THE BIG DEBATE: Is the pub trade being ruined by big companies?
With Lincoln city centre often being criticised for its number of chain pubs and a lack of independent bars, the Echo is asking the public if they think that the pub trade is being ruined by big companies. Here, two experts present either side of the argument...
Steve Renshaw, secretary of the Lincoln branch of CAMRA
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Pubs in Lincoln are expensive and don’t support local microbreweries. These are common observations by visitors to the city. Clearly, they are generalisations and there are notable exceptions. But, based on my travels, I find it difficult to disagree. The reasons are complicated, but one of the major factors is the ownership of our pubs.
In the good old days, most pubs belonged to the local breweries. They were tied houses – they only sold their brewery’s beer. Independent pubs became known as free houses, and could buy their beer from any brewer.
Things changed after the Second World War, when brewery mergers began. By the 1980s, the “Big Six” brewers owned more than half of the country’s pubs and produced 75 per cent of its beer. Mrs Thatcher’s Government was concerned about the lack of competition and, in 1989, issued the Beer Orders. Brewers were not allowed to own more than 2,000 pubs, and had to give landlords the option of selling at least one guest beer produced by a rival.
Because the big brewers weren’t prepared to open up their pubs to other brewers’ beers, they came up with something new – pub companies – to which they sold all their pubs. As these “pubcos” didn’t brew beer themselves, they were exempt from the legislation.
So, today, we have a situation where around half of pubs in the UK are owned by pubcos. These pubs have to buy their beer only from the pubco, at a price up to 50 per cent more than a free-of-tie publican pays.
Alongside this, pubco licensees often find themselves paying rents that are above the market rate. Around Lincoln, we have very few free houses, so there isn’t the same level of competition as in many other towns. Hence the higher prices in our pubs. And, as the pubcos broker deals with the bigger brewers, microbreweries have found it difficult to get beer into their pubs.
For some years, CAMRA has campaigned against the unfair practices of pubcos. This came to fruition last month, when the Government announced a new, statutory code to ensure fair practices for a number of issues, including rents and the prices publicans pay for beer. It will enshrine the fundamental principle that “a tied licensee should be no worse off than a free-of-tie licensee”.
The code is expected to apply to all companies owning more than 500 tied leases.
Regional family brewers, such as Batemans, who have used the beer tie for more than a century to guarantee a market for their beer, will be exempt.
One development that has benefited microbreweries is the Society of Independent Brewers’ direct delivery scheme. A number of pubcos, including big boys Punch Taverns and Enterprise Inns, allow some of their licensees to source beer brewed within 30 miles of the pub, via the scheme.
I visited The Strugglers Inn, a Punch pub on Westgate, to find out what can be achieved within the constraints of a pubco lease. Apart from snacks, there is no food on offer, so the pub stands or falls on the quality and diversity of its beers.
There are eight handpumps on the bar. By using Punch’s core and guest beer lists and direct delivery to the best advantage, landlady, Anna, managed to serve 386 different real ales during 2012. And the quality has been recognised with the award of CAMRA’s Lincolnshire Pub of the Year in 2010 and 2012.
And what about the beer? 8 Sail Brewery’s Victorian Porter (5% ABV) is produced in the shadow of Heckington’s famous windmill. It’s a full-bodied, beer dominated by dark malt flavours, but with hints of berry fruits and some bitterness at the end. Perfect after a winter’s walk.
Find out more about CAMRA’s campaigns at www.camra.org.uk/campaigns
Dave Pawson, Punch Taverns’ central operations manager
In March 1987, when I was 13, we packed up our sold house and moved to a “new town” called Redditch in the West Midlands, leaving Lincoln, our home city.
We left behind our family and friends because my father had retrained as a prison officer having been made redundant from one of Lincoln’s largest employers, Clayton Dewandre, where he had worked for 25 years, following the closure of the factory.
I tell this story to illustrate a point about how the communities we know can change significantly.
When Claytons (hopefully some of you will remember it, maybe even worked there) closed, a section of society who lived, worked and socialised together, shared the same tastes and views, were dispersed. What effect did this have on the community pubs?
When I was asked to write this piece I asked my dad to tell me his stories about his favourite pubs in Lincoln when he was a young man.
I’ll list some of them for you: The Lincoln Imp on the Ermine, The Roaring Meg on Nettleham road, The Turks Head on Newport; The Brickmakers Arms, Stamp End; The Ripon Arms on Portland St; the Roebuck and the Queens Head on the High St. Great pubs from a great time. These were the glory days of the community pub and the community.
So what has changed? It’s not about ownership of pub buildings. People have changed. Their tastes, what they want, what they can access and when they can get it.
In the glory days of the pub there were three channels on the TV and you only went to a gym if you were at school or in prison. The pub was more or less the only leisure activity for a working class male between the ages of 18 and 65.
It’s a simplistic and flawed argument to suggest that pub companies and the beer tie are to blame for the demise of the industry.
It refuses to acknowledge that society has changed so significantly. Leisure is now a hugely competitive market with gyms, multiplex cinemas, coffee shops, huge indoor shopping centres, online gaming, nine hundred TV channels etc. Pubs no longer have the monopoly they once enjoyed.
What is the future of the pub, and especially the community pub, in the face of such competition? I think it’s a bright one, so long as we look forward to what the future can hold and acknowledge what the consumer wants rather than looking backwards and apportioning blame.
The pub is a retail business. I know it means much more emotionally and so it should, but at its heart it provides products that customers purchase and then consume on the premises.
If the pub is a retail business it must operate on retail principles. It’s about service, standards, comfort and quality of product. This is just a given to the general public today.
Cost is an issue, no doubt. Since 2004 beer duty rates have increased by 42 per cent. In 2008 the Labour Government imposed the “Beer Duty Escalator” which committed to an “inflation plus 2 per cent” rise in beer duty up until 2014/15. The coalition Government continues with that policy.
The average price of a pint is now £3.10 and a third of that goes to the Government. When it comes to the price of beer, I know where I’m looking.
Punch Taverns has a vested interest in the success of our pubs. Our tenants buy their beer from us and, yes, it is more expensive than a “free of tie” publican, but we balance that out by charging a lower sustainable fixed rent for the business.
The more successful the pub is, the more beer they will buy. Why would we set a rent for a pub that is unsustainable? It’s self-defeating.
You price a pub out of business, you lose your income. Our success is interdependent and that’s why we are investing heavily in our estate.
Nationwide, over this year we will spend £45 million on pub refurbishments. In the last two years we have spent a quarter of million pounds in Lincolnshire investing in our pubs with a further half a million earmarked for the next year.
We are building popular pubs (with a fantastic range of real ale) run by successful tenants. When we have that, we all win.