OFT NOT TO INVESTIGATE PUBLIC HOUSE PROPERTY COMPANIES BEER TIE
The Office of Fair Trading is not going to investigate the beer tie purchase arrangement between pubcos and their managers. This means they must buy certain live or real ales, at inflated non-market prices from designated distributors... rather than from frfee market sources or drerict from individual breweries.
OFT RESPONSE: Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales," said Simon Williams, senior director of the OFT's goods group.
I leased a free of tie pub in Norfolk and after 18 months gave back the lease losing in the process. I found out too late that the previous landlord had in fact been trading around the clock and doubling bar prices after closing time during lock ins!
But the real problem with the OFT report is:
The OFT report totally misses the point that pubcos are these days in effect little more than property companies and have no interest in the promotion of live or real ale. That is fact.
They would prefer that real ale is confined to a bottle and that line fed beers are restricted to lagers and other easy to handle top pressure ( ie co2 driven) beers as the pubcos can put line monitors on each line, they are unable to do this with live or real ales through hand pump beer engines. in fact by the application of the tie, it effectively restricts distribution and competition.
Tie beers are usually distributed by third parties (ie Batemans use Small Beer many others use Waveney Beer Seller) so a dual price list will be applied on the same delivery run, the non tied pub will get a similar beer for say 30% less than the next drop off to a tied pub, all from the samer Gyle [brew]number.
If the Pubco can show that a pub is failing it can be easily disposed of, the licence withdrawn, despite any objections from locals, simply by showing the negative balance sheet! The property delicenced and used for other purposes such as a private residence. This returns an amazing proifit to the pubco shareholders, far more than a rental income!
I cannot believe that the OFT has been so taken in by the pubcos!
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