Saturday, October 04, 2014

Shall we start a new group about pubs and beer?

Kevin Durkan on the (unoffical) CAMRA Facebook page that has almost 12,000 members, less than 10% of CAMRA's total 'official' membership posted this proposition

"I've got a suggestion:

"Shall we start a new group about pubs and beer, which were, last time I checked, Camra's real objectives? Because I am so bored of people posting about the cheap discount booze they've bought at their local B&M's. I literally couldn't care less.  Do you people not realise you are the problem?"
Innovation in the Tied Pub Sector
It got a good response, quite heated, most people just don't have a clue why pubs are closing and use the 'loads of pubs aren't worth saving' angle because the pubs are run down, uncomfortable, unpleasant places to go to often staffed by people who seem depressed, pissed off, fed up and distant, even rude... Well. All these things are signs of the Great British Pubco Scam which has thousands of licensees trapped in bonded labour, working ludicrous hours for next to nothing (57% of tied publicans earn less than £10K a year CAMRA) and, unable to leave their business without going bust, stick it out in a spiral of ever decreasing reward until the inevitable happens and the bailiffs walk in and close them down - no wonder they look pissed off. Here's my penn'orth:

That is a good proposition Kevin Durkan I am a licensee and publican who has for a decade being lobbying government to legislate against tied pubco's and family brewers who are asset stripping Britain's pubs for short term financial gain, in the case of pubco's, solely to pay interest on the gargantuan debts the pubco's raised to buy the pubs in the first place.

It is the Great British Pubco Scam and is the root of the problem with pubs. Most people don't know about it because the pubco's and brewers behind it are in the business of keeping it out of people's consciousness. The obfuscation through their trade body, the British Beer and Pub Association is deliberate and calculated to be taken up by the pub going public, largely people who take pubs for granted, paradoxically because pubs have been such a ubiquitous part of all our life experience it seems impossible that the end of the pub is nigh. Well. It is.

A fundamental problem with the British Pub Sector is that everyone who's not a publican believes they know more than any professional publican about what is wrong with the British Pub Sector and all the obfuscation feeds this ignorance... Smoking ban, beer duty, taxes, business rates, drink driving, supermarkets, duty free booze cruises, red tape, changing habits, red wine, bad weather, the price of Sky Sports, crap pub tenants 'not diversifying their offer'... oh the reasons for the failure of the pub sector are anything and everything that is NOT to do with the FACT that Tied pub rents are higher than the open market and their supply prices are up to DOUBLE open market - the MAJORITY of pubs are Tied therefore the majority of pubs don't make enough profit to reinvest in the fabric of the buildings, the pubs get run down while they are obliged to sell beer at ridiculous prices, customers abandon shitty pubs for nicer environments - like their living room or Starbucks or Managed Pub Chains (this is another essential part of the Scam) - the publicans whose lives are literally Tied up in their failing pub businesses work harder, longer hours for ever lower returns, they become depressed, their pubs become more run down and eventually their business fails and the pubco sells the knackered pub 'suitable for alternative use' - it is happening everywhere, all the time and is a crisis...

31 pubs are closing every week, this figure lags behind the true rate, in addition there are, literally tens of hundreds of pubs under Holding Management which the pubco's try to re let while they are on the market. The pubco's are divesting more pubs all the time and beginning to invest in managed estates, the 'independent British pub' is definitely, without a shadow of doubt, being forced out of existence by private equity asset stripping buying pubs for their development value irrespective of their viability and the rates of closure is increasing.

There IS a Beer Revolution underway, pressure cooked by the fact that the British Pub Sector is a foreclosed market - the more micro brewers that open, the more people are encouraged to set up more breweries - the more competition there is for outlets for these beers and the more pressure there is for the existing brewers to cut their prices to maintain sales in an every burgeoning market... There will be many small brewery failures as this explodes and there is not enough outlet for existing and new brews.

As more traditional, run down pubs that cannot make profit and cannot sell beers from the Beer Revolution continue to fail, more Micro Pubs will set up in non pub venues to take advantage of the obvious market opportunity there is - and more pressure will be put on existing pubs already in a spiral of decline in the overall market.  This will speed more inevitable closures and likely stimulate more people to set up more micro pubs which, in turn, will open the market up to the micro brewers who will have more places to sell to...

This activity is all very interesting, there is innovation afoot and lots of palpable excitement - there really is a Beer and Pub Revolution taking place in what has been a very stagnant landscape. What is of great concern though is that the main villains of the piece, the tied model pubco's and family brewers who slavishly have copied the bigger pubco's rapacious lead, are carrying on plying their asset stripping, closing and selling thousands of pubs which, out of their irresponsible clutches would, with investment, undoubtedly be viable, thriving and exciting pubs in their own right.  What's tragic is that pretty much wherever a micro pub pops up there used to be nearby, a traditional pub that has been run down by the pubco scam and sold to pay interest on the loans the private equity sharks raised to buy it in the first place.  Before the pub closed many successive tenants lost their shirt, their businesses made 'unviable' by the excessive financial demands placed on it by an intransigent, rapacious freeholder sweating its assets.  The success of the Micro Pub that replaces the taditional pub is not really proof that the market supports these new places of social hubbub but is rather evidence that IF the previous pub had been allowed to ply its trade in a fair and free market, able to retain its own profit instead of having it all taken by a pubco in excessive rent and double price beer supply, it would still be there serving its community and it would be serving great beers that are coming out of the Beer Brewing Revolution at around a quid less than the market supports now... 

The evidence for the Great British Pubco Scam is everywhere there is a Micro Pub - most are opening near premises that once were a pub but have now been converted to residential, or to Tesco's or to betting shops.

So YES Kevin. Your suggestion is a good one.
Consider now the busy cafe society that has swept through Britain in the last twenty five years... Starbucks alone turns over almost half a £Billion a year.  It pubs had evolved in a free market it's not easy to imagine pubs being the place of choice for millions of coffee and tea drinkers to spend time. They are, after all, the iconic place of relaxation and socialising in the UK.

1 comment:

  1. I'd be interested to read the source material for the "fact" that tied rents are higher than market rents.- I've never seen any. Could you post a link?

    Tied (list) prices may occasionally be 2x FOT, but on average the prices actually paid are not - as I've demonstrated elsewhere ad nauseam.