They Don't Like It Up 'em!

You remember Tough Ted? I've written about him here and here. Ted Tuppin bosses that friend of the licensed trade, Enterprise Inns. Seems though he has come up against someone as plain speaking as himself and he doesn't like it. Greg Mulholland MP described Tuppen as the Gerald Ratner of the pub trade and suggested it was time he stepped down. I am sure all his many failed tenants, having had the pips squeezed out of them by Enterprise, will say "Amen" to that. Not to his face mind - he's tough. No such fears for Mulholland who did though. But he is fit as a flea and one of the MPs who knows what he's talking about when it comes to beer and pubs.

Speaking at a Tenanted Pub Company Summit, organised by the Morning Advertiser he said “I think the aggression and denial of Mr Tuppen continues to be a problem" and recounted how he and Ted have " an interesting relationship” of exchanging “nasty letters”.

There's much more. Read all about it here in the MA. It'll cheer you up no end!

Illogical CAMRA Says City Analyst

Both The Morning Advertiser and The Publican publish a view from Douglas Jack of Numis (no, I don't know who they are either), who alleges that removing the tie would reduce pub product range, investment, support and supply, driving up prices as a result. He goes on to give a few reasons for this by saying that CAMRA’s claim that the beer tie had inflated price to the consumer by 50p a pint was “fictitious”. He said that the average beer price across Punch and Enterprise pubs at 30 September was £2.62 a pint — 3% above the average of £2.54 a pint. The average free trade price was £2.56. He reckon's that Punch and Enterprise’s average beer price is also below the average in the tenanted sector of £2.73 “reflecting higher purchasing power that is passed on to tenants through investment and support”.

Now I'm always a little suspicious of figures trotted out these days, but I'm sure it will come as somewhat of a shock to most Enterprise and Punch tenants to know they are benefiting in such a way. Maybe Enterprise and Punch do stay competitive on price, but as we've read before, it seems to be at the expense of their licensees who work hugely long hours for little reward. Rather than the commonly held view that the lion's share of the money taken by a pub going to the PubCo, it seems according to Jack that everything in the garden is rosy. He also ignores that whatever changes the PubCos have made have been forced on them by public scrutiny, not by their own heartfelt conversion to the shining path.

I 'm getting to the stage where I no longer know what to believe, but I'll leave you with this thought. I am (reliably) told that The Society of Independent Brewers (SIBA) sell their beers to Enterprise for £55 a nine. They sell them to their tenants for £90 a pop. God knows what discounts they screw out of the bigger brewers. Of course you could choose to believe that the benefit of this "higher purchasing power" goes to "investment and support" as Mr Jack seemingly does, or you could take the view that it services the huge debt created by a dodgy business model. Wonder which it is?

CAMRA may well get it wrong, but City analysts don't always get it right either.

PubCos Off the Hook - For Now.

The Office of Fair Trading has ruled out action against the PubCos on the grounds that their current activities and the tie they impose, doesn't act against consumer interests.. They said  it had "not found evidence that supply ties are resulting in competition problems that are having an adverse impact on consumers".

CAMRA, who had raised the complaint expressed disappointment, but will ask the Government to take action following the scathing Business and Enterprise Committee Report. There is more than one  way to skin this cat it seems.

While disappointing, this is hardly surprising, given the narrow  remit of the OFT, though it could well be argued that the effect on consumers is somewhat more oblique than stated by both CAMRA and the OFT.  Reading the report, it seems to me the OFT has been a bit keen to get this one done, dusted and forgotten.

The Morning Advertiser has the story and you can download the report which is quite interesting.

Breaking News: The BEC will re-convene before Christmas to consider its position.

Enterprising or Not?

I understand that Enterprise Inns were one of the biggest beneficiaries of Cask Ale week, with sales of the real stuff increasing by 10.7% for the 20 odd percent of their pubs that joined in. Good news and one that gives you hope they will see this as something to build on. Enterprise are the biggest customer of the Society of Independent Brewers (SIBA) Direct Delivery Scheme and now wants SIBA members who take part in the scheme, to undergo accreditation for the taste categorisation system Cyclops by February 2010. The accreditation is designed to help educate both staff and customers about how a beer tastes, its colour and bitterness etc.

I can see where they are coming from and clearly if it is done to educate and promote cask ale, it is a good thing, but of course there is a cost to the brewer, though SIBA will pay for 60% of it. There is a risk too that some brewers will lose out as the vast majority aren't registered yet and you do sort of wonder if this is an attempt to restrict choice, or charitably, inadvertently result in it.

Frankly I am not sure what to make of it, other than cask beer is on the up again one way or another.

Sad Demise

I was in Leeds yesterday and had an hour or two to myself. I was being picked up at the Parish Church, so the choice of venue was simple, my old haunt when I worked in Leeds, the Palace. It was lunchtime, the pub was heaving. It sells around ten beers on handpump and inexpensive, cheap and cheerful food, a good selection of wines by the glass or bottle at prices that don't make you weep and a reasonable choice of lagers including Staropramen. It is bright and welcoming, with large windows and is a nice place to be in.

I enjoyed my beers and lapped up the pleasant atmosphere for an hour before nipping across to the magnificent Leeds Market which used to be my lunch break diversion from work. I had though, one other pub in mind. The Duck and Drake was one of the main multi choice pubs when this was less common. I used to drink there often and can remember some fine pints there. Always a bit rougher and readier than the Palace, it nonetheless was a fine place to enjoy good cask ale in a genuine old fashioned atmosphere. I had half an hour left, so nipped in. Two hefty smokers blocked my way, moving reluctantly aside. Inside there was no-one behind the bar and a solitary customer reading a Daily Mirror. It looked forlorn, down at heel and had obviously seen much better days. I hesitated then fled. Back in the Palace I reflected that no wonder it isn't in the Good Beer Guide. I checked when I got home. It has not been in since 2007. Seems the out of touch CAMRA has got this one right.

As far as I know, the Duck and Drake is operated by Scottish and Newcastle Pub Enterprises. The Palace has now been placed in the ever expanding Nicolson's chain.

Pubcos Have Ripped Heart out of Industry

Yes what I think, but no, not what I have said in so many words. The Morning Advertiser, a prominent trade paper says so though the vehicle of a spoof blog, written by the fictitious "Sir Shannon Alberry."

"Sir Shannon" says this "So how have the owners of the major pub companies behaved? Doing a bit of research I have noted that the directors of the main pubcos have sold between them about £50m of shares between 2000 and 2006. The share prices are now a fraction of their former levels — both of the main pubcos shares are more than 90% off their peak. Surely given the protestations as to the robustness of their model — now would be a great time for them to be snapping up the shares. But no — not a single purchase. Indeed in recent times the two leading lights have exercised Long Term Investment Plans and taken even more money out of their companies.*

On the basis that actions speak louder than words — they are telling us that the pub model is indeed dead, that both companies are going bust, and they are getting all they can out before the ships sink."

I guess this must be what the MA believes, despite the vehicle they choose to say so. They may well be right. The PubCo model is creaking at the seams.

*More detail and the original article here

7560 Pubs Go on Market - Sort Of

Only if you happen to be the licensee of them already. Punch Taverns have offered the freehold of all their pubs to the sitting licensee if the price can be agreed. Punch said "we are genuinely interested in selling pubs to our licensees at the right price. Our presumption is that the vast bulk of our estate will still remain with us, but we feel with finance costs so low, there is a window of opportunity now for some of our licensees to obtain a freehold.”

Problem is very few will be able to afford it, given that banks are wary of lending cash and while interest rates are low now, they may not remain so. Nonetheless it is an interesting development and a possible way out for some, from the albatross round their necks that is the average Pub Company.

The Garden is Rosy. Or is it?

It seems that all this stuff we read about Pub Companies treating their leaseholders badly, is a lot of old bollocks. The buggers are rolling in it. Punch Taverns have just announced that their leaseholders make an average of £64,000 a year before EBITDA - definition here. They earn 70% above the average wage in fact.

Now I've no idea what has to come out of this nice little earner, as it doesn't say how the calculation is made, but I'm guessing though this is before all the things a licensee has to pay such as bills, wages, insurance, etc. etc.

Either way it flies in the face of what you read elsewhere in the trade press and why Parliament is once again looking into what Pub Companies are up to. Already in the comments columns of trade publications, there are allegations of economy with the truth. Seems to me the old adage fits best "there are lies, damned lies and statistics!"

Let's hope Parliament tease out the truth of it all.

Calling Time

There is a long and interesting piece, titled as above on the plight of pubs in the Guardian today. Read it here

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.

PubCo's on a Warning!

It is fair to say that I think the creation of large Pub Companies with their accompanying mountains of debt and avaricious habits has done far more to damage the UK pub industry than Tesco et al. I know it is open to considerable debate, but it is clear that moving from a position when the infamous Beer Orders came in to deal with the "monopoly" that was the Big Six Brewers, we went from a position where around 90% of the pubs in England and Wales were free of debt, to one where they were mortgaged to the hilt and beyond. Each time a pub company has bought another one, (and they are huge now, far bigger than the "problem" that was intended to be fixed) another few thousand pounds of debt has been heaped on the pubs and subsequently to the rent the tenant pays. At each stage of this spiralling game, money has been taken out and debt put in, to the point where pubs have become unviable. The tenants misery is added to by being tied - beer choice is dictated by the Pubcos by and large - and sold to tenants at inflated prices. Add changing lifestyles and habits, along with cheap supermarket beer and you have a losing formula. A desperate hope of survival against the odds for a lot of licensees.

The pub companies still don't get it though and continue on their anti competitive and losing ways. They are the true enemy of the pub lover, squeezing the assets until the pips squeak. And boy are they squeaking now. So much so that even our MPs have noticed something is amiss. Anti-pubco MP Tim Farron speaking at the official launch of the Fair Pint group, which wants the tie removed from all pubs, except those owned by brewers with fewer than 500 sites, said the Fair Pint campaign group is "pushing at an open door for another select committee hearing". Tory MP Sir Nicholas Winterton added: "There is a growing concern in Parliament about the power of the pubcos and how they are exploiting landlords."I believe an inquiry is long overdue."

Too bloody right it is Nick, but let's hope it isn't "too little, too late".

Cheeky or Correct?

I am indebted to the Morning Advertiser for this:

JD Wetherspoon founder Tim Martin has written to the Competition Commission objecting to Heineken’s takeover of Scottish & Newcastle. Martin argues that the move will see a serious reduction in competition and that he is worried by Heineken’s “attitude to price”. He complains that Heineken has refused to supply Amstel to his company because Wetherspoon wanted to sell it for £1.99 a pint. Martin says in his submission to the Competition Commission: “The number of brewers from whom publicans buy recognised and attractive lager products has dropped dramatically in recent years as the number of major brewers has contracted through takeovers.

“At the current time, in choosing a portfolio of lagers the main brewers from which publicans can choose are Scottish & Newcastle, Coors, Carlsberg and Heineken. “Although the first three companies have by far the biggest volumes in the UK, Heineken has viable alternative products and is pushing hard to get them established in British pubs. "Their pouring lager is Amstel (around 4% abv) and their premium lager is Heineken itself (5% abv). “We feel it is a very unhealthy situation if the selection of brewers from which publicans can choose is reduced in this way. “Our fears are exacerbated by the attitude of Heineken towards price. “We recently wished to add another pouring lager to our portfolio and sought to install Amstel in all our pubs with an initial selling price of £1.99. “However, Heineken refused to supply the product to us, since they wished to establish a 'premium' selling price for their product.”

Martin claims that a main motive for the Heineken takeover of S&N is to reduce the level of competition in the market and to push up prices to the licensed trade and, ultimately, to consumers.

“Heineken and Scottish & Newcastle, as separate companies, provide clear and distinct alternative sources of supply for publicans in Britain and this reduction in competition should not be permitted.”

Well what about that then? Timbo is undoubtedly right, but is he the right guy to say it?

A Tale of Two Wetherspoons

Thinking about my Wetherspoon's fetish, there is a story I'll share about my two "local" London ones. I have another blog, which is really a personal diary. On the 2 November at the beginning of the Wetherspoon's Beer Festival, I wrote this:

"En route to the USA, I am in London so I call into the local JDW (Goodman's Field) with E. After a long wait we are eventually served by a Polish girl who gives us a (very) small bag of peanuts by way of compensation for the wait. Nice. JDW have a beer fest which allows a person to choose 3 x 1/3 pints for the price of a pint, thus allowing you to try more beers. The problem is I have a voucher that allows the purchase of a pint for £1.19 instead of the usual £1.89. The Polish usurper scoffs at my voucher and alleges I can't use it for three thirds, despite all the advertising saying have a go at three thirds for the price of a pint. I argue that logically my voucher is valid for this and point out politely that she is wrong. I ask that she consult the manager which she does reluctantly. He shrugs which I take it to be OK. Our fair Polish maiden is not happy. She says if it wasn't so busy she'd take it all further. I am incredulous. I know she is wrong. In a piece of silly vindictiveness, she snatches back my compensatory nuts. I say nowt, though this is done in front of all the other customers. I am kind of incensed, but faintly amused at the same time, though I'll take this further elsewhere quoting chapter and verse.

We move on to the next JDW, (Liberty Bounds) nobbut a cockstride way. This is a city JDW and thus £2.20 a pint. The operative consults about my voucher, comes back all smiles and says "No Problem". He then helpfully talks me through the available beers. 6 beers are duly selected and two vouchers used. Fantastic! I really wonder where our Polish lass was coming from. To serve the public you have to have common sense, not to mention politeness, and an idea about customer service. Wetherspoons are meant to train them in at least the latter two. I reflect ruefully on her attitude and her sheer cheek. On this showing, there is a way to go for this young lady at least!"

Of course I didn't take this any further, but I should have.

Punch Drunk

I note from yesterday's press that Punch Taverns are intending to bid for M&B, the Midlands based pub operator. Why should I care I hear you ask? Well you should. Punch already operates 9000 odd pubs, so chances are it will be running one in your area. If it succeeds in taking over M&B, it will own over 11,000 pubs. It will seriously affect the way the industry operates and will do little for choice. Although Punch is signed up to the SIBA Direct Delivery scheme, it seems only 50 of its current 9000 estate (which includes the Spirit Group) take part. So much for choice. When we used to complain about the "Big 5" brewers all these years ago, we never knew that really these were golden days. While now we have more brewers than ever, we have less choice than ever. So if you have a Punch pub near you with a dismal beer list, point them in the direction of SIBA. It might just help.