City Diary: 16 October

By The PMA Team

- Last updated on GMT

Related tags Shepherd neame Real estate investment trust Jonathan neame Enterprise inns

All the latest gossip from the City.

Does just what it says on the label

The Kent vineyard owned by private equity boss Jon Moulton is launching a new wine called Recession Red. The label, which features a picture of Prime Minister Gordon Brown, describes it as a wine to remember in a year to forget and suggests serving it with "whatever food you can afford".

Neame to raise bottling capacity

Reality-check time. Declines in beer sales actually slowed down last year, points out Shepherd Neame boss Jonathan Neame. The decline was 2.8% compared to 4.6% the year before. The step-change, though, is the growth in off-trade sales at the expense of on-trade. Shepherd Neame's bottling hall struggled to meet off-trade demand and now the company will invest £3m in a new bottling line next year to double capacity.

M&B's easterly migration

Mitchells & Butlers' London office has been making a slow migration across the capital this year. It wasn't an attempt to put distance between itself and human Exocet Robert Tchenguiz's Mayfair office. Excessive rental demands on its Marble Arch office prompted a move to offices above Browns in St Martin's Lane. It was only a temporary resting place with the office now moved to above an O'Neill's near Euston — much handier for the train to Birmingham.

Robbie's Reit just not rated

There were some very strong views out there on Iranian investor Robert Tchenguiz and the plan to convert Mitchells & Butlers into a real estate investment trust (Reit). Here's just one view that found its way into City Diary's inbox in recent months. "An M&B Reit is simply a sale-and-leaseback that will no doubt be structured to suit one party only. It is nothing more than a one-trick pony that will only serve to line the pockets of investors with a short-term view on value creation. Investors should ask what M&B will do with the money that is raised, and if this is such a good idea why aren't there a gaggle of other property companies (British Land) queuing up at the door for a piece of this deal." It's alright — he's gone away now.

Green-fingered Jack's back

Top City analyst Douglas Jack's garden should be looking lovely — he returned to the fray a fortnight ago as leisure analyst at Numis after a three-month period of gardening leave in the wake of leaving Panmure Gordon. He admits it's not like he's not missed much while he was strimming and trimming. "There's just so much to catch up on — it's been quite intense while I was away."

Dual view from London Town

Billy Buchanan, new boss of tenanted and managed operator London Town, has a pretty good view of both sides of the fence. He has 200 or so tenants but his company is also a tenant of 24 Punch pubs and 14 Enterprise pubs thanks to the acquisition of GRS Inns. Interesting to hear his view of pub rents then. Of his pubco sites, he said: "The rents are too high in most of them compared to what we get in the marketplace."

Taxing time for blamed trade

Rather succinct summary of the Government's attitude to the pub trade from Shepherd Neame. The Kent brewer says: "It sees the industry as a tax collection point on one hand and a social problem on the other." Quite.

Enterprise help in perspective

City Diary has a calculator — and isn't scared to use it. Enterprise Inns has offered help worth £4,000 to 1,300 of its pubs in its second half. Enterprise Inns makes an average of £68,000 per annum from each of its pubs — or £17,000 per quarter. With each pub tending to get help for a set period of three months, one way of looking at the support is to see it as Enterprise Inns handing back around 23.5% of its

average pub profit to the licensee for the quarter. In truth, of course, the pubs helped are bottom-end outlets and as such will contribute much less than £68,000 — so the percentage will certainly be a lot more than 23.5% for each pub helped.

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