There’s a fascinating case of a business transformation, following and adapting to changing market conditions, in the history of Whitbread.
I grew up knowing Whitbread as a traditional brewer and pub operator, back in the days when almost every street had a local public house. The company had been in brewing since 1742.
That business model was one of vertical integration. The company made its own products – in this case, beer – and then sold them through its own outlets – the pubs. The great benefit of such a model is that all the margin from the end user sale right back to the manufacture flows to the business.
Whitbread were faced with intense competition in the brewing market and decided to sell that part of the business. The market forces that drove the sale of the brewing business left in question the operation of the pubs and they too were sold a couple of years later.
At that point, Whitbread recognised their strength was in the hospitality industry. It wasn’t really anything to do with beer!
They’ve leveraged that strength with two brands that you will know today in Costa Coffee and Premier Inn (the name of the latter is undoubtedly a nod to the history of its owner) and the business is going from strength to strength.
Both Costa and Premier were businesses acquired as part of the transformation strategy, but the key word is strategy. The acquired businesses were elements of the overall plan, tools to enable the company to deliver the hospitality services it had identified as a key strength.
In a different world, St Ives Press was a very successful commercial printing business that invested in new print technology. The business moved into publishing services and acquired a book printing company. The key acquisitions were direct response printing companies – producing flyers and direct mail pieces. St Ives is now a digital marketing services company – oh, and they still do print things!
St Ives recognised that they were in the communications business, and specifically in helping their customers communicate their messages.
What’s your key strength? What is it that you do for your customers?