What are the Beer Orders?

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The Beer Orders may well be being revoked by the government, but what exactly are they, and how have they affected the trade?The Beer Orders required...

The Beer Orders may well be being revoked by the government, but what exactly are they, and how have they affected the trade?

The Beer Orders required brewers to:

  • reduce the size of their tied estate to their permitted maximum (2,000 plus half the highest number of pubs over 2,000 held by the brewer since July 10, 1989) by November 1, 1992
  • not tie their tenants and tied loan clients for any alcoholic drinks other than beer
  • permit their tenants and tied loan clients to buy one brand of cask-conditioned beer and (as amended in 1997) one bottle-conditioned beer of their choice on the open market rather than through the brewer (the so-called "guest beer" provision)
  • to publish wholesale prices
  • not refuse to supply beer except in certain circumstances
  • not sell pubs with clauses preventing them being pubs in the future
  • make brewery tied loans repayable by the recipient on not more than three months' notice without penalty.

Changes in the market

The Beer Orders changed the landscape of the British brewing and pub trade when they were introduced in 1989. Before then, the majority of the 60,000 pubs in the UK were owned by a select few - the giant brewers such as Bass, Courage and Whitbread.

Pubs were the cash-cows of those key players and such was the brewers' domination of the industry that the competition authorities launched an investigation.

The Beer Orders, a direct result of that government probe, ruled that the brewers had an unfair grip on the trade and placed a limit on their estate size

This changed everything.

Brewers sold rafts of pubs, presenting a market entry to aspiring pub bosses who rushed to buy them. Scores of small tenanted and managed pub companies sprang up, such as Commer and Surrey Free Inns, followed by the super pub companies such as Enterprise Inns, Pubmaster, and later Punch Taverns.

The balance of power swung away from the brewers as pub companies started to squeeze better beer prices from their suppliers.

Banks and financial institutions like Nomura realised the opportunity and suddenly pubs were financial instruments. This investment saw almost all of the major brewers splitting their brewing and pub operations completely to increase profit.

With this transformation in the market all but complete, the DTI yesterday (Wednesday) decided to axe the very legislation that had started it all.

Vote!

We asked: Do you think the revocation of the Beer Orders will damage the trade? This is how you voted:
Yes​:152 Votes (73%)
No​:56 Votes (27%)

Related topics: Beer

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