FLVA calls for fairer share of profits for tied licensees


Licensees must be given a fairer share of tied pub profits if the industry is to attract more people with the right entrepreneurial skills, a trade leader has warned.

12 replies - Last reply by Interested Observer, 17/02/2012 15:21:51

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FLVA calls for fairer share of profits for tied licensees

At LAST FLVA is catching up and having the nerve to say it; albeit rather diplomatically and way behind the curve.

These points were being made graphically years ago - the untenable earnings, the inequitous conditions, the penurious position of tied lessees all over the country - none of this is news, this is Ancient History.

IF articles like this were of wider interest and got into the mainstream press this industry would be the laughing stock of the nation - which is EXACTLY what it should be.

Conditions in the tied pub sector have been dragging WAY behind the real world for decades (by about seventy years real time would be a good guess), so much so that there's nowhere left for the tied pub sector to crawl off to to before it dies and now it's just slumping into its last pathetic rasping gasp where it is - on its knees.

RE: FLVA calls for fairer share of profits for tied licensees

A couple earning £30,000 for a 40 hour week - I should aspire to that!

In our tax return for last year I earned £500 and my wife Nil and that was for an average 98 hour week each. Frankly it is embarrassing.

We did of course have the "accommodation benefit" worth we are told £10,000 each - not that there was much else to do but sleep when not working.

The points made here are quite valid but seem to me to demonstrate the "Hail fellow well met" bufferdom of well meaning folk with time on their hands flapping round the problem and making vapid comments like these.

At least ed davey in his dreadful command paper drafted by the BBPA made one valid point which was that the problem with the FRI leases was too urgent to be resolved by legislation which was why he was minded to go for a strong self regulated approach.


RE: FLVA calls for fairer share of profits for tied licensees

as I've said before ... better late than never

RE: FLVA calls for fairer share of profits for tied licensees

All ‘nice’ stuff from Nigel Williams and the FLVA who recently seem to be making lots noise. Sadly, their screams of injustice have come far too late for long suffering tied tenants and filling the MA copy with press releases post Government response does nothing to persuade the rest of the sector that the organisation is nothing more than a pubco ‘stooge’.

I sense that Nigel Williams is a good man but there is a touch of ‘after the Lord Mayor’s show’ in his statement today. He talks about the imbalance of power between landlord and tenant yet categorically defends the beer tie which is main cause of the imbalance in the first place. The fundamental problem has always been about risk and reward but holding out the ‘gruel’ bowl and begging for more is likely to fall on deaf ears. History has taught us that the pubcos, without statutory intervention, will continue to grab all of the cash and as much as Williams wants to see more money in his cash drawer the “please sir, can I have some more” approach is unlikely to do the job.

I suspect Williams is calling for more transparency whilst not wishing to upset FLVA paymasters by calling for much needed reform of the beer tie. It’s an oxymoron and I suspect Williams knows it.

Continuing on the thread of transparency perhaps Williams would be good enough to tell us where the money comes from to fund the FLVA and who in the organisation is paid a retainer by the pubcos?

RE: FLVA calls for fairer share of profits for tied licensees

The problem Nigel Williams has is that he's avoiding the main issue. The most serious threat facing the pub industry is the cancer of property companies Beer Tie.

The Beer Tie has proved to be harmful to the pub trade!!
For any genuinely caring person, this fact ought to be the starting point, never lose sight of it!!!

No other country will allow one section of the society to make money simply by ripping off the profits of another!!

It's scandallous how the exploitative beer tie is allowed to go on ravaging the pub industry!

RE: FLVA calls for fairer share of profits for tied licensees

It may also be worth the FLVA noting that it is not just the usual suspects in the pubco fiasco who are deemed to be ripping off their tenants. There are some family brewers also, who fully tie in their tenants and charge well over the odds for the goods they sell. OK, if you are running a brewery owned pub, I can fully understand that you would be expected to stock the products they actually brew and potentially pay a little more per barrel than you would if you were buying on the freetrade. That seems pretty standard and would be deemed I suppose as "wet rent". When it comes to evey other beverage type you stock, you are also tied like minerals, wines etc, I don't see why you should be paying over the odds. For example, a barrel of Carling lager from one of our local freetrade suppliers, I was quoted earlier in the region of £90 + VAT, but would be expected to pay £134 + VAT had I purchased that same barrel from one of the local family brewers, although they don't brew Carling, or make Pepsi, or wine. Yet a lot of these tied houses also have such a churn of tenants, because it doesn't take the brain of Stephen Hawking to work out that after you have paid all your outgoings and paid the over inflated prices the brewers charge, there it nothing else left in the pot for you, so you have just slogged your guts out for nothing.

RE: FLVA calls for fairer share of profits for tied licensees

Fine words from the FLVA but, as with government pronouncements, that is as far as it will go. Paying lip service to the concerns of a section of their minions.

The most important component of any retail business is the customer. If you can supply them what they desire at a price around what they can afford, and make a profit, you have a business. To achieve this you need happy, motivated staff who derive a reasonable reward for their labours.

Pubcos have turned this fundamental principle on its head. Their business model begins with what they decide they require from each premise, the customer is secondary and the lessees who serve those customers can sink or swim. In a declining market it is inevitable that most will sink, just a matter of time.

That is why it is my contention that a tied pub is not a retail business at all and of zero interest to entrepreneurs. The sooner pubcos own up and stop exaggerating these "opportunities" the better for all concerned. Unless they address their overwhelming indebtedness and restructure their businesses with affordable debt levels there is no long term hope for any tied lessee, or the pubcos themselves.

RE: FLVA calls for fairer share of profits for tied licensees

Ms.Way I am curious, before you took on your pub did you exercise due diligence on product pricing?
Surely you must have been aware of the difference in pricing between tied and freetrade and factored this into your business plan.

RE: FLVA calls for fairer share of profits for tied licensees

Kevin, i signed my tied lease back in 2001. Back then I was achieving 57/58% on tied products. By 2066 my GP had fallen to 49% yet I was the most expensive pub in the area. Having already been involved in the sector I believed I had carried out due diligence and factored this into my business projections. What I didn't factor in was pubco greed or the awful way my rent review was conducted resulting in a 40% increase. Perhaps you can tell me what I did wrong?

RE: FLVA calls for fairer share of profits for tied licensees

Thanks for that Ms. Cobnutt
I could guess at many reasons why you failed, most would breach posting guidelines.
Not much due diligence if "puco greed" came as a big suprise. And you did not have the skills to achieve a better result with a rent review.

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