Happy hour followed by hangover: financing the UK brewery industry, 1880–1913

Abstract

In the last 15 years of the nineteenth century c.300 British brewers incorporated and floated securities on the stock market. Subsequently, in the 1900s, the industry suffered a long-lived hangover. In this paper, we establish the stylised facts of this transformation and estimate the gains enjoyed by brewery investors during the boom as well as the losses suffered by investors during the bust of the 1900s. However, not all brewery equity shares suffered alike. We find that post-1900 performance correlates positively with capital-market discipline and good corporate governance and negatively with family control, but does not correlate with indebtedness.

Small beer? peer‐to‐peer lending in the craft beer sector

“…For example, between 1880 and 1913, the number of breweries listed on the stock market went from 12 to 308 (Acheson, Coyle, & Turner, ). This significant increase in the amount of capital invested in breweries eventually resulted in large losses for investors, although it had long‐term effects on the brewing sector and capital markets in the United Kingdom (Acheson et al, ). It remains to be seen whether the successful equity crowdfunding campaigns of Brewdog can be emulated by other craft brewers.…”

The influence of institutional factors on corporate narratives: A thematic content analysis of Guinness

“…In 1900, there were 308 incorporated breweries with securities traded on a stock market. These had a total paid-up capital of over £165 million (Acheson et al, 2016). Coming closer to our analysis period (1948 to 1996, see later), the number of breweries declined after World War II, with Gourvish and Wilson (1994: 447) describing the period from 1955 to 1980 as 'merger mania' 3 .…”

Bubbles in history

“…Recent bubbles have typically been accompanied by relatively low interest rates (Noguchi, 1994a;Jordá et al, 2015b). The booms of the 1890s in brewery, mining, and bicycle shares also occurred when interest rates were at a then-record low (Acheson et al, 2016;Quinn, 2019a;Van Helten, 1990). A surprising exception is the 1920s U.S. stock market bubble, almost all of which occurred when the Federal Reserve's discount rate was above its historical average (White, 1990).…”