Pete Robinson: Pubcos and Beer Orders, a necessary mistake

Related tags Beer orders Beer Public house Brewing

But the so-called 'Beer Orders' had entirely the opposite effect. Worse still the legislation effectively created the greedy pubco.However it did...

But the so-called 'Beer Orders' had entirely the opposite effect. Worse still the legislation effectively created the greedy pubco.

However it did guarantee all tenants would be free of tie for non-beer drinks and low-alcohol beers. Plus they would have the right to buy one cask-conditioned beer of their choice on the open market (the Guest Beer provision).

We tend to forget that immediately before the Beer Orders the 'Big Five' major breweries were effectively giant pubcos, owning almost all the UK's pubs whilst dominating every aspect of the industry. In their day they behaved responsibly and brewery, publican & customer all benefitted.

Tenants prepared to work hard became wealthy and even a managed house provided a lucrative income.

That all changed throughout the 70's when those breweries became utterly ruthless. They assimilated smaller breweries like 'The Borg' - resistance was futile.

As fair play became outdated landlords found they had very few rights. Managers were treated with contempt and manipulated by a fearsome system of regular stock takes.

Tenants were bullied into investing their life savings into their pubs then rewarded with punitive rent rises if they managed to make a go of the place.

Ties were totalitarian, inflexible and all pervading. In most cases all wines, spirits, and even soft drinks, crisps and nuts had to be purchased through the brewery. Constant checks and blatant spying enforced compliance with brewery rules.

There was always a long waiting list of new, misguided licencees hoping to jump onto this carousel.

Back in the early 80's a friend of mine became one such victim.

Eager to pursue his dream of a country pub he took a tenancy in a village near Kettering, paying a pretty fair whack for 'ingoings' (fixtures & fittings, goodwill, etc). New roads had diverted it's passing trade and it clearly had not made any real money for several years.

Despite this the brewery 'dummied' a set of accounts showing generous profits.

Ah yes, a bit of fixing up and this place would be a goldmine. He had the good sense to keep his well-paid day job leaving his wife in charge at lunchtime. They sank a fortune into renovations but with two other, better placed pubs in the same village they found it impossible to make a living.

Over the next two years travesty turned to disaster. She became depressed at this impossible situation and took to the booze. In response he gave up his job to devote more time. Debts spiralled until the brewery began withholding supplies.

In desperation he put on a keg of a rival brewery's beer and that was that. Prompt eviction followed and they never recovered financially. Within two months a new set of mugs had taken on the same pub.

The Beer Orders was originally intended to offer people like him a fairer deal but it didn't go far enough. The only way such pubs stood a chance was free from 'full' tie.

It's easy, with the benefit of hindsight, to see the inherent flaws in the beer order legislation. However it was duplicitous brewery greed that created the greedy pubco as an attempted work around.

The Beer Orders failed not because of any lack of good intention but because of lack of maintenance. The original policy was intended to be ongoing with occasional reviews and updates.

But like many good ideas that came from Thatcher's cabinet it was soon shelved once the Iron Lady had been hung out to dry.

Imagine, say, if it had been amended to guarantee a tie of no more than 75% with the tenant free to make up the remainder as would a free house.

This would have guaranteed a fairer deal on his pubco cost prices because there would be no point in keeping them artificially inflated while he's pushing his more profitable'non-tied' lines.

Then in 1997 Nu-Labour picked up the ball and sat on it, before revoking the legislation entirely in 2003. The fact they chose to replace it with absolutely nothing speaks volumes.

So the Beer Orders was not a bad idea in essence. But in practice it merely substituted one form of corporate greed for another.

Related topics Beer

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