The news that MP’s at the House of Commons have backed the amendment to the Small Business Bill, which aims to secure market value rents and cheaper beer for licensees tied to large pub companies, has been welcomed by Tennent Caledonian Breweries (TCB).
John Gilligan, speaking for TCB told DRAM, “We would welcome the move if it was to become law in Scotland.” He continued, “It is potentially the biggest change to affect the trade since the beer orders were introduced and it offers the biggest opportunity too.”
Although the potential change in the law is currently confined to England, John suggests that the bill has support within the Scottish government too.
However, unlike England, tied houses in Scotland account for less than 10% of pubs, whereas in England more than 70% of pubs are tied. As the bill currently stands all tied tenants would have the right to request a rent review if they have not had one for five years and publicans would be able buy beer on the open market.
Says John, “As a regional brewer, we welcome the improved market access that this legislation should facilitate. We believe that it is right, not only for businesses such as ourselves, other Scottish brewers and also for tenants keen to offer the best pub environment and, more importantly, for the general public who demand and deserve choice. We also hope that the plan to increase the availability of guest beers in England and Wales will mean that all Scottish brewers will be able to sell more to English pubs.”
The British Beer & Pub Association, (BBPA) which has as members the large pub co’s and brewers, believes the changes will be damaging. Brigid Simmonds, BBPA Chief Executive, said, “This change effectively breaks the ‘beer tie’, which has served Britain’s unique pub industry well for nearly 400 years. It would hugely damage investment, jobs, and results in 1,400 more pubs closing, with 7,000 job losses – as the Government’s own research shows.
“There are serious legal and competition issues which must be faced, as it rides roughshod over what are previously agreed contracts, and creates an unworkable, two-tier market.” She concluded, “I hope Parliament will rethink as the bill continues its progress.
A view shared by David Forde, Managing Director of HEINEKEN who said, “What the Great British pub needs most is sustained investment to improve standards and attract more customers. If enacted, the Market Rent Only option would effectively break the beer tie, threaten vital investment and damage pubs. This year our Star Pubs & Bars business invested £18m to improve our pubs. We know that with the right lessee, in the right pub, backed by the right investment our model benefits lessees, the community and us as the brewer. These changes would threaten that partnership and make it more difficult for people to enter the market and own their own pub. We urge Parliament to think again before this poorly thought out proposal becomes law.”
However TCB think its time for change. John comments, “ We recognise that the tied pub model may have worked in the past but times have changed and it is appropriate that the model evolves.”