Bespoke prices would suit all

By Andrew Pring

- Last updated on GMT

Related tags Beer price rises Alcoholic beverage Pubcos

Pring: pubcos should share in their licensees' fortunes, be they up or down
Pring: pubcos should share in their licensees' fortunes, be they up or down
Licensees can't do it on their own — they need flexibility from their pubcos to rival the big managed operators, says Andrew Pring.

Marston's offer to shield its licensees from the next round of beer price rises for a period of 10 weeks throws down a heavy gauntlet to other pubcos. But it's one they'll have to pick up. Otherwise their tenants will stand no chance against the increasingly aggressive food and drink pricing policies of the major managed operators such as JDW and M&B.

And this cannot be just a temporary move, a "quantitative easing" designed to help tenants through the hardest part of the year. Life will hardly be a jot easier for the bulk of licensees when spring comes calling. All the economic forecasts tell us that. Certainly Wetherspoon is not planning to pull its 99p offers any time soon. And it wouldn't surprise anyone if further deals are unveiled by Tim Martin & Co as the year goes on.

No, this is from here on in. These are the new rules of the game for the pub companies. No longer can they assume that one pricing policy suits all their pubs. In some pubs, in some towns, where their tenants are up against especially fierce opposition, a view will have to be taken on a pub-by-pub basis what that pub should be selling its beer at — and therefore what they should be paying for that beer supply.

This is going to be mightily difficult for the pubcos — firstly because it will be stretching logistically, but even more difficult will be the margin sacrifice. The only way they can make up this shortfall is if the pub then performs better and sells more beer and everything else.

But that's how it should be. Pubcos should share in their licensees' fortunes, be they up or down. So if they work to help a licensee by lowering the price of his beer, they help him with his customers and driving extra trade. Right result all round.

To focus on customers and what they want is surely what licensees and pubcos should be working on together. But it doesn't always happen. According to one former drinks boss quoted in the Guardian on Saturday, it never happens at all. The unnamed source said "the pubcos haven't spent more than 10 minutes in the past 10 years worrying about the consumer. They were only doing financial engineering and that's bound to come crashing down at some stage."

Whatever the merits of that view, things are undeniably crashing down at the moment. Which is why Marston's and others are having to work as never before to tailor meaningful business solutions for each of their pubs. And why newcomers to a pub are in such a strong position to demand the very best terms before they sign on the dotted line.

Ultimately, it's not just newcomers to a pub who'll enjoy these terms. Stalwarts too must be given the opportunity to survive against the cut-throat managed operators.

The pubco model has a lot of evolving to do. And fast.

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