ‘lagered’ in the traditional way for three months before being released for sale, adding to the flavour and aroma. Not long after its launch, in 2005 the men’s style magazine GQ voted Cain’s Finest Lager number two in its list of ‘100 best things in the world’ and called it ‘the greatest bottled lager’. Even CAMRA, an organisation that began partly as a reaction against traditional British breweries turning to lager brewing, celebrated the achievement. Building on that success, in April 2007 Cain’s brewed a ‘Birthday Bock’ to celebrate Liverpool’s 800th birthday and the birth month of Robert Cain.

By entering a market in which no British brewers had ever succeeded before, the Dusanjs took an important step in their attempt to reach a wider market and become brewers of beer from Liverpool, rather than just for Liverpool. As part of the effort to become ‘Britain’s favourite brewer’ they began to develop the Cain’s brand in a more up to date way. The release of Cain’s distinctive Wheat Beer in the autumn of 2007 confirmed the brewery as one of Britain’s most modern producers of high quality beers.

While the Dusanjs were settling in to their new surroundings in 2002 the city had plans to bid for the coveted European Capital of Culture title. Slow but steady progress was being made in the regeneration of Liverpool’s city centre and there was a sense that like other post-industrial northern cities, such as Manchester and Newcastle, Liverpool could begin to look again to the future. In 2003, when the culture secretary Tessa Jowell announced that Liverpool had won the competition many voices claimed that Merseyside was undeserving of the honour. Other cities, Newcastle included, protested that Liverpool was hardly one of Britain’s cultural centres and as a European city Liverpool also seemed unsuitable. In 2003 an Atlantic-facing attitude was deeply unfashionable and just three years earlier Liverpool had shared millennium celebrations with New York. Nevertheless as novelist Linda Grant wrote in The Guardian soon after the announcement ‘If the city can be reborn, this is its moment’ (Grant, 2003).

And the image of Liverpool as ‘sailortown’ lacking an interest or investment in culture was of course highly inaccurate and unfair. Liverpool’s past as a city celebrated for its art, music, literature, and arts patronage made it an ideal candidate for reinvention in the years leading up to 2008 and beyond. The Dusanj brothers also saw this as an opportunity for the brewery to reconnect with the city. Reviving Robert Cain’s own interest in the arts they made a successful bid for Cain’s to become the official beer of the Capital of Culture in 2008, beating off larger competitors in the process. The brewery invested £1 million in Capital of Culture plans and took its connection with the arts further in 2006 when Cain’s became the official supplier of beer to the Tate art galleries in Liverpool, London, and St. Ives.

By then the brewery had won many awards, beginning in 2003 with supermarket chain Tesco’s Best Beer Award. Cain’s Raisin Beer won plaudits for innovation from the Californian raisin industry and picked up CAMRA’s prestigious ‘Beer of the Festival’ award at the Liverpool Beer Festival in 2004. Cain’s Finest Lager won a string of awards from CAMRA and elsewhere, while other beers have been honoured by organisations such as the Society of Independent Brewers. Since 2002 the remarkable turnaround of Cain’s has also been noted by business leaders. The Dusanj brothers won the Business and Commerce prize at the Asian Jewel Awards in 2004, the year the brewery edged back into profit. A few months earlier they were named ‘Corporate Players of the Year’ for 2003 by North West Business Insider magazine. In 2005 they were named Liverpool directors of the Year by the Institute of Directors.

Cain’s brewery is one of Liverpool’s best-loved buildings and represents the city’s past as a powerhouse of Victorian industry and trade. In the twenty-first century it also became an emblem of revival, ambition, and independent spirit, qualities for which Liverpool was once famous. By the time Liverpool came to celebrate its 800th anniversary in 2007, Cain’s was central to the way the city saw itself. Even though it had almost disappeared altogether just five years before, the brewery was once again an institution that seemed solid and unbreakable; a forward-looking brand in a city that needed to build for the future.

As the Capital of Culture year came into sight through a fog of political in-fighting and bruised egos, the Dusanj brothers had expansion in mind. They negotiated a takeover deal with Honeycombe Leisure PLC, a company that ran a chain of pubs and hotels across the North West. Although Honeycombe was the larger company it was struggling in difficult trading conditions, soon to be made worse by a ban on smoking in public places that came into force in July 2007. Although welcomed by the majority of non-smokers, for whom pub visits became a much more pleasant experience, the smoking ban forced publicans to make arrangements for many of their customers to drink and smoke outside even in bad weather. It was a factor in declining beer sales in pubs during 2007 and 2008.

The ‘reverse takeover’ of Honeycombe, which was completed on 7 June 2007, saw the Dusanjs take a controlling interest in the merged organisation, which became known as the Cains Beer Company PLC. In the process they acquired over 100 pubs, inns and hotels around North West England, to go with the 11 already held by Cain’s in Liverpool itself. A Bank of Scotland statement after the deal was agreed in May said:

Bank of Scotland is delighted to be supporting a highly reputable and well-known local business with national ambitions to make its mark with the UK brewery sector.

Throughout the course of our discussions with Cains, we’ve been consistently impressed by the strong management demonstrated by the Dusanj brothers. Their entrepreneurial aspirations for the business closely reflect Bank of Scotland’s own commitment to funding ambitious and fast-growing companies throughout the UK.

With the Robert Cain brewery as its centre of operations the new company had a turnover of £65 million and although the Honeycombe side of the operation was lossmaking, the prospects for the new company were such that bankers were willing to lend £40 million to support its business plan, three quarters of which was a loan facility to see Cain’s through the years following the merger.

One advantage of the deal was that it brought Cain’s to the stock market for the first time, an achievement that the brothers described as the most significant of their lives up to that date. With a market capitalization of around £7.5 million and a total value of around £37 million the new enlarged company raised £5 million for new investment and expansion. In November 2007 Cain’s also celebrated the global success of its innovative Raisin Beer, which was named the World’s Best Fruit Beer at the 2007 International Beer Awards.

It is an indication of the popularity of Cain’s and its position as a producer of high quality real ales that the CAMRA Members Investment Club was a strong supporter of the move. CAMRA members bought over a million shares in the new company, something that would have been almost unimaginable twenty years earlier. This was the secret behind the success of the brewery after 2002. Through its quality cask and bottled beers, through its canned supermarket own-brand lines, and through operating as a canning and bottling facility for other quality brewers, the brewery could operate in many different markets, drawing support from beer drinkers of all kinds. Just as it did under the founder in the 1860s the brewery reached people across the city and beyond. By the end of 2007 the achievement of the Dusanj brothers in rescuing the brewery and rebuilding the brand made them heroes in Liverpool. Their progress was also widely admired in the brewing industry, especially among smaller ‘craft’ brewers who shared their enthusiasm for creating new, innovative beers.

But even as the company floated on the Alternative Investment Market in the summer of 2007, economic storm clouds were gathering. Newcastle-based bank Northern Rock found itself over-exposed to so-called ‘sub-prime’ mortgages and in September it asked for help from the Bank of England to stay in business. This proved to be a sign of difficult times ahead for everyone. As what became known as the ‘credit crunch’ increased in pressure, banks became less willing to lend money and by the time Northern Rock was taken over by the government in February 2008 the financial climate had changed completely. With over 100 pubs in need of refurbishment and maintenance, the Cains Beer Company depended on the goodwill of its bankers and although it did not seem like a problem at the time of the merger, the company’s borrowing would later prove to be its downfall.

Through the autumn of 2007 and into the following spring the Dusanj brothers worked on a plan to improve the former Honeycombe pubs and get Cain’s beers into supermarkets around Britain. There was some opposition to the way the new company was run, especially among former Honeycombe publicans who were used to supplying guest beers from several different breweries. Many disliked having to offer only Cain’s beers to their customers and pointed out that it was because Cain’s beers had themselves been offered as guest ales that the brewery had been able to survive. The Dusanjs also came in for criticism from former Honeycombe managers and other employees who resented their experience being overlooked and felt that the refurbishment plan amounted to little more than an exercise in rebranding. Even so, in the second half of 2007 the expansion was generally seen as a positive thing both for the company and for Liverpool.

What nobody foresaw, however, was a global economic crisis that by the autumn of 2008 would bring the world banking system to its knees and threatened to plunge Western economies into recession on a scale not seen for generations. Even in the days of Robert Cain, brewing was exposed to global markets–Cain himself bought hops from Germany and malt made from Californian barley–but in 2007 it had become even more important. Commodity prices began to rise sharply, adding to problems in the brewing industry caused by rising taxes and falling beer sales. In the first half of 2008 the price of cereals soared, the price of oil and gas rose dramatically, while at the same time drinkers tightened their belts and began to stay at home.

In May 2008 a trading statement for the Cain’s Beer Company noted the difficult conditions and on 28 July the Cains Beer Company interim report was released, covering the six months up to April 2008. The report was upbeat about rising beer sales in supermarkets and about the possibility of making good on the original business plan. But it also recorded half yearly losses of £4.5 million to add to the £2.7 million in losses for the 14 months up to October 2007. While the company was far from going bust it was very short of funds. It also emerged that the company faced a winding up order imposed by HM Revenue and Customs in a dispute over an unpaid tax bill. Suddenly, and almost without warning, Cain’s was in trouble again.

To make matters worse, by the time the company’s credit facility came up for renewal in July its banker, the Bank of Scotland, was having problems of its own. Negotiations took place throughout July to secure funding for the Cains Beer Company but on 1 August the bank finally refused to extend its credit. During this period Ajmail Dusanj agreed that the situation was not unlike Robert Cain’s own early struggles. But Cain’s Victorian optimism did not match up with the reality of brewing industry in 2008. Cain’s lacked funds to continue operating and on 7 August administrators from PricewaterhouseCoopers were called in to take charge of the business and try to save at least some of the 1,000 jobs. The brewery was up for sale again.

In Liverpool there was a sense of shock that this could happen. Cain’s had become a symbol of Liverpool’s rebirth, and enthusiasm for the home grown brewery had been matched by a growing confidence in the place as a twenty-first century city. Almost inevitably the collapse of Cain’s was seen in some quarters as a sign of Liverpool’s own overconfidence. Yet within days of administrators moving in and the Dusanj brothers moving out, several companies were tipped to buy the brewery, including the Burton brewer Marstons and a Scottish management group MMSI which bought the Isle of Arran Brewery under similar circumstances earlier in the year. Sudarghara Dusanj went on the record to tell the Liverpool Daily Post: “We are hopeful. It’s a good brewery and a good business.” After months of struggling to find funding, neither he nor his brother could accept that the brewery was finished.

As administrators began to shut down pubs, including the popular Ship Inn or ‘Blood Tub’ at Lathom in West Lancashire and the Thatch Inn in Southport, the brewery kept working.  It became clear that while the Cains Beer Company had problems, the brewery itself was still a going concern. Despite serious problems for brewing in 2007 and 2008 many small regional breweries, including Moorhouses in Burnley, managed to expand production. In fact locally brewed real ale looked set to buck the national trend of falling beer sales and Cain’s looked a good prospect for the right buyer. Marstons, itself a large group, was committed to maintaining separate breweries for the brands under its ownership, seeing the value in keeping local brands such as Jennings of Cumbria, Brakspear of Oxfordshire, and Ringwood of Hampshire, based in their communities. Cain’s, with its strong local ties and powerful branding, was too valuable to be allowed to die. MMSI even promised that if Cain’s folded they would set up a brewery of their own in the city, emphasising the point that regional brewing could be a good business proposition even in difficult times.

The uncertainties lingered on through August and September and it emerged that the Dusanj family had a trump card up its sleeve. Back in 2002 when Cain’s was rescued from closure the Dusanjs had put the brewery and the nine Liverpool pubs they bought with it into a family trust. Their reason for doing so was to protect themselves and the wider family from the loss of the business, but having control of the freehold on the brewery site and its core pubs meant the Dusanj brothers could influence the terms of any sale to a third party. Despite losing control of the company, they remained powerful players in the fight to save it and by mid-September they looked likely to buy back the business and regain control of the brewery.

The Dusanj brothers finally managed to negotiate a deal with the administrators late on 21 September and their success was announced in the Daily Post the following day. For brewery workers there were sighs of relief that their jobs had been secured, but the overall reaction around Liverpool was rather subdued. After 43 days of uncertainty, during which the brothers had been criticised for the mistake they made in taking over Honeycombe, the sheen had come off the previous six years of expansion and awards. In a climate of financial crisis and looming recession, when rich city bankers were being rewarded for failure with multi-million pound ‘golden parachutes’, the idea that the Dusanj brothers could take back a company they had pushed to the brink of disaster did not go down especially well. The deal itself, while not at all unfair in the world of business, was seen by some as unjustifiable, especially when newspapers reported that the sale of the company to other bidders had been soured by the brothers’ demands for rent of £1 million a year.

After many days of long and exhausting negotiations the Dusanj brothers made an uncharacteristically low-key statement through a spokesman, reported by the Daily Post: “They have been working hard to try to make sure they can protect jobs and carry on Cain’s brewery. As time goes by, they will be more inclined to speak personally about what’s happened and their future plans.” (Daily Post, 22 September, 2008). This was very different from the the confident start they had made in 2002 and a long way from the chirpy ‘Bill and Sid’ image cultivated as they became part of the Cain’s mythology. The summer’s events had given them an experience of business that they had never seen before and changed forever their relationship with the city of Liverpool. It was perhaps understandable that this would be a sober affair.

For Liverpool, rocked by the news of Cain’s collapse in August, the summer of 2008 will also be remembered for the European Capital of Culture celebrations. In 2008 Liverpool made the headlines mainly for its art, not its brewery. From concerts and art exhibitions, to street theatre and a spectacular giant spider, Liverpool showed the world what it had to offer and put on a show it could be proud of. The brewery Robert Cain built while Liverpool found its feet in the nineteenth century remains one of the city’s great institutions. From its rescue in 2002 the revival of Cain’s and the work of the Dusanj brothers in promoting the city and its beer were a key factor in Liverpool’s growing self-confidence and pride. But great institutions, like great cities, are bigger than the people who look after them and they need to nurtured, fought for, and defended. As Liverpool decides how to build on the Capital of Culture year, its great brewery faces a difficult period of recovery. Robert Cain, a great Victorian gentleman and Irish slummy, knew a thing or two about struggle and persistence. His words echo in the future of brewery and city:

While everyone is against you, while you are unknown, suspected, weak in credit–those are the troublesome days. If a man has the strength and foresight to live through this and keep a foothold he will find the next stages perhaps as hard in work but more encouraging as regards profits and prospects. (Liverpool Review, 1887, 10)

This chapter is taken from my book Cains: The Story of Liverpool in a Pint. It was re-written in the aftermath of the collapse of the Cains brewing company in August 2008 and published in December that year.

Advertisements

One Comment on “Cains: The Story of Liverpool in a Pint. Chapter 9: Full Circle”

  1. […] Of course it didn’t work out that way. On August 7, 2008, after several months of speculation, administrators were called in to manage the Cain’s brewing company, which had collapsed under the weight of its debts and unpaid taxes. Taking over the loss-making Honeycombe Leisure pub chain a year earlier was a near-fatal mistake for the brewery, but it also meant I had to rewrite the final chapter of my book. And I had to do so in September and October of 2008, which was when the book should have been published. You can read my revised final chapter here in its unedited form. […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s