I get quite cross when I hear people talking about 'emerging markets' or even 'BRICs' as a single great lump of investment. To me, investing in Russia is completely different from investing, in, say, Brazil or China. You can't lump them together - it's apples and oranges, chalk and cheese, or... beer and beer.
Beer and beer? Or should I say cask ale and lager? Because the City made a bad investment mistake based on the idea that all cask ale was the same. And I think it's about to make the same mistake by thinking that one emerging market is just like another.
Let's run the clock back to the late 90s and look at the market for brewing and pub companies as it was then. Whitbread and Bass were the big brewers, and they were producing adequate, but not exciting, cask ale. They were also making much more money out of selling lager, and promoted their lagers unsparingly on TV. Unsurprisingly, their cask ales didn't do well.
So the City got the idea that cask ale was a declining market. Only problem with that idea; cask ale was booming! Not at Whitbread and Bass, admittedly - but regional brewers like Wolverhampton & Dudley were doing well. So were Young's, Fullers, Jennings, Hardys & Hansons - just about anybody except Whitbread and Bass! Even so, because the City thought that real ale was a rubbish investment, you could pick these companies up at a 50% discount to their net assets.
If you were a lucky investor, you were acquainted with some of the better products of regional brewers, like Ridley's Old Bob (now alas killed off by Greene King, though its Witchfinder Porter is being revived as a seasonal beer this autumn) and Woodfordes Wherry. And so maybe you didn't buy the City view, and maybe you invested in one or two brewers - but not Bass or £WTB.
Fast forward to 2007 and see what happened. The two big brewers got out of brewing completely - they'd never been a hundred percent committed to real ale, and in the end they didn't even want to brew lager. Whitbread and Bass both sold their brewing operations to Interbrew, the Belgian conglomerate, and exited the market completely.
Meanwhile Wolves & Duds had run all the way from about 375p to eleven quid on the back of a hostile -…
