Sunday, March 01, 2009

response to the Publican 27 February 2009; Mark Daniels: When Did You Last Reward Yourself?

"The breweries and pubcos can’t just sit back and relax either."

That's exactly what has been happening. Brewers, wher they can, have been trying to help by absorbing cost increases. I'd question whether pubcos have ever wanted to do anything other than sit back and relax and monitor the cash rushing into their coffers.

Their business 'model' (never understood why ripping people off is called 'model') revolves around dumping all the responsibility for running an entire industry into the laps of thousands of individuals who pay unsustainably excessive rents and eye wateringly high prices for their products while running the whole estate for their freeholders...

As a way of generating cash for shareholders, the board of directors and for paying interest on mind boggling levels of debt, it's a highly efficient process.

As a way of running an industry it's directly analogous to the banking industry... AND the CEOs have overpaid themselves on the basis of future performance. You won;t see any of them picking up the bill for getting their companies into deep doodoo. The world of pubcos is built on massively, irresponsibly over valued property, with additional highly profitable bonus income stream from wholesale supply added in, used as collateral for mountain ranges of securitized debt, used to buy even more overvalued property which has then been borrowed against on the assumption of ever increasing bricks and mortar value and continuing growth in sales. All hot air basically. They just haven't crashed the way the banks have - yet - because there's a massive river of cash flowing by at the bottom coming in from the shop floor. At the moment the whole of the pubco edifice is floating on cash generated by you and me and thousands of other hard working licensees.

They know they've done wrong they can't change anything and begin to support their licensees financially because they need all the cash they get to service the irresponsible financial commitments they signed up to.

Pubcos are hoping they can confuse people so they will never notice the analogies with the sub prime banking crisis by chucking money via the BBPA at anti tax campaigns, anti supermarket propaganda and publishing one sided statistics to 'prove' that free of tie pubs close faster than the robust tied sector.

All the time never seriously caring a JOT about pubs, beer, heritage, draymen, customers or anything to with the pub business other than making money out of nothing,

Pubcos don't talk to brewers about anything other than screwing them down to a lower margin. They don't talk to anyone in the trade about anything to do with sustaining the pub industry.

They are the root of the problem.

I have been to meetings in large rooms full of industry insiders all talking about why pubs are failing. Together as a group they would not say boo to a goose about pubcos being part of the problem. Get them outside on their own for a drink and it's different: The pubcos are THE problem but no one will admit openly it for fear of having business withdrawn, property deals stopped, beer supply interrupted, membership fees cancelled; you name it, the pubcos are in there from top to bottom ruining the pub industry to their own cash benefit.

That's why no one speaks out for licensees and that's why we aren't represented... anywhere. Axe the Tax my foot.

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