Going Dutch

The news that Heineken is buying most of the tied pub estate of Punch Taverns has been written about on one hand as a great and confident nod to the future of the British pub and by by others as the return of the pre Beer Orders beer world.  Is either position really the case?

Ẁith the addition of 1900 pubs to its existing 1100 or so, soon Heineken will control over 3000 pubs and will apply, I assume, their rules to their new tenants. This will allow the tenants (in theory) access to a maximum of 176 cask beers, mainly chosen from big brewers.  On the contrary, one of the good things about Punch in their latter days was the ability of its tenants to buy from far and wide, mainly through SIBA, though of course, Punch did apply their mark-up to the end product invoice. This allowed access to hundreds of beers. Jeff Bell describes the process here for those interested in it.  As far as I know, Star Inns and Bars (Heineken's pub arm), allow no such flexibility. Indeed their tenants in my area tell me that far from being allowed access to the whole Heineken list, there is usually a much smaller list from which they must choose and requests for access to the bigger list, imperfect though it is,  are stonewalled by area managers.  One must assume that is done on grounds of profit, by Heineken purchasing and selling large volumes of a small amount of brands, led of course by their wholly owned offshoot, Caledonian Brewery.  It puts Star Inns and Bars tenants at a considerable disadvantage over rivals who are not so hidebound.

Now the Beer Orders have been long since revoked and funnily enough, Punch were in the process of really cleaning their act up - a process presumably approved of by Heineken, as they have stumped up £305 million to take control - but will this massive tie really be good for choice? Heineken are clearly aware of this concern and issued a statement to the London Evening Standard. Reading this rather bland and wishy washy set of "assurances" you may not exactly be reassured.  Lawson Mountstevens, head of Heineken’s Star Pubs & Bars UK estate, told the Standard: “Our plan is to keep great London pubs as high-quality venues."  He added: "Around 15% of the brands we sell in each of our existing pubs are not owned by us, so we use regional cask-ale brewers such as Fuller’s. I want to reassure sceptics that, subject to the deal for us buying the Punch pubs completing, we will aim to keep up this policy of selling a number of non-Heineken beers.”. 

Convinced? Me neither. A huge loss of choice will do nothing for the dog eat dog situation of over supply and may well see off quite a few brewers as markets close to them. In this respect we are indeed heading back to the closed markets pre Beer Orders. The Good Old Days?  For Heineken, maybe.

Heineken's boast of maintaining choice looks much less attractive of you look at it as Heineken selling 85% of brands they own in pubs.

To save you the arithmetic Heineken are paying an average of £160,000 a pub. Their partner,  Patron Capital will retain and run the 'Punch B' pubs of which there are 1,329 as well as TopCo.