Tuesday, 18 November 2008

....and a bit more on the Beer Tie

I was going to say something thoughtful about Ted's post yesterday on The Round. But at least mentioning it here gives Ted a link for now. Have a look at it. It's interesting, but I'm afraid it's one of those cultural things that is fading here as well. I'll say more later.

More urgently Jeff Pickthall reminds me again that I don't like the tied house. I've tried to give a balanced and factual account, but I still don't like it. Jeff clearly is in no doubt but despite me wanting to vote "both" on his little amusing poll, I have thoughts about the wider picture.

The problem is, if we suddenly banished the tie what would happen? I guess I don't really know and neither does anybody else. But be sure that the pubco's make their money out of selling beverages to tied pubs. If they all of a sudden stop being able to make money this way my guess is that rents would go up. In any event the economics of the model would change. It might mean that pubcos sell off some estate. It might mean some lessees find the rent too high. Maybe it's the right thing, but there would be an upset to the industry as big as the smoking ban was.

I think the smoking ban was done incorrectly. I am in support of it now but I think it was too much of a shock to the industry and a half way house should first have been employed. If we ban the tie overnight then we would undoubtedly rock the pub boat so much that innocent pubs would fail. I am in suport of a change but if it happens it needs to be done carefully.

But really, what's the problem? Well I don't like the tie because it creates the sort of pub that I don't like. So I go to a pub that isn't tied. This is almost entirely true whenever I am aware there is a choice. It's true that in some areas there is no choice and sometimes the pubcos eliminate the choice in a particular geography. I would hate to run a tied house, so I don't and I knew I wouldn't when I started in the industry.

The punters who use tied houses generally like them. Those that don't like them choose a free house (although there are some "free houses" that are not, but that's perhaps a different story) I am very happy to hear from anybody who thinks that an area is devoid of sufficient choice, this would help me to sure up my need to hate the tied system.

Where there really is a problem is the case of licensees that find themselves running a tied house. Yes they signed a contract. Yes they really, really should have read the small print. I really do not think that most licensees go into the industry fully understanding the implications of the tie. I know far more people who believe they want to run a pub than are actually doing it. I also know quite a lot of people who have given it a go and failed, or at least got out as soon as they could.

I believe that the tied, leased pub works because many people go into it being promised the world by the pubco, and because they are so struck with the idea that they would like to run a pub they would agree to anything. I believe this is being exploited by the pubcos, perhaps not cynically or even deliberately, but everybody considering taking a pubco lease needs careful, unbiased advise.

I know how easy it is to get behind on suppliers payments. There are all sorts of reasons for it. In the free trade it is not uncommon to be put on "stop" by a supplier. It's a kind of telling off. But normally you just go to another supplier and order off them for a while whilst you get the original supplier in credit again and go back to normal. It's a nuisance and it's supposed to be because suppliers need to be paid and "stopping" the account normally works.

There is also the situation where the pubco fails to deliver. It does happen. We've been let down by suppliers more times than I care to remember. We just do what we have to, buy from where we need. It helps keep suppliers on their toes to stop buying of one that is failing to deliver. The tied lessee has not got that advantage. The pubco can still put them on stop, a little unfair I'd say.

With the tied lease the lessee has not got that valuable strategical tool. A few hundred pounds owing to the pubco can prevent trading for a weekend. What would you do? I'd go to the cash and carry for sure. If the wrong item was put on the waggon I'm sure I'd get it anywhere I could to keep my customers happy.

I'm afraid the tied lease will continue to work so long as people think it's good to get into the pub industry that way. If I were to advise anybody I would say don't take on a tied lease unless you were sure and even then be sure that the property was right. But most of all, screw the pubco for the best deal you can get, including an element of freedom, if they don't play ball, walk away because running a pub is your life and your life is worth more than that.

1 comment:

Brewers Union Local 180 said...

I don't have a comment on the tie at the moment, per se, but the little bit there about abruptness and the smoking ban caught my eye coupled with the wee chunk of gray matter loosely associated with it.

A couple of years ago (I think it has been at least three now), the city of Eugene, our nearest largish city, imposed a ban on smoking in public places. There was the usual hubbub and outcry that everybody would flee to neighboring Springfield. Didn't happen. But it was abrupt.

On January 1, 2009, the entire State of Oregon goes smoke-free. This is a land area larger than Great Britain, and there is no grace period. As I started my business in August with a self-imposed ban, and am enjoying the benefits thereof, I'm curious to see what's going to happen to the three smoky bars in Oakridge, where I send people on a quest for a pitcher of Coors Lite and a filtered stick of chemical tobacco.

As with a potential ban on the tie in the UK, and our upcoming statewide smoking ban, one wonders if there is a graceful and gradual solution; some sort of gentle slope rather than a swift kick off a precipitous cliff.