Black Sheep aims to roll out double the number of barrels

Paul and Rob Theakston want to invest up to 5m in the North Yorkshire company to increase beer production from more than 70,000 to 150,000 barrels a year.

"The intention is to go onwards and upwards despite the challenging economic climate in which we find ourselves," said Paul Theakston, in an interview with the Yorkshire Post. "Perhaps rather arrogantly we think we can persuade more people to drink our beer."

Mr Theakston said the expansion would take place in a "controlled and progressive" way and would be funded through retained earnings and "appropriate" bank debt.

The expansion follows investment of 5m five years ago in a new brewing house on site. To unlock existing capacity, the family plans to install new fermenting equipment and conditioning tanks in place of racking operations, which would be moved to an industrial estate nearby. Brewing shifts would then be increased from two to three per day.

Mr Theakston founded the brewery in 1992 although his family connection with brewing in Masham can be traced back to 1827. The brewing dynasty continues with new appointments in the family firm.

Eldest son, Rob, 36, became joint managing director on January 1, after more than a decade in the business. He gained experience at other family-owned brewers, including Kent's Shepherd Neame. Jo Theakston, another son, became a company director on April 1 and looks after marketing. He also spent time away at another family-owned brewer, Wells and Young's in Bedfordshire.

Other key staff include Alan Dunn, head brewer, and Brian Smith, trade salesman, who both became directors on April 1. The finance director, Steve Constable, joined the business shortly after its launch. "We have a really good team," said Mr Theakston, who described succession in family-owned businesses as "a double-edged sword". The new generation must be "solid and qualified", while the previous generation "needs to stand back and let them get on with it". Mr Theakston plans to stand down as managing director by next July, when he turns 66. He may become chairman, although this is not confirmed.

Mr Theakston entered the brewing industry as a young man, joining the family firm T&R Theakston in 1964. Following the controversial sale of the business to Scottish & Newcastle, he used the publicity surrounding the Theakston family split to establish his own brewery, choosing the name Black Sheep.

The business won an important contract with Marks & Spencer in its first year. Mr Theakston said: "I've only had experience of setting up one business from scratch, but my sense is you can plan all you like with cash flows and business plans, but it doesn't half help if you get one or two lucky breaks."

Black Sheep is a non-listed plc, with shares handled by Brewin Dolphin, the stockbroker, and around 1,200 private individual shareholders. It has achieved "gentle" growth over its 18 years, said Mr Theakston. Last year turnover was 17.6m.

Asked about the secret of successful brewing, he said: "Buy the best brewing materials you can afford. Brew it properly. Give it plenty of time. Don't short cut. Observe usual basic rules and you'll get a decent pint of beer."

Brewers and retailers must also work closely together to ensure consistency in pints served.

Mr Theakston added: "Although brewers will kick me for saying it, it is fundamentally a pretty simple process. The science which goes with it is very complex, but operationally the process is straight forward."

There is a danger, he said, in allowing accountants too much control over spending decisions, which can lead to the loss of heart and soul from the brewing process and "death by a thousand cuts".

"In a business like ours, we are not in a position to spend a fortune on marketing. The quality of our beer is absolutely essential to what we do. If you haven't got quality, you've got nothing."

Survival of the fittest in changing times

The figures speak for themselves. Pubs are closing at a rate of 39 a week, leaving just over 52,000 in the UK.

Paul Theakston, joint managing director of Black Sheep Brewery, said: "There is a view that it's got further to go."

He added: "The pub has struggled due to changing social habits. The activities within the pub have changed as well – there is a much greater reliance on food.

"Alcohol in general has become a much smaller part of life in the pub. We will end up with less pubs but the ones that we have will be survival-of-the-fittest good operators."

Mr Theakston said the last government's policies on taxation had been "a disaster" for the brewing industry, with beer duty rising by 20 per cent over the last two years alone.

He said the new government should look at heavier taxation of stronger drinks.