Beer Tie

Product Information

The pub companies have borrowed heavily to expand their portfolios and since the credit crunch they’ve been forced by the banks into massive sell-offs. Some of these pubs have become free houses, but many others have been converted into other uses such as supermarkets. Challenges arising from supermarket pricing, pub regulation and punitive leases all have a cost. And that cost is a dire selection of the cheapest brands of beer, "ready" meals, poorly trained staff and management, delayed refurbishment, increasingly desperate price promotions and so on. In other words, a disheartening experience for the customer creating a spiral of decline, leading sooner or later to yet another closure statistic. What is it we stand to lose? He said: “The review into the pubs code must be an honest one, which means accepting the reality, which is that there is no genuine MRO option available to tenants and this must be rectified or it will be clear that the government have and never had any intention to deliver on promises made to parliament.” Independent Family Brewers of Britain chairman Paul Wells said: "It's great news because it does validate the business model that the family brewers have been championing for a long time. Mark Robson is founder of Red Mist Leisure, which runs five pubs in the South East of England. He moved into the pub business in 2004 initially operating tied leases via Punch Taverns, but managed to acquire them and now runs them as free houses. He gave the new amendment a cautious welcome. “I am very, very anti-beer tie so if it goes then that’s a good thing. However, usually when the government gets involved in the pub industry they make things worse rather than better. I am little bit sceptical that it will go through as the beer tie has been around for 400 years.”

Competition Commissioner Joaquin Almunia said: "The rules adopted today will ensure that consumers can buy goods and services at the best available prices wherever they are located in the EU while leaving companies without market power essentially free to organise their sales network as they see best." T he Competition and Markets Authority exists to promot e competition for the benefit of consumers – therefore it i s disappointing that they are seemingly disinterested in investigating something that will have potentially anti-competitive effects on the UK beer and pub market.

The brewing industry

Rupert Croft, partner at law firm Maitland Walker, said: "The most notable change is that the definition of market share of 30% will now include buyers as well as suppliers, but this is unlikely to affect pub companies. His case was helped by publicity whipped up by the dispute, not to mention romantic regard for the Blue Bell, a 200-year-old pub whose interior has not changed since 1903 and where York City football club was formed. Pubs in less affluent areas of Britain are in danger of becoming extinct. They have been priced out of the market by rapacious landlords and the supermarkets. If we don't look sharp we are in danger of losing them forever. David Law and Simon Clarke run the Eagle Ale House, near London’s Clapham Common, and rent the premises from Enterprise Inns, the subject of more than three times as many MRO applications as any other chain. Their view is that the tie forces tenants to pay unnecessarily high prices for their beer which according to CAMRA can be 60 – 70% more than non-tied pubs. This impacts on their profitability and ultimately results in too many pub closures.

In 2009, CAMRA submitted a super-complaint to the Office of Fair Trading (‘OFT’) regarding the UK ‘beer ties’ issue. The OFT rejected the complaint, arguing that it had not found evidence of any competition problems having a significant impact on consumers. In contrast, it argued that at a national, regional and local level, there was evidence of a large number of competing pub outlets owned by different operators, who were competitive and offered sufficient choice, arguing that large pub companies source from a number of suppliers. Critics argue that, despite the reduction in the power of large brewers, the competition authorities have failed to recognise the continuing significance of the ‘beer tie’ to pricing, competition and choice. I certainly don’t have any sympathy for them,” says Marsden. “I hope that many publicans are able to buy their premises, I’d certainly like to buy the Prince.” The new appeal to Chief Executive, Dr Andrea Coscelli , follows a string of correspondence about the proposed joint venture between Carlsberg and Marston’s that CAMRA believes could have significant anti-competitive effects on the UK beer and pub market.Like most landlords who seek an MRO option, Pybus never got his. Instead, the former British debating championships runner-up thrashed out a deal face to face with his landlord, the pubco Punch Taverns.

Fair Pint were encouraged by our meetings with MEPs and Commission officials and there is a real concern about the impact of the pubco model on British consumers and individual tied publicans. The vote to end the tie is supported by bodies such as CAMRA and the Federation of Small Businesses. They argue that removing the tie will save many pubs from closure and bring greater competition to the market. Others argue that the tie remains a key part of the industry that works well for pub companies who have ambitious tenants. One of the key arguments against the change is that the tie is about more than the rent and beer.It is vital that the CMA steps up the plate, thoroughly investigates the proposed joint venture between Marston’s and Carlsberg, and help s to ensure there is fair competition , access to market for brewers, and decent consumer choice when it comes to beer and pubs up and down the country.” According to data from the British Beer and Pub Association, there have been 739 MRO applications since the system began three years ago. Only 57 resulted in MRO tenancies. The BBPA, whose members include the six largest pub companies, believe the pubs code is working well. Leading c onsumer group CAMRA has called on the Competition and Markets Authority to take the lead and investigate a proposed merger which could reduce the choice of beers available to pubgoers. Being tied also gives tenants access to wider business support: from maintenance to financial and marketing support. Many pub companies highlight this and argue that this support is vital to many of their tenants especially those who’ve come into the industry from other professions. The new rules have kept the same threshold of market share - 30% - under which the exemptions will apply.