As the chief executive of Liberation Group, Mark Crowther has seen the pubs industry undergo significant change in the Channel Islands, the UK and Europe. So what comes next, both for his business and the sector in general?
How did you get to where you are now?
One half of my working life has been spent running big groups of pubs and restaurants, and the other half involved with drinks businesses. I started life as a graduate trainee with Allied Domecq and ended up running a group of 150 managed pubs around London.
I also had a year running big branded restaurants in Germany and Paris. Then I moved over to the drinks side, joining Guinness, which became Diageo. For the last couple of years there, I was based in Paris and running northern Europe – markets like Austria, Switzerland and the Benelux, up to Iceland. More recently I was the on-trade MD running all of Carlsberg UK’s operations.
Approaching my late 30s, I was keen to have a slice of the action, so I was looking to lead buyouts for a couple of other businesses when what is now Liberation Group came on my radar.
At the time, the business was CI Traders, which had been bought by Sandpiper. They’d decided to focus on their retail business, so had put 65 pubs on the market, along with two wholesale businesses and the brewery in Jersey. I worked with LGV Capital on the deal, we acquired the business in 2008, called it Liberation Group and off we went.
Your previous experience focused on the UK and Europe – how does the Channel Islands’ more compact market compare?
That was part of the appeal. When I was putting together the business plan, I based myself in the islands and visited all 65 pubs three or four times each. I basically compiled 65 mini-business plans – whether they should be managed or tenanted, if there should be a food offering or accommodation, and so on.
That gave me a really good insight into island life and the cultural differences between having pubs in Alderney, Guernsey and Jersey, plus we supply Sark and Herm as well.
I found it fascinating and liked the fact that it was a tight geography – it felt like you could really get under the skin of the business. It also gave us the chance to get to know our tenants – we know all our managers and many of the staff because we’re in and out of the sites all the time.
In September last year, Liberation was acquired by Caledonia Investments – what was the purpose of the buyout?
As with any private equity backing, we knew LGV would want to offload its shareholding but, as the Liberation management team, we were keen to stick with the business and go again because we really enjoy it and had a strong plan for the next chapter.
If we’d just kept the Channel Island business, however, I don’t think there’d have been a strong enough growth story to have secured another financial backer.
So when we were talking to potential backers, including Caledonia, I said our vision was to take the business and expand into the UK mainland – which is why we bought Butcombe nearly two years ago. Butcombe is a great business, with the brewery and initial 19 pubs around the Bristol and Bath area, and it gave us a great platform.
In the course of the last year, LGV had a sale process and Caledonia was the successful party. We were delighted with that, as they were our number one choice out of the seven original bidders.
So basically, we’ve rolled money into the new company and gone again. The same management shareholders are shareholders in the new company – but we have Caledonia as our major shareholder and backer.
So is expansion off-island going to be your main focus in terms of growth?
The Channel Islands will always be a major part of our business, and if the right opportunities come up, we’ll absolutely be spending money in the islands as well.
I don’t want people to think we’ve ‘switched off’ the Channel Islands – we’re a Jersey company and this is where our home and DNA is. But we want to double the business again in the next five years, which is what we did under LGV. To do that, we need to make further acquisitions – so we’re going to be focusing on the West Country to achieve that.
We expect the growth to come through acquiring managed pubs and tenanted pubs and growing the drinks business as well as developing the Butcombe beer brand and some complementary brands and services around that part of the business.
Do you have any intention to branch out beyond that – into hotels, for instance?
Rooms are definitely on our radar – we have several pubs with rooms already and acquisition opportunities will include adding rooms to the pubs we’re buying.
A pub with really good-quality boutique rooms is an area of interest to us. They cost a lot in capital expenditure to set up, but they can be really profitable once they’re up and running.
Liberation has successfully branched out beyond the Channel Islands. Do you think that other businesses struggle to expand outside the islands – and can that limit ambition?
What you can’t do is imagine you can stay sitting in Jersey, looking across the sea, thinking ‘right, we’re going to do this and were going to buy that’.
We’ve got management teams on the ground in the West Country – I actually live in Bath myself – so I think a physical presence and being out there and making it happen is the key part of this. It’s what some island law firms and finance firms have done in the Middle East and Far East.
Just because you have a good business in the Channel Islands doesn’t mean that you’ll have a good business elsewhere – like anything in business, you have to get out there and work hard at it.
The pub game is changing dramatically. Do you feel traditional pubs are falling by the wayside and having a food offering is almost a pre-requisite these days?
I’d agree it’s not the same as it was 10 years ago. There are lots of demands on people’s time and money – it’s not just that there are fewer drinking pubs, but that there are coffee shops, social media and other demands too.
With our managed estate, we’ve grown the food as a percentage of turnover from around 22 per cent when we bought the business to approaching 45 per cent now – and that probably drives another 25-30 per cent of drinks that are associated with food. That’s very different from where the business was when we bought it.
Having said that, I don’t believe that a good wet-led pub’s days are over.
Pubs were always seen as the heart of the community – but with the traditional pub in decline, is that now an outdated stereotype?
I’d agree that maybe there aren’t as many community pubs as there used to be, but I can think of pubs in St Helier that you can go into at any time of day or evening and you’ve got people from all walks of life who meet there on a regular basis.
There are many great examples of traditional pubs and I believe they still have an important role to play in communities.
Is it simply too expensive to go out to pubs these days?
A pub offers much more than just a source of alcohol – it can be community, friendship, food, watching the football with your mates. People may go out less frequently, but going out to a pub is very much an affordable luxury.
If your sole reason is to get alcohol as cheaply as possible, you’ll get a mate to bring you a bottle of vodka back from duty-free. But if you want to go out because you want to socialise with other people, you can only get that by going to a pub.
Do you think that craft beers and trendy brands such as Brewdog are good or bad for the industry?
I think they’re good, because one thing the whole craft beer scene has done is to raise the profile of beer. People are really fascinated by beer now, the different flavours and styles, and beer matching.
If every pub sold Carling, as much as it’s our number one brand, that would be quite boring. If you can bring in some vibrancy and interest, then there’s nothing wrong with that.
What’s your view on the above-inflation proposed increase in alcohol duty in the Jersey 2017 budget?
It’s just disappointing really. Both Guernsey and Jersey are proposing five per cent increases on alcohol [at the time of writing]. What I find frustrating is that there’s no engagement from politicians around these issues.
The Jersey decision came completely out of the blue and is allegedly targeted at reducing alcohol consumption, but that’s been happening already. The Jersey Health Profile 2016 says drinking in Jersey has dropped by 3.5 litres per head from 2005 to 2015, with islanders now consuming an average of 11.5 litres of pure alcohol a year.
Bear in mind that we pay millions of pounds a year to the States in alcohol duty, yet Alan Maclean [Minister for Treasury and Resources] didn’t have the courtesy to meet us for a coffee and say ‘this is what I’m thinking, let’s discuss it’.
It’s a blunt instrument and they haven’t thought about the ramifications. Look at the investments we’ve made recently – the Old Court House or The Square in Jersey. They’re both investments that are north of £1 million and create value for the economy and for employment. And yet this is what we get in return.
The reality is that we’ve got choices now – so when we’re looking at where to put our investment, do we invest in Jersey or Guernsey or do we go to the UK where they’re reducing beer duty, for example? Beer duty in the UK is cheaper than Jersey now – Jersey has one of the highest duty rates in the world on alcohol, which is quite bizarre.
The politicians talk on the one hand about how hospitality is really important to the visitor economy, and then on the other they say: “We’re going to stuff alcohol duty up five per cent”. It all seems very disjointed.
In a recent article in BL, Malcolm Lewis at Longueville Manor said that hospitality isn’t seen as a legitimate career choice. Do you think pubs suffer from the same perception?
Nearly half of our employees are 25 or under. We’re a fantastic source of opportunities for young people, gaining experience of working with the public and having responsibility. Pubs and drinks businesses can be a lifelong career and you can travel worldwide, as I have.
I do share Malcolm’s view though – it can be seen as a second-rate career, or something you do while you’re waiting for a ‘proper’ job, which I think is a great shame. We’ve got managers in their 20s who are running businesses that make £300,000-£400,000 profit. Those are big businesses with teams of 20 or 30 staff. These are multi-faceted, hands-on jobs that can develop you into a fantastic leader.
And finally, what plans do you have for Liberation in the next couple of years?
We’re working with Caledonia to look to double the size of the business over the next five years. Caledonia has ring-fenced £40 million of equity and a similar amount from our banks – so that’s around £80 million of firepower to grow the business.
As I’ve mentioned, the main focus will be on the West Country. We’ll look at acquiring sites in Exeter, Hampshire and up through the Cotswolds. We already have a strong beer brand and we’re going to invest in that through sponsorship deals and by refreshing the brand imagery.
That said, the Channel Islands are still a very important part of our business. Though most of our investment will probably be away from the islands, we’re not switching them off – this is still our home and still our base.
Name: Mark Crowther
Position: CEO, Liberation Group
Married to: Emma
Children: Amelia, Noah and Harry
Hobbies: Family, cooking, French house, Bath rugby, Arsenal FC
Interesting fact: I had a holiday job as a student working as Father Christmas at Debenhams in Cambridge