Sunday, May 24, 2009

Trust in the trade — a Manifesto

David I hear what you're saying, with respect. But Fair Pint really is about more than the tie. Fair Pint is doing a lot of work on the rent side of the piece as well but this has not taken such a high profile position because, although intricately intertwined with the tie, it is a secondary element to the tie. How could it be otherwise - the way the tie has been serially abused goes deeply into the way rents are assessed as much as its use has perverted the price of beer supply.

The most prominet issue about the tie is how it has been implemented since the Beer Orders. The tie has been manipulated by companies whose interests are not in brewing or even in managing property portfolios responsibly. The tie, as administered by companies whose only motivation is the pusuit of profit to the detriment of all other measures of successful performance, has become a pernicious, polarising influence in the whole pub industry.

There is a clear history of this as evidenced by the concerns of FSB - and others - which led initially to the 2004 TISC inquiry. Those concerns have not been addressed by the powerful companies whose behaviour, deservedly, is once again in the spotlight.

The fundamental tension of the tie is that, quite clearly, while it exists companies cannot be trusted NOT to abuse the automatic position of heightened power over the individual which the tie confers upon them.

It seems reasonable to assume the logic that in an evenly balanced commercial relationship the long term success or failure of major pub companies is entirely dependent on the long term success of lessees. However it is manifestly clear that the commercial relationship does not work this way. Deplorable levels of churn and thousands of boarded up and closing pubs are inescapable evidence that many pubcos do not care one iota about the long term success of their lessees because, if they did, the evidence to the contrary would not be there.

If the tie remains in any recognisable form it will be used as a tool to extract profit rather than one to promote a sustainable pub and brewing industry. The tie should go. Rents must, and will be, be dealt with in tandem.

If there are thousands of contented tied tenants out there, and I sincerely hope there are more than is my impression, and there are a number of pubcos out there looking after them, surely they have nothing to fear from its removal. They will have the open and free opportunity to sustain their already healthy relationship with their business partners and surely not be adversely affected in any way.

As it stands the reality is that it could hardly be any worse than it is now for many tied licensees. Let's face it, finding earnings of less than 15K a year in the BEC survey wasn't exactly a bolt out of the blue for anyone other than politicians, journalists and more general observers of our trade, including our customers over the bar... The truth is what has happened to this trade at the hands of a few overly greedy boards of directors is shocking.

The tie has to go. Where tied estates exist that are operated equitably and sustainably - where lessees have a fair chance to make a return on their capital and work investment - then surely there is not a fundamental problem and no one should fear from the end of feudalism oooopps, I meant the tie. Everyone involved in the contract benefits from the relationship.

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