In­nis & Gunn’s founder toasts a decade of growth

The Herald - - FRONT PAGE - SCOTT WRIGHT

THERE is noth­ing quite like ac­quir­ing a busi­ness at the height of a world­wide fi­nan­cial cri­sis.

Re­flect­ing on per­haps the most sem­i­nal mo­ment in his com­pany’s early his­tory, Dou­gal Sharp, brewer and founder of In­nis & Gunn, re­called that the global fi­nan­cial sys­tem came close to col­lapse shortly af­ter he bought out his for­mer joint ven­ture part­ner in early 2008.

In­nis & Gunn was formed as a part­ner­ship be­tween Mr Sharp and Wil­liam Grant & Sons in 2003, shortly af­ter the for­mer head brewer of Ed­in­burgh’s Cale­do­nian Brew­ery stum­bled on the idea of ma­tur­ing beer in bour­bon bar­rels.

Five years later, just months af­ter putting his house on the line to get the deal done, US bank Lehman Broth­ers col­lapsed. The world watched in dis­be­lief as global bank­ing in­sti­tu­tions teetered on the precipice.

De­spite the un­fold­ing chaos, some­thing in Mr Sharp as­sured him things were go­ing to be all right for Ed­in­burgh-based In­nis & Gunn.

“It very quickly be­came ap­par­ent that things were go­ing to be fine, be­cause the com­pany had good cash flow, we were grow­ing [and] more and more peo­ple were us­ing craft beer when the re­ces­sion was at its height, ” Mr Sharp said. “It was an af­ford­able treat. In­stead of go­ing out twice a week they were maybe stay­ing in on one of the nights, but they would buy some re­ally good beer to drink at home.

“Right through that time, over the last 10 years, we have grown enor­mously. We are prob­a­bly 10 times the size we were.”

Of course, there has been a lot more to In­nis & Gunn’s progress in the last decade than the fact craft beer has re­mained af­ford­able through­out dif­fi­cult eco­nomic times.

And it was cer­tainly not all plain sail­ing in the early days. With key busi­ness func­tions pre­vi­ously “in-sourced” to Wil­liam Grant un­der the joint ven­ture, Mr Sharp said he had to build up an en­tire in­fra­struc­ture – sales, lo­gis­tics, cus­tomer ser­vice, sup­ply chain, and plan­ning – from scratch.

“It was all on the job learn­ing, which many say is the best way to do it, be­cause your mis­takes re­ally hurt!” re­called Mr Sharp. “It was go­ing back to be­ing a start-up.

“We were all fly­ing by the seat of our pants a lit­tle bit. There was a lot of mak­ing it up as we went along, but for­tu­nately we got more things right than we got wrong.”

The In­nis & Gunn story can­not be told in iso­la­tion from the ex­plo­sion of in­ter­est in craft beer over the last decade. Hun­dreds of new brew­ers have sprung up around the coun­try in that time, with Scot­tish brands, in­clud­ing In­nis & Gunn, lead­ing the charge.

Long gone are the days when the choice for drinkers in pubs was lim­ited to a small and unimag­i­na­tive range of stan­dard lager and stout.

Mr Sharp, who won the Cham­pion Beer of Bri­tain ti­tle for Deuchars IPA dur­ing his long spell as head brewer at the Ca­ley in Ed­in­burgh, ad­mits that chal­leng­ing the sta­tus quo had been a key mo­ti­va­tion for set­ting In­nis & Gunn up in the first place.

“If you go right back to the ori­gins of In­nis & Gunn, the rea­son I set the com­pany up was that I was just so ut­terly p ***** off at the state of our in­dus­try,” he said. “I had been work­ing in our old fam­ily com­pany for all th­ese years, and we were mak­ing amaz­ing beer – Cham­pion Beer of Bri­tain [for Deuchars] – and I saw a sea of uni­for­mity in the bars and in the super­mar­kets. It all looked the same, it all tasted the same, it was all made with the same in­gre­di­ents, [and] all the pack­ag­ing said the same things. To me, it felt all beer was about was get­ting you drunk.

“Then I looked at what the guys in the wine and spir­its in­dus­tries were do­ing, and it was a quan­tum of a dif­fer­ence. They were mak­ing amaz­ing-tast­ing prod­ucts that had amaz­ing sto­ries.

“That sense of frus­tra­tion was the fer­tile ground into which the In­nis & Gunn Orig­i­nal dis­cov­ery fell. When I first tasted that beer, I re­mem­ber think­ing that this is the thing that I can change this in­dus­try with.”

Mr Sharp con­tends the “ex­plo­sion of choice” in the last decade has been great for con­sumers, and is con­vinced that the “dark days” of lim­ited beer ranges are not com­ing back.

Yet, while it may seem that the bar tops and su­per­mar­ket shelves in Scot­land are now awash with in­ter­est­ing beer, craft re­mains a small part of the over­all beer mar­ket.

“I still be­lieve we are only just over the start­ing line,” Mr Sharp said. “Craft beer in the UK is only three per cent of the mar­ket. In Amer­ica, it is well over 10%, so there is a long, long way to go.”

In­nis & Gunn it­self has un­der­gone mas­sive change in the last decade. An early mover in the ex­port mar­ket, it is

now firmly es­tab­lished as a lead­ing im­ported craft beer brand in Canada and Swe­den. Sales are grow­ing rapidly in France, too, while the firm be­gan ex­port­ing to China for the first time last year. Last year ex­ports ac­counted for

45% of the firm’s sales, which to­talled £22.4 mil­lion.

Do­mes­tic sales have been helped by a move into the on-trade through its Beer Kitchen con­cept, which has out­lets in Glas­gow, Dundee and Ed­in­burgh. It has also in­stalled a brew­ery in Glas­gow’s Ar­gyle Street Arches. Other Beer Kitchens may fol­low, but for now Mr Sharp said the em­pha­sis is on fine-tun­ing the of­fer at its ex­ist­ing out­lets.

“For us the Beer Kitchen is re­ally a place for our fans to come to get a real In­nis & Gunn ex­pe­ri­ence, over and above go­ing to the lo­cal pub which might sell In­nis & Gunn along with lots of dif­fer­ent beers,” he said. “It is about the way that our staff in­ter­act with our cus­tomers, the way we present the range of beers, the style of food, the dé­cor, the am­bi­ence, ev­ery­thing. It is about de­liv­er­ing a place that feels to us like an In­nis & Gunn brand home.”

The beer In­nis & Gunn, which em­ploys around 160 staff, is known for has changed, too. It may have bur­nished its early rep­u­ta­tion with strong, flavour-packed beers “fin­ished” in whisky or rum casks, but it is the brand’s lager will be its driver of growth for years to come.

The lager was only avail­able on draught when it launched in the bar trade five years ago. But since be­com­ing avail­able in cans in the off-trade sales have “ex­ploded”.

“It just seems to have re­ally caught a mood and is res­onat­ing with drinkers,” Mr Sharp said.

This year In­nis & Gunn fore­casts a

30% rise in sales in the UK its cur­rent fi­nan­cial year, driven by lager, its

“power brand”.

“For a craft beer busi­ness that is now 15 years old, to still be grow­ing at th­ese rates I think is as­ton­ish­ing,” Mr Sharp said.

Yet Mr Sharp says the in­creas­ing dom­i­nance of In­nis & Gunn lager has not damp­ened the firm’s ex­per­i­men­tal na­ture.

The com­pany, which out­sources most of its ac­tual pro­duc­tion to Ten­nent’s Well­park Brew­ery in Glas­gow, con­tin­ues to make bar­rel-aged beers, in­clud­ing its Blood Red Sky and IPAS.

The most re­cent IPA, which launched in the sum­mer, is mango-flavoured, go­ing un­der the name Man­gos on the Run.

“Our fans have loved it,” he said. “Ev­ery­where you go, where it is on draught, it is the first thing to sell-out. Peo­ple have gone crazy for it.”

Mr Sharp is equally up­beat about his re­la­tion­ship with L Cat­ter­ton, the US pri­vate eq­uity firm that took a near-30% stake in In­nis & Gunn as part of a £15m in­vest­ment in the busi­ness around a year ago. The deal val­ued In­nis & Gunn at £54m.

“I’m de­lighted, gen­uinely de­lighted,” he said. “Be­cause of the breadth of in­dus­tries that they work in... they do add a great deal to the busi­ness at board meet­ings, in­for­mal con­ver­sa­tions, their net­work of con­tacts and the way they ap­proach busi­ness. It’s very re­fresh­ing and en­light­en­ing for us as a busi­ness.”

„ Dou­gal Sharp be­lieves there is still huge scope for the craft beer sec­tor to grow in the UK. The beer firm is build­ing a port­fo­lio of Beer Kitchens, in­clud­ing this out­let (above right) in Ash­ton Lane, Glas­gow, to give con­sumers the “real In­nis & Gunn ex­pe­ri­ence”.

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