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Tuesday, June 22, 1999 Published at 11:23 GMT 12:23 UK

Business: The Economy

Real ale loses its froth

"Do you want it, sir?" Smart bottled beer marketing has hit real ale

British drinkers appear to be losing their taste for real ale.

Figures from the Brewers and Licensees Association show that the market share of cask-conditioned beers has fallen for the fourth year in succession.

Traditional brewers had prospered on the back of the real ale campaign of the 1970s and 1980s.

[ image: Pub-goers: change of taste]
Pub-goers: change of taste
But since 1994 the real ale share of the beer market has fallen steadily from 17.5% to 10.9% last year - a catastrophic decline for smaller brewers dependent on demand for real ale.

Pub-goers have been turning their backs on the traditional pint in favour of imported lagers and bottled beers. There has also been a marked shift towards drinking more wine.

With sales of real ale down 11% last year alone, several breweries have been forced to close.

End of an era

The BBC's Rory Cellan-Jones: Mitchells has lost out to marketing and fashion
Joining them next month will be Mitchells, which has been brewing beer in Lancaster for more than 130 years. Its chairman, William Barker, says there are simply too many competitors in the market.

But not all real ale companies are falling on hard times.

[ image: Jolly green giant: takeover]
Jolly green giant: takeover
The Suffolk-based brewer and pub-chain, Greene King, has just announced a healthy 7% increase in pre-tax profits and an agreed £145m takeover bid for its rival, the UK's second-oldest independent brewer, Morland.

The contraction of the real ale market has had a bearing on the deal.

Morland's chairman, Martin Mays-Smith, said: "We view the prospect of losing independence with great sadness, but recognise the pressures that exist for consolidation in the regional brewery sector."

Morland, based at Abingdon in Oxfordshire, owns 123 managed pubs and 285 tenanted pubs, mainly in the Thames Valley.

Its Old Speckled Hen and Ruddles brands will now be added to Greene King's IPA and Abbot Ale.

Brewery closure

The takeover will mean the closure of Morland's Abingdon plant, which employs 250 workers.

Greene King has already said it will be moving production to its Bury St Edmunds site within two years. It is not yet clear how many jobs will be lost.

The agreed offer is on the basis of 176p in cash and 0.4063 new Greene King shares for each Morland share, valuing Morland at 445p per share.

The bid represents a premium of about 20% on Morland's closing price of 372.5p on 27 May, the day prior to its announcement that it was in takeover talks.

Greene King's chairman, David McCall, said "Morland is an excellent fit with our existing estate and strengthens our geographical presence in the areas we have targeted for growth."

In the year to 1 May, Greene King's 200th anniversary year, the company made record pre-tax profits of £46.5m.

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