Black Sheep Brewery hits back at shareholder’s campaign to oust Theakston family

A shareholder in Yorkshire’s Black Sheep Brewery has launched a campaign to oust its founders from the business after five years of difficult trading.

(Photo: Kreuzschnabel/Flickr)

David Nabarro, a former investment banker who helped raise the funds needed for founder Paul Theakston to launch the brewery in 1992, is leading the campaign, having become “frustrated and impatient with what I believe has been Paul and his two sons’ mismanagement of our company.”

Black Sheep Brewery registered an operating profit of £260,000 on £19 million in the 12 months to March 2018, recovering from a £437,000 loss the previous year.

Nabarro said his campaign, which he has called Building a Better Black Sheep, is not a bid to “steal” the company or gain an advantage over other shareholders, but instead to “do the right thing by the company.”

Although the owners have recently brought the chain back into profit after five years of sharp decline, Nabarro said the company failed to “keep pace with changes in the brewing environment in the UK.”

In a letter to management and all shareholders, seen by The Yorkshire Post, Nabarro said: “I’m afraid, watching from afar, as year-by-year, one disappointing annual report has followed another through our letter-box, I have become increasingly frustrated and impatient with what I believe has been Paul and his two sons’ mismanagement of our company.”

“We are not in anyway trying to steal the company or gain some advantage over the other shareholders. On the contrary, our objective is to make money for all stakeholders and just do the right thing by the company.”

The ex-banker said he was supported by a number of shareholders, and is already working towards building a new management team.

Nabarro said Paul, alongside sons Robert and Jonathan, were too slow to capitalise on the craft beer movement in the UK, resulting in five years of poor financial results.

“In an age when there is so much craft beer produced right across the UK, people will pay a premium price for something that is very special,” he said. “The trouble is that Black Sheep branding is very low quality and has not kept pace with changes in the brewing environment in the UK and therefore has failed to achieve price premiumisation.”

The company, he said, is “operating at around 65 per cent or production capacity, it could produce a whole lot more beer if it could sell it.”

The City veteran said the company is struggling because management are using an outdated business model based on large-scale offers in supermarkets and cask ale production, and should instead invest in nurturing a core range of beers

“The most recent Report & Accounts to 31st March 2018 has been accompanied by an immediate 7.5% fall in Black Sheep’s notional share price to £1.85, and I need hardly remind you that over the last five years under the Theakston Family’s stewardship our Company has paid no dividends. In fact, compared to five years ago, annual revenues, of which circa 39.94% were represented by beer duty, have actually declined by 1.04%”

Black Sheep Brewery hit back at Nabarro’s claims that the business is in poor health, saying “the future is positive in a highly competitive market.”

A spokesperson for Black Sheep reacted to the news by reinforcing the fact that the brewery has  “announced a return to profit, a growth in sales and an expanded line of products.”

“The plc is owned by hundreds of shareholders from the local community and the comments of one shareholder activist, who has the objective of de-stabilising the management of the business, should not distract us from pursuing our strategy and delivering the results all shareholders want us to strive for.”

The spokesperson told the drinks business that Nabarro did not raise his concerns at the company’s AGM held earlier this year, despite shareholders being entitled to do so.

“Change is in our plan and has been endorsed overwhelmingly by the majority of shareholders.”