Beer in Hong Kong – Part Four – The Hong Kong Brewers and Distillers Ltd 1930-1935

Martyn Cornell has kindly given permission for extracts from his article, A Short History of Beer in Hong Kong, to be posted on our website.

The article was published in the Journal of the Brewery History Society, Brewery History, Issue 156, 2012

Martyn has his own blog, Zythophile – Beer now and then, linked below.

Despite its title the article is quite lengthy and packed with information. This fourth extract begins in the late 1920s…

The transplanting of the Oriental Brewery left Hong Kong once again without a brewery of its own, though the colony continued to import beer in considerable quantities: by the end of the 1920s around 17,000 barrels a year, on average were being shipped in. As early as 1922 in was being reported that Ruttonjee & Sons, a wines and spirits company set up by a Parsee from Bombay, Hormusjee Ruttonjee, who had come to Hong Kong originally in 1884,(51) ‘will open a new brewery’ in Hong Kong.(52) However, it was not until 1930 that the Ruttonjees’ plans seem to have crystallised with the formation of the Hong Kong Brewers and Distillers Ltd., with Jehangir Ruttonjee, aged 50, Hormusjee’s son, as managing director and largest shareholder.

By November that year, work had started on a site for a new brewery at Sham Tseng – a name meaning ‘deep well’ – by the seafront on the Castle Peak Road, in the southern New Territories, and about 11 miles west of Kowloon. The equipment was being supplied by the Skoda Works in Pilsen, Czechoslovakia, home, as the new company pointed out, to the original Pilsen lager, and Skoda was also furnishing ‘an expert brewer’.(53) The water supply, from the hills behind the brewery site, had been checked by the government analyst in Hong Kong and also the Wahl-Henius Institute of Fermentology in Chicago. The new concern would make its own ice, selling any excess to the Hong Kong Dairy Farm Ice & Cold Storage Co. The plant would also have a distillery, making 930,000 gallons of alcohol a year, ‘both for consumption and for industrial purposes’, and the excess CO2 the brewery and distillery produced would be used for refrigeration and for carbonating fizzy drinks.

The new company was capitalised at $8 million (British trade dollars), divided into $10 shares, but:-

only 50,000 shares ($500,000) are now being issued, as it is estimated that only this amount will be required for the formation of the company – including buildings, plant, machinery and working capital.(54)

The men behind the new concern included several of Hong Kong’s best-known businessmen, Western and Chinese, among them Sir Elly Kadoorie, the biggest shareholder in China Light and Power, the local electricity company, whose family ran the Peninsula Hotel in Kowloon.(55)

By June 1931 Hong Kong Brewers was declaring that the ‘large area of sea front which the company is reclaiming is almost completed’, and ‘the necessary machinery has been ordered and is expected to arrive in the Colony shortly’. It also revealed that the architects for the brewery were the old-established Hong Kong practice Leigh and Orange. Brewing was expected to be under way by March 1932, and ‘over a hundred hands will be employed when it is in full swing’.(56) The next month the statutory shareholders’ meeting was held, at which it was revealed that the capacity of the brewing plant, ‘the latest and most up-to-date design’ was 10,000 to 12,000 hectolitres a year, approximately 6,000 to 7,000 (imperial) barrels. The brewery plant was due to arrive at the end of December, and the ice-making plant at the beginning of January. The company had also purchased a 200kw emergency power plant. It was repeated that the entire plant ‘should be ready to start operations in May 1932’, and ‘despite the adverse exchange rate, affecting as it does the purchase of raw materials, we hope to be able to offer our beer to the public at a much more favourable rate than could be obtained for imported beer’.(57)

Later that same July the architects, Leigh and Orange, leaked to the press the news that the new brewery was to begin operations on 14 May 1932, and work on building the brewery would start ‘in a few days’. A large part of the building was to be insulated in cork, ‘to guarantee a temperature of about 40 degrees Fahrenheit … all the year round’. The 60-feet-high, two-storey brewery block would be a concrete shell on pile foundations, the machinery and ice-plant houses single storey, and the site would include a malt silo with a capacity of 180 tons, a bottling room, a cooperage and ‘several other essential departments’. Annual output was ‘5,000 hogsheads’ – 7,500 barrels – and the total cost was estimated at $150,000.(58)

The architects were being optimistic: piling for the brewery foundations only started in November 1931, being completed three months later. The tender for building work was won by the suitably named local firm of Messers Hop Yick & Co., who started erecting the reinforced concrete brewery buildings in March 1932. By May the brewing plant had arrived but was waiting to be installed by engineers from Skoda. The ice-making machinery, supplied by the American firm York Shipley Inc., was also on site. The brewer, Mr V. Woitsch, a graduate Engineer Brewer of the Vienna Brewing Academy, was ‘for many years technical and commercial director of one of the largest breweries in Pilsen’, the Ceský plzenský pivovar (which traded as Svetovar, or the ‘World Brewery’), and later state superintendent of breweries in Czechoslovakia, and his assistant brewmaster, F. Drapal, was a former managing brewer in Czechoslovakia. Meanwhile the company was still negotiating to purchase plant for its distillery and has hired ‘an expert distiller and distillery engineer, who has been adviser to some of the largest distilleries in the United Kingdom’, and who ‘will arrive from Scotland this month’ to take up his post.(59)

The distillery never seems to have actually started, but the brewery held its official opening ceremony in August 1933, an event attended by more than 600 prominent citizens from Hong Kong and Kowloon, driven out to the brewery site in more than 100 cars organised by the Hong Kong Hotel Garage. Catering – ‘teas, cakes, ices etc’ was organised by Lane, Crawford in a large open matshed erected for the occasion between the brewery (itself decorated with bunting and hung with flags) and the sea, while music was provided by the Band of the South Wales Borderers. Mrs Borrett, the wife of the General Officer Commanding (that is, commander of British troops in China), Major-General Oswald Borrett, formally opened the doors of the brewery with a silver key (which she was allowed to keep), after which her husband gave a ‘witty’ speech.(60)

The major-general was followed by speeches from the brewery chairman, Stanley Dodwell, another Hong Kong businessman, who had taken over the role four months earlier after the original chairman, Mr Warren, went home, and the managing director, Jehangir Ruttonjee. Dodwell assured the crowd that ‘nowhere in the world is beer brewed in more beautiful surroundings’, while the picturesque hills behind ‘pour down to us a constant supply of ideal water for our purpose, water … found to be equal in quality to, and just as suitable as, the Pilsen water itself, where the famous Pilsener beer is brewed’.(61)

Some had declared that the brewery ‘could hardly be declared a British undertaking. That criticism is quite unjust’, Dodwell said. ‘It IS British – it is going to brew British Pilsener beer’. He told the crowd that:-

when you have tasted the amber liquid our master brewers have prepared for you, and when we have shown you over the brewery, you will give us your encouragement and support not merely from a sense of duty, but on the merits of the beer we brew and the conditions under which we brew it. Aninspection of the various sections of the brewery wil convince you that nothing has been spared to make it a model of its kind – in its up-to-date equipment, in its hygienic conditions and in the personal cleanliness of every one of its employees.

Dodwell recalled the Victorian music hall song ‘Come the Booze is Cheaper’, and declared that the new brewery’s HB brand beer, on draught and in pint and quart bottles, was just over half the price of the imported product.(62)

Ruttonjee’s speech touched on one problem the brewery had had to overcome: the Hong Kong imports and exports department had no experience in assessing the duty to be paid on home-produced beer. However, the Superintendant of Imports and Exports, J.D. Lloyd, ‘evolved a most satisfactory method of procedure under which, while the revenue is protected, the working of the Brewery is in every way facilitated’.(63)

In 1934 the brewery installed another 14 60-barrel aluminium maturing and fermenting tanks, and added a new bottle-washing room.(64) Unfortunately, macroeconomic matters way outside the company’s control quickly brought it serious problems. It had paid for its plant at an exchange rate of 11.5 pence sterling to the British trade dollar, but when Britain left the gold standard in September 1931, the pound slumped more than 30% against the trade dollar, to one shilling and three pence. At the same time, for political reasons – pressure from senators representing the seven electorally important western silver-producing states – the United States government had been buying silver, which dramatically increased the price of the metal, sending it up almost threefold between 1932 and April 1935.(65) Hong Kong and China were the last places in the world to still tie their currency to silver, and higher silver prices hammered their exchange rates. By the middle of 1935 the trade dollar was nearly two and a half times higher against the pound than it had been in 1930.

The rising value of the trade dollar made exports dear and imports into Hong Kong much cheaper, so that British beer was on sale at the same price as the local product, despite the cost of shipping it 12,000 miles by sea: the brewery’s chairman, Stanley Dodwell, complained in June 1935 that ‘had exchange remained anywhere near where it was when the Brewery project was started, we could have supplied the Colony with very much cheaper beer than that imported from anywhere else except perhaps Japan’.(66) At the same time:-

export is now quite out of the question, and the cheaper dollar price of all imported beer has of course necessitated a big reduction in our prices. Nobody could have foreseen these violent fluctuations, which were entirely due to outside influences and world economic conditions

Dodwell said.

Attempts to find an export market were also hurt when some of the brewery’s beer turned cloudy. ‘It is extremely difficult to prevent non-chemically beer becoming hazy in a humid tropical climate’, Dodwell told shareholders in June 1935.

Every precaution was taken with our pasteurising plant to obviate this possibility, but unfortunately it failed us. This defect has now been remedied and acting on the advice of the leading brewing research institutions, we are satisfied that the difficulty has now been overcome and that there is now no better, purer beer of its kind brewed in the Far East.(67)

Ironically another of the brewery’s problems had beencaused by its being far more successful in getting peopleto return its beer bottles than anticipated. A contract for bottles had been entered into ‘far in excess of our requirements’, Dodwell admitted, after 80% of empty bottles were returned to the brewery, instead of the 25 to 30% anticipated.

As a result of its problems, the brewery made a loss for the financial year of nearly $138,000, Dodwell told the shareholders meeting in June, most of it interest on its overdraft and depreciation. He attacked the Hong Kong government for its lack of support, saying that at one point, because of the exchange rate, the brewery had
been paying more in duty on its product than imported beer paid. While that had been altered, the change merely mean that the duty on the Hong Kong brewery’s beer was now exactly the same as the duty on imported beer. Dodwell pointed out that in the Straits Settlements, locally brewed beer paid only 7/10ths the duty imported British beer did, which in turn was less than the duty on foreign beer.

In an appeal to the Hong Kong public, Dodwell said the colony and its industries

are passing through what can only be described as critical times – times, indeed in which I feel that we should all stand together. I therefore confidently appeal to the public for increased support. This can be given at no extra cost at all, for during the year we have made two reductions in our prices.

These were now, after the allowance for the return of empty bottles, $14.06 per case of 72 pints and $15.16 per case of 48 quarts. ‘Appreciating, as I do, the sporting instincts of the Hong Kong public, I refuse to believe that we shall appeal to them in vain’, Dodwell said. He added that ‘our beer can now be obtained on draught at the principle clubs, hotels and restaurants in the Colony, and the demand for it has been most satisfactory’.(68)

The company was cutting costs, Dodwell said – it was moving its offices from Duddell Street in Central on Hong Kong island to the brewery at Sham Tseng, and the directors had agreed to forego three quarters of their fees. He praised the managing director, Jehandir Ruttonjee, ‘who as you know is by far the largest shareholder’, and who, Dodwell said, ‘has rendered the company invaluable help. His optimism and faith in the future of the Brewery have led him to place his resources at the Company’s disposal to an extent which I feel very few shareholders realise’.(69) However, the bank overdraft was weighing heavily on the finances, and ‘some form of reconstruction in the near future will be essential’, Dodwell warned. But an appeal to shareholders to subscribe to a new issue of $200,000 received a response that was ‘almost negligible’, and the decision was made to wind the company up.(70)

Early in December 1935 it was announced that the brewery was going into voluntary liquidation, its collapse ‘in direct consequence of violent exchange fluctuations’. However, ‘it is planned to carry out a reorganisation scheme and meanwhile the company’s business will continue as usual’.(71) The Hongkong Telegraph reported that:-

its product, HB Beer, has not secured the patronage locally that was expected, but recently it was announced that the earlier troubles experienced in all newly established breweries
had been overcome. Since that time there has been much favourable comment on the high quality of the Company’s beer.

At an extraordinary meeting on 11 December to wind up the company, chairman Stanley Dodwell complained that after being hit by the plunge in the pound,

we commenced marketing our beer when exchange was favourable, but, just as we were getting into our stride, America’s silver policy drove exchange up to so high a level that not only had our prices for the local market to be reduced to an unprofitable point to compete with imported beer but our plans for export business were frustrated.(72)

Ironically, the previous month China had finally untied its currency from the price of silver. A month later, and a week before the meeting that saw the winding up of Hong Kong Brewers and Distillers Ltd., the colony followed, finally abandoning the silver-based British trade dollar and pegging its currency to sterling (and introducing the Hong Kong dollar).(73) The move came too late for the Sham Tseng brewery. Including depreciation and interest, the company had lost ‘3 lakhs of dollars’ – $300,000 – in two years of working, Dodwell said, and when its overdraft with the Hongkong and Shanghai Bank reached $110,000, the bank demanded that ‘a substantial reduction to be made in it’.(74)

The following year, Jehangir Ruttonjee incorporated a new firm under almost exactly the same name, the Hong Kong Brewery and Distillery Ltd…to be continued

References:

51. McCabe, I.B., Harlaftis, G. and Minoglou, I.P. (eds.)
(2005) Diaspora Entrepreneurial Networks: Four Centuries
of History. Berg: Oxford and New York. p.252.
52. Brewers’ Journal Volume. Vol. 58, October 1922. p.50.
53. China Mail. 29 November 1930. p.1.
54. ibid.
55. Hongkong Telegraph. 25 November 1930. p.12.
56. Hong Kong Daily Press. 17 June 1931. p.7.
57. Hongkong Telegraph. 16 July 1931. p.10.
58. Hongkong Telegraph. 28 July 1931. p.2.
59. Hong Kong Daily Press. 14 May 1932. p.2.
60. China Mail. 17 August 1933. p.10.
61. Hong Kong Daily Press. 17 August 1933. p.7.
62. China Mail op. cit.; Singapore Free Press and
Mercantile Advertiser. 31 August 1933. p.6.
63. Hongkong Telegraph. 17 August 1933. p.11.
64. Hongkong Telegraph. 26 June 1935. Final edition. p.5.
65. Latter, T. (2004) Hong Kong’s Exchange Rate Regimes
In The Twentieth Century: The story of three regime changes.
Hong Kong: The University of Hong Kong and Hong Kong
Institute for Monetary Research. pp.3-4.
66. Hongkong Telegraph. 26 June 1935. Final edition. p.5.
67. ibid.
68. ibid.
69. ibid.
70. Hong Kong Daily Press. 12 December 1935. Second
edition. pp.1 & 7.
71. Hongkong Telegraph. 2 December 1935. p.1.
72. Hong Kong Daily Press. 12 December 1935. Second
edition. pp.1 & 7.
73. Latter, T. (2004) op. cit. p.10.
74. Hong Kong Daily Press. 12 December 1935. Second
edition. pp.1 & 7.

This article was first posted on 29th June 2016.

See:

1. The Brewery History Society website The Society was founded in 1972 to promote research into all aspects of the brewing industry, to encourage the interchange of information about breweries and brewing, and to collect photographic and other archive information about brewery history.
2. Martyn Cornell’s blog, Zythophile – Beer now and then

Related Indhhk articles:

1. Beer in Hong Kong – Part One – the early days up to the planned opening of its first brewery
2. Beer in Hong Kong – Part Two – The Imperial Brewing Company Ltd
3. Beer in Hong Kong – Part Three – The Oriental Brewery 1908-1912
4. Beer in Hong Kong – Part Five – the Hong Kong Brewery and Distillery Ltd 1936-1947
5. Beer in Hong Kong – Part Six – the San Miguel Breweries at Sham Tseng and Yuen Long
6. Beer in Hong Kong – Part Seven – Carlsberg brewery, Tai Po – opened 1981
7. Oriental Brewery – “The beer that’s brewed to suit the climate”
8. Hong Kong Brewers and Distillers -The Opening of the Sham Tseng Brewery
9. Hong Kong Brewers and Distillers – The Sham Tseng Brewery 1930-1935
10. Lady Southorn’s hop shovel – Hongkong Brewers & Distillers 1934
11. The Imperial Brewing Company formed 1905, commenced operations 1907
12. Wo Fat Hing Distillery, Lung Wo village