Saturday, February 06, 2010

Spot on Karl. The fears of dire consequences should the tie go are based entirely on a natural fear of change fuelled by alarmist stories put out by the people who benefit from the tie regime.

There are no plausible grounds, real or invented, to have deep concerns for the consequences of the pub and beer market becoming entirely free of the encumbrances that pubcos have created for their lessees and, ultimately themselves.

Pubcos are in trouble because their estates, i.e. their lessees, are in trouble. The reason their lessees are in trouble is that pubco rents and pubco wholesale supply prices drain all the profit out of the business and make running the average pub a completely unsustainable business exercise. There is no way out but business failure for the thousands of individuals hamstrung by the tie - and the knock on effect is that their freeholders cannot sustain the historical levels of profit essential to service a business model which is built on debt that is not invested wisely and used constructively to nurture the development of their business...

Lessees who are struggling financially extend the life of their business by cutting wage bills and working ever longer hours themselves. They do not refurbish their businesses when needed because they cannot afford it. They pay themselves less and less and cut corners on maintenance.

There is nothing genuine to fear from the end of the tie except the unknown pleasure of being free to make your own decisions about your stock and working out how to get your prices down by shopping around... what a dreadful, fearful prospect.

edited by: J Mark Dodds at: 07/02/2010 03:19:35

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