Sunday, March 01, 2009

Roger Protz ought to stick to brews, taste and tradition which he writes about so beautifully, before straying into the politics and economics of the demise of the pub unless doing a lot more research before getting out his big pen and firing it off at the usual suspects... as he did a fortnight ago in his 'Economics of the Madhouse' piece in the 12 February edition of MA.

Roger indiscriminately blasted both barrels at brewers, supermarkets and the government, totally sidestepping the pubco Elephant in the Room; beginning his argument "with friends like these, who needs enemies?" running through "Not only do the big brewers have a pact with the supermarkets, they seem to have also joined forces with the government to destroy the British pub" ending on "The brewers... would reap bigger profits if they sold beer at reasonable rather than inflated prices in pubs... sooner or later a national brewer will crash, unable to sustain itself on the slender profits it makes from off-sales".

Brewers selling beer at inflated prices in pubs? Brewers? Brewers Roger, are at the financial mercy of pubcos in exactly the same way as they are to supermarkets. Who are the biggest wholesalers of beer to British pubs? Brewers? No; not brewers, pubcos are.

Pubcos' make beer expensive in pubs. Pubcos make a LOT of money out of selling beer. Supermarkets do not. It should be said again: Beer is expensive in pubs because of pubcos not because of brewers.

The slender profits brewers make out of supplying the on trade encourages them to discount deeply to the off trade because margins there are bigger – and it’s safe to bet that the extended credit terms demanded by supermarkets' will be less than those of pubcos and that brewers regard supermarkets’ ability to pay their invoices as being more secure than that of the pubos’.

If you were a producer / wholesaler who had two MAJOR client bases: supermarkets and pubcos and one was 65 days’ credit and £70million in debt to you but showing year on year income growth and the other was pushing 120 days + credit on a £150million indebtedness AND showing a dramatic year on year income FALL, who would you be cosying up to for the foreseeable future?

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