Saturday 13 June 2009

Restraint? Not for me...

It's busy here and that's nice. Business seems to be quite good and I'm not sure the current economic situation has affected us one jot. Majoring on quality micro-brewed beer and interesting quality food seems to be a business plan that has merits. Unfortunately, it does result in me having much less time to blog than I'd like. I must go into the kitchen soon and start to prep for the day. I'm grabbing a few minutes to try and get across some points that are bothering me.

Recently, the publication Business and Enterprise Committee Pub Companies Report generated quite a lot of discussion in the trade press about the situation. The BBPA with it's Axe the Beer Tax campaign finding itself at odds with the Fair Pint Campaign. For me, I found the words from the BBPA to be completely transparent. The Fair Pint Campaign is pointing out that actually the beer tax is not the biggest thing that is effecting the pub industry. I agree with them, and the BBPA arguing against that rather highlights their own guerrilla tactics, exactly the thing they are accusing the Fair Pint Campaign of doing.

To go further on the beer tax issue, on a pint of 4% beer less than £0.40p is beer duty. It might interest you to know that typically, a tied house pays around that amount extra to it's landlord per pint compared to a free house and often more. If you add the compounding cost issues such as VAT and employer national insurance contributions1 the cost issues for beer for the tied house do indeed make beer duty less significant to the trade than Axe the Beer Tax would suggest.

I'm all for complaining about beer tax, but it is not the root cause of the pub industries problems. The major Pubco's must take a major part of the blame. I'm sorry to offend the supporters of the regional brewers, but these tie reliant industries must also be watched as I feel they are no better. The rhetoric from all of these larger companies, suggesting that real ale will die out without them, is beginning to irritate me. I supply only micro-brewed beer and am completely independent. I see no death of real ale any time soon. Regionals brew real ale because it is a way of getting CAMRA on their side, but in reality most of their revenue is from the tie on wines, spirits, RTDs and major lager brands, not their own brewed beer. Brewing real ale helps to ensure CAMRA supports the tie for this group of PubCo estates that happen to also brew a little bit of beer.

Yes, I know we need to think through any change to the tie system carefully, but ultimately I'm becoming convinced that we need to think about moving to a limit of much smaller than 500 tied houses per estate. If a brewery or product needs a monopolistic system to get the product to market then the product can't be that good. Ultimately, the tie prevents many microbreweries from getting their products to market even though many tied house licensees would love to stock their products. Supporting the tie in any form is restricting the development of microbreweries.

1Employer national insurance contributions are greater than employee national insurance contributions. Hidden taxes are significant to the small business. Beer tax is relatively small in comparison.

This post is crap and vitriolic. I'd like to be more subtle and eloquent, but I haven't got time, sorry. I hope to return to the subject soon. I'm hoping to attack the concept that without the tie many licensees can't afford to get into the trade. I'm hoping to argue that without being able to afford a free house many would be better off not starting in the trade at all.


Curmudgeon said...

Sorry, Dave, I have to strongly disagree. The tie, insofar as it applies to regional and family brewers, is a major bastion of choice and diversity. Do you really want a situation where the international brewers control 95% plus of the beer market, and hundreds of microbrewers are scrabbling around for what remains?

Unknown said...

You don't need to apologise Cumudgeon, I expect a lot more disagree with me as well.

I don't think the micros would be scrabbling about for what remains, I think it's a growing market that is inhibited by the tie.

To me, your thoughts are exactly what the companies that rely on the tie want you to think. A sucess of thier rhetoric, in my view.

But, disagree with me if you wish, I'll defend your right to do that.

Gazza Prescott said...

Curmudgeon shows his old-fashioned Robinsons-drinking side yet again.

It's just gibberish to suggest that, if there were no beer tie, then ALL pubs would sell the cheapest crud they could get their hands on. Many pubs WANT to offer a craft beer (some want local, some want something different) and at the moment they have no chance to do so. If there were no tie, pubs that wanted to sell craft beer could do so and those that wished to sell cheap crap could go their own way.

To suggest that regional brewers, who make some atrocious beer which is sold in tied estates where the pubs have no other option, are the bastions of craft beer is to be stuck in the 1970's and to deny the massive strides in quality and innovation of the last 20 years.

Micro-brewers are the only future of real ale and as soon as they can get their beer into any pub that wants them then the sooner we'll have a proper craft beer revolution in the UK.

Jeff Pickthall said...

Couldn't have put it better myself Mr Prescott.

It seems Curmudgeon has swallowed CAMRA's book of controlled-economy, protectionist, anti-competition claptrap.