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No Great Stagnation in Guinness
Ireland’s most famous brewery has been ahead of the curve for 250 years
Guinness is one of Ireland’s greatest business success stories. What started off as a small Dublin brewery has grown to produce one of the most consumed beers in the world, and become an iconic Irish brand.
Guinness today has an inseparable connection with Irish culture. Guinness loyalists will scorn a barman for mispouring a pint of Guinness. Corkman Ian Ryan has created a successful Instagram account documenting “shite pints of Guinness”. The “Guinness Advisor” has rated over 100 pubs in Dublin for their pints and recorded them on a map.
Taken over its entire history, Guinness may just be the most successful company Ireland has ever produced. In 1930, it was the seventh largest company in Britain or Ireland.1 It is one of our oldest companies of note. Considering that it predates the Bank of Ireland and the State itself, it could even be said that Guinness is the longest-running successful large institution in Ireland.
The key to Guinness’ robustness has been innovation. Through a series of key innovations, Guinness was able to stay on top despite (among other things) a famine, mass emigration, two World Wars, a civil war, and the changeover from British to sovereign rule. Guinness is responsible for changes in workplace relations, several foundational advances in the physics of brewing, and even the famous Student’s t-test in statistics. Indeed, Guinness has been one of the key drivers of innovation in Ireland.
The 9000-year lease
In 1759, in the southwest of Dublin city, a young entrepreneur named Arthur Guinness came across a brewery at St. James’ Gate available for rent. It had nearly all of the equipment required to brew the beer that he wanted to produce – stout. The premises sat on four acres and had a keeve (a vat used in brewing), a mill, two malt houses, stabling for twelve horses and a loft to hold 200 tons of hay.
The site was an ideal location for a brewery. It had nearby access to rail lines, good roads, the river Liffey and the Grand Canal. Additionally, the brewery was close enough to the city centre to provide access to a good labour market. However, the site was in disrepair and needed significant work to make it functional again. Guinness lacked the funds to buy the brewery outright so he needed to lease it. But if the lease were too short, then he ran the risk of not being able to renew.
On December 31st, 1759, Guinness agreed to lease the 90-by-300-foot brewery for the requested price of £45 per year on one condition: that he could have a 9000-year lease. Such a long lease was unheard of at the time, and even today is extremely rare. The landlord accepted. Years later, after Guinness had achieved some initial financial success, the company purchased the site outright and continued to expand its operations, growing its presence from four to sixty-four acres.
Transforming the workplace
Working is no longer just an exchange of labour for wages. It has become more common to see employers offering attractive non-salary benefits, such as financing employees’ education, healthcare, and even housing. These perks are associated with various tech companies and were popularised in the modern era by Hewlett-Packard. Guinness, however, was ahead of the curve by hundreds of years.
If you got a job in Guinness 100 or 200 years ago, you would be the envy of your peers. Dismissals and resignations were rare, and the salaries were 10-20% above the Dublin average. Employees enjoyed a host of benefits that were unheard of elsewhere, including:
Generous paid annual leave: This is common now but it only became mandatory in the early 20th century.
Free meals: All employees were entitled to three meals a day at an on-site restaurant.
Free family trips: From 1886 on, a system of annual excursions was introduced, providing Guinness employees with free train tickets and an allowance for day trips with family.
Free healthcare: Employees and their families received free healthcare with the first on-site clinic being opened in 1870. By the 1930s, this clinic employed doctors, dentists, chemists, nurses, and a masseuse. That’s right – Guinness had an on-site masseuse working in a brewery in 1930!
Pension: Guinness was famous for its pension. Pensions only became commonplace through their widespread introduction by the State in the early 1900s. Guinness pensions date back to the 1860s; the first US corporation to introduce a corporate pension was American Express in 1875.
Guinness’ care for its employees extended beyond their working life. If an employee died, generous benefits were passed on to the family. The pension would be passed on to the widows or orphans of deceased staff with an extra allowance being paid for every child under the age of fourteen. Families would also receive burial allowances. Preference was given to widows of employees for employment as housekeepers, attendants and office cleaners within the Brewery, and a free dinner was given every weekday to the sons of widows if they attended school.
Guinness also improved access to affordable housing for employees. In 1872, Edward Cecil Guinness2 (Arthur’s grandson) built housing on a site near the brewery for nearly 300 brewery families. The company also set up a Building Society in 1901 to provide low-interest rate loans with favourable terms to staff.
It’s clear that Guinness cared for its employees in a way that was very different to its peers at the time. As we will see, Guinness relied on top talent – and these talented workers could only be retained if they loved working at Guinness.
Inventing a new statistical method
At the cusp of the 20th century, Guinness began to bring science into every part of the brewing process. In 1896, Thomas Bennett Case became the first university science graduate to be hired by the brewing team at Guinness, with more joining in the following years. In 1900, Guinness’ commitment to R&D ratcheted up a gear with the establishment of the Guinness Research Laboratory by the chemist Alexander Forbes-Watson.
This team focused on answering questions related to brewing – for example, what level of nitrogen in barley produced the best pints. They also made advances in understanding how hops (a key ingredient) contributed to the brewing process. Case focused on estimating the amount of ‘soft resin’ in a batch of hops to investigate whether there was a connection between taste quality and soft resin. There are thousands of hops added to each batch of Guinness and it takes time to extract soft resin, so they had to take samples. Case took a sample of eleven measurements and a colleague took a sample of fourteen. There was a difference between the averages they both calculated. Was this a real difference across the batch? Or was it due to random error introduced by using small sample sizes? Case did not have an answer because the traditional statistical tools of the time relied on taking large samples of 150 or more to find an accurate estimate for the average. This problem was unsolved for many years until an Oxford-educated brewer joined the Guinness research team and devised a solution.
William Sealy Gosset graduated from Oxford University in 1899, where he obtained degrees in Mathematical Moderations and Natural Sciences. He then joined Guinness, where he worked for 38 years, eventually becoming Head Experimental Brewer. While at Guinness, he turned his attention to the small-sample problem that had faced Case a number of years earlier, and developed what we now know as the Student’s t-test. Gossett laid out his small sampling theory in a 1908 paper, The Probable Error of a Mean.
Guinness forbade employees from publishing research under their own name, lest they be copied by competitors. This is why Gossett had to publish his research under the pseudonym of ‘Student’. Since its publication, Gossett’s work on t-distributions has gone on to become core to modern statistics and will be taught in any introductory statistics course.
Gossett’s contributions were not fully appreciated until they were promoted by the statistician R.A. Fisher, who called him “the Faraday of statistics”. Coincidentally, R.A. Fisher would go on to marry Eileen Guinness (great-granddaughter of Arthur).
Reinventing the pint of plain
It’s hard to believe, but the modern pint of Guinness was only invented in 1959. The modern pint is poured on draught from a tap using a two-pour motion which results in a cold pint of black stout that settles with a foamy top. Before this, a complicated approach called the ‘high and low’ system was used to pull a pint of Guinness, which involved the use of two kegs, one under high pressure and one under low pressure.
This method was widespread across Ireland and every publican had their own variation of it. It was said that a barman or barmaid could live or die on their ability to pull a good pint of plain. While this method of serving Guinness was certainly charming, the high level of skill required to pull a pint made it difficult for Guinness to export their product globally. Guinness was widely consumed on draught in Ireland but it was sold in bottles elsewhere, resulting in much worse quality.
This all changed when Michael Ash developed the “Easy Pour” system in 1959.
Michael Ash attended Cambridge University, where he won the Rouse Ball prize, and achieved the Senior Wrangler title, awarded to the top mathematics undergraduate. He joined Guinness in 1951 and, over the next eight years, he and his team developed the Easy Pour. The previous system used only carbon dioxide but Ash realised that the addition of nitrogen was key. The blend of nitrogen and carbon dioxide creates smaller, more delicate bubbles which remain suspended within the stout until poured, leading to that signature surge we see in the two-pour today.
Together with keg designer Eric Lewis, Ash developed the “Ash Can”, a two-chamber keg which carried both stout and gas, and which would be combined together in a special ratio to deliver nitrogenated Guinness. The Easy Pour product was launched in 1959 and it was so effective that within a year it had been rolled out to all draught Guinness outlets – but not without some backlash. Guinness traditionalists opposed this new method, but it did not take long for the easy-pour method to prevail, resulting in the death of the high and low method.
This project, which only cost Guinness £20,000, made Guinness far easier to serve by an unskilled barman or barmaid and vastly improved Guinness’ popularity abroad.
The taste of Guinness is strongly influenced by both the style and quality of the pour. The pour is what gives the drink its hallmark creamy head. This is very difficult to achieve with a can or a bottle, and as a result, the taste of canned and bottled Guinness has historically been poor.
The Guinness research team began trying to solve this problem in 1969 under the codename Project ACORN. ACORN stood for Advanced Cans of Rich Nectar – I am not messing! Initially, the team focused on an approach in which there would be a false lid to hold a gas chamber resting underneath the main lid. When the can was opened, it would produce a hole for drinking, and also a hole in the gas chamber, causing the gas and liquid to mix together.
This approach didn’t bear much fruit. The team then looked into developing an external device (an initiator) to cause the Guinness to surge, as it does when poured from draught. The idea here was that by exerting a gentle external force on the Guinness you could stimulate the creation of a head. The team explored various designs, including a bottle-top initiator, a hand initiator and an ultrasonic initiator. But none of them worked.
The real breakthrough in at-home Guinness drinking came with the invention of the “widget”. A widget is a small gas-filled plastic ball which sits within the can. When the can is opened, there is a sudden drop in pressure, and the gas within the widget jets out from a small hole. This agitates the Guinness and leads to bubble formation. The result is that, when the can is poured, you get a surging mixture in the glass of gas bubbles and liquid which settles as a creamy pint. Work on the widget method started in 1984 under the name Project Dynamite. At one point, the London team posted samples to Dublin, which were held up in customs due to the unfortunate labelling of the documents. The project was soon renamed Project Oaktree, in homage to Project ACORN. Over a hundred varieties of the widget were tried and, eventually, the team finalised a design which was released to shops in 1989.
The disparity in quality between pub-served pints and home-served pints was reduced massively, which paved the way for a steady increase in Guinness sales. This widget has proven so popular that in 2004, a survey of over 9000 people in the UK rated it as a greater innovation than the internet and the mobile phone!
Creating a global brand
The core of the Guinness brand image is the colour black and the iconic harp. Guinness has used the harp, which represents the famous Brian Boru harp, since 1862.
There is an internet urban legend that the Irish Free State changed the direction of the harp on its flag so as not to infringe on Guinness’ trademark. The Guinness harp has a flat edge on the left and faces right, while the harp as used by the Irish government faces left. Unfortunately, this story is too delicious to be true; the Irish coat of arms has primarily faced left since long before Guinness. It is doubtful that any Irish government would have switched its iconography to a right-facing harp. However, the story is rooted in truth.
In the 1980s, Ireland began the process of registering the harp with the World Intellectual Property Organisation. The Attorney General was advised that they should only register the left-facing harp for fear of violating the Guinness trademark. The advice was taken, and so, the Irish government today only has intellectual property over harps that face left.
Still, the fact that such a rumour could spread is indicative of how culturally iconic Guinness has become. That was no accident.
While Guinness did forge a brand identity early on, they didn’t begin advertising until 1929. The decision to begin advertising under Rupert Guinness came with strict instructions: the quality of the advertising must match the quality of the beer. The first advert appeared in the British press in February 1929 with the now iconic slogan “Guinness is Good for You”.
Soon after, Guinness began a series of adverts with illustrations involving wild animals. Penguins, lions, sea lions and the famous Guinness toucan all featured in this multi-decade campaign. As the years went on, Guinness began to experiment with alternative methods of advertising. The most famous example of this is the Guinness Book of Records. It was an idea conceived of by Managing Director of Guinness Breweries, Sir Hugh Beaver, while on a hunting trip in Wexford in 1951. He and his friend got into an argument over what the fastest game bird was. Beaver had the idea to create a book of world records to display in pubs all over the world to settle debates just like this one. The book was published by a sister company called Guinness Superlatives and has since become the best-selling copyrighted book of all time. The company was sold by Guinness in 2002.
Perhaps the most bizarre episode in the history of Guinness advertising is when the company produced and bankrolled a feature-length Nigerian action film as a promotional stunt. The main character, Michael Power, can be seen drinking Guinness in many scenes, and he has been described as the “African James Bond”. The film was unusually successful and it succeeded in massively raising the status of Guinness in Africa. Nigeria is now the third largest market for Guinness after the UK and Ireland.
Through its excellent public relations, Guinness became so endeared to the Irish people – and to the government – that it could make outrageous claims about its purported health benefits with impunity. Guinness adverts regularly featured endorsements from doctors.
Up until the 1970s and 80s, Guinness was a prescription medication, of a sort. Doctors recommended it for everything from the flu to nerves. There were even Guinness prescriptions for pregnant women, though more commonly for women who had recently given birth. Guinness (in moderation) may or may not be good for you, but stricter advertising regulations eventually meant that the company wasn’t allowed to claim as such. They responded with a tongue-in-cheek advertising campaign which declared that “Guinness Isn’t Good for You”.
A determined founder began Guinness with a vision and took a bold decision with a 9000-year lease. The company then started a brewery which defied nearly every norm in workplace relations. They used the scientific method to radically rethink how beer is brewed and served, and created a world-class brand & marketing operation.
When Guinness released a subtly different pint glass several years ago, traditionalists decried it as blasphemous. The irony is that the brewery that creates this drink has eschewed tradition for over 250 years. In the author’s humble opinion, Ireland’s signature drink is one of the finest pints to grace the kegs and taps of publicans across the world. Some perceive Guinness to be stagnant and unchanging; it is anything but.
Will O’Brien is a member of the founding team of Zipp Mobility. He is on the steering committee for 18for0, a non-profit that advocates for nuclear power in Ireland. You can follow him on Twitter here.
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As measured by market value. Source: Leslie Hannah, The Rise of the Corporate Economy, 1983 edition, p. 63.
It is worth noting that the success of the Guinness company has also been the success of the Guinness family. The Dublin Brewery is still majority owned by the family, though they own nothing close to a majority of the parent company. The Guinnesses have remained prominent for centuries in elite Irish life. They are the closest thing Ireland has to the Rothschilds, to whom they are even related by marriage.