Sunday, March 08, 2009

Evening Standard

The financial pressures on pubs are numerous. The smoking ban has had an undboubtedly devastating effect on many oubs. Others - likely fewer over all - have undoubtedly benfited from the ban. The duty escalator has forced pubs to increase prices which has only increased the price differential between the on trade and the off trade.

Underpinning all of these real financial pressures on pubs is the pernicious but hidden influence of the dominant pub companies who own the majority of the pub trade's bricks and mortar. Pubcos are the companieds that replaced brewers as the majority pub freeholders following the 1989 Beer Orders which were supposed to break the power of brewers and make a fairer, more competitive and diverse market develop.

In twenty years power has simply transferred from enormous brewers to enormous property companies who have no necessarily specific allegiance to any brewer. Pubcos own pubs and let them out to licensees who operate them as small businesses. The majority of pubs in Britain operate in this way, paying rent to pubco landlords and with lease obligations - the 'beer tie' - that oblige licensees to buy beer through their rent collector's wholesale supply chain at prices set by the pubco rather than by the market. Typically tied beer prices are double those of the freehouse trade.

Pubcos have massive debts secured on hugely overvalued property estates. They charge high rent and a lot for beer because they have to repay DEBT. Pubcos are killing pubs

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