Thursday, 26 June 2008

Come on in - the water's lovely!

I have written about my dislike of the giant Pub Companies before so was interested to hear that an announcement has been made of a new Parliamentary enquiry into Pub Company activity. It will have the remit to examine whether the recommendations of the 2004 Trade and Industry Committee report on pubcos have been followed.The key questions it will look at are:

• Has the Licensing Act had an effect on competition within the market?

• To what extent have revisions to the framework codes of practice [from the British Beer & Pub Association] met the Committee's concerns?

• To what extent are the codes applied by the Pubcos?

• Is there a need for further regulation of the industry?

Hopefully this time there will be a better look at the power of the Pubcos and their restrictive practices. The Fair Pint Campaign will be there to state the case of those who feel the PubCos operate unfairly. This has sparked off a lively debate within the trade, particularly on the Morning Advertiser forums. One wag suggested that all PubCos should have a common logo, the shark from Jaws and the slogan which heads this post. One disgruntled lease holder quoted the following:

Fact.... I placed my beer only order on Wednesday with my pubco, total £1344.24

Fact.....I then contacted a friend at a local wholesalers and was quoted for exactly the same order £981.33... a difference of 362.91. Multiply that by 52 weeks and you have a mark up of nearly £19,000 per annum, that was a small order for me. I have done the same exercise 2 or 3 times now and once it was a staggering £800+ difference.(for a weekly order)

I rather think that's a lot of mark up. No-one objects to the PubCos making a decent return on their money, but it should be shared with those who actually are leasing the business. Let's hope these monsters have their wings severely clipped.


helen said...

Well if pubcos are treating their lease holders like this it is no wonder that some end up goign out of business. Eventually more peeps will choose to buy online from sites like The Drink Shop when the Local pub isnt so "local" any longer.

Paul Garrard said...

I hope some good comes out of it. Real Guest beer among other things one hopes. But the cynic in me is saying it'll be the usual fudge/climbdown.

Paul Garrard said...

I hope some good comes out of it. Real Guest beer among other things one hopes. But the cynic in me is saying it'll be the usual fudge/climbdown.

Stonch said...

As someone who simultaneously works in beer wholesale to the free trade and runs a pub tied to a major PubCo, I feel uniquely well qualified to comment on this.

Yes, the mark ups applied by PubCos are usually very high indeed - and of course they tend also to restrict the range of products you can stock. The price structure can make turning a profit very difficult for landlords. On the other hand, it's the deal you sign up for on day one: lessees know the economics, and will have accounted for them in their business plan. Don't take on a tied lease if you're going to complain about the prices later.

Having said that, it's greats to see government investigating the power of PubCos, and I'd love to see them seriously curtailed.

Stonch said...

bloody hell the opening paragraph of my last comment makes you sound like a right see-you-next-tuesday. Sorry all!

Tandleman said...


I think the issue you outline in your second para is fair enough as far as it goes, but what lessees would say is that they don't know exactly how much they will be charged and the pub cos change this as they go along to suit themselves.When you are in, you are kind of stuck. That's the gist of what they are saying on the MA forum anyway.

Stonch said...

You're right in that unreasonable price rises can move a business from profitable to unprofitable in one fell swoop.

Of course all of this depends on the nature of your tie. Ours is just beers (and ciders), meaning we can get in wines and spirits at the best prices on the market and make decent margins there. Then of course there's food, an essential money spinner for most (good) pubs these days.

When you consider that - and the fact that wastage on draught beers can be very high - it makes me wonder how anyone can make good money out of a tied pub in which beer is the focus... obviously that's bad for beer lovers like you and I!

Tandleman said...

You are right and of course if you have a free of tie arrangement for anything, that is reflected in a big rent increase, or supplement as they tend to call it.

They get you one way or another.

Boak said...

It'd be great if Something Can Be Done, but it'd be quite hard to draft legislation that would stop this kind of thing happening. I'm glad someone's looking at it though.