Family brewers fight for the beer tie
Disgruntled licensees, maverick MPs and 'fat cat' pub companies… there have been a lot of voices sounding off on the beer tie in recent months.
But one group of people has taken its time to speak up. Yet it is one that fears that it has everything to lose if all the talk and all the pressure were to escalate into some concrete action against the tie: the family brewers.
As well as being chief executive of Charles Wells Ltd - comprising both the pub company and the Wells & Young's brewing operation - Paul Wells chairs the Independent Family Brewers of Britain (IFBB).
The organisation has been gaining a higher profile this year, and it was with this hat on that we met recently to discuss the tie, and why he and the other 26 members of the IFBB believe it is time to come out batting for it.
The fundamentals
Wells is unequivocal on what any tinkering with the tie could mean for IFBB members. "The tie is completely fundamental to the operation of most family brewers," he says.
"It's not a fluke that beer has survived here and not in places such as Australia, the US and France, which tend to be dominated by just two major brewers.
"We've survived because the tie means we are not subject to the dominance of enormous manufacturing economies of scale. If those manufacturers were able to replicate their dominance in this market they could go into every pub that's there."
Wells gestures along the bar in the Somerstown Coffee House pub in Euston, London, where we are meeting. "I can see in front of me 10 different draught beers and I'm reasonably confident they have another 10 beers in packaged - there are maybe 20 different beer brands on show," he says.
And that's not the case in countries such as France, Belgium and Holland, Wells continues, where the tie operates in a different way and very few smaller brewers can be maintained.
Although the anti-tie campaigners led by Fair Pint are targeting pubcos with more than 500 pubs, Wells fears that, in amongst the media clamour that has brought the issue onto TV and into the tabloid press, the very existence of the tie itself has now become the main focus of their ire.
And with Parliament's Business & Enterprise Committee due to report its findings soon, the clamour is reaching fever pitch.
"My concern is the law of unintended consequences, particularly because MPs are very busy and tend to give issues a glancing blow - they will tend to see the tie as a bad thing simply because of the publicity that Fair Pint has got," says Wells.
"The tie looks simplistic to the outside world but is quite elaborate in the detail in the way in which some pubs have different agreements."
Wells fears that the likes of trade union the GMB, which recently entered the fray, and Liberal Democrat leader Nick Clegg - who described the beer tie as "unfair" in a recent interview with The Publican - are good examples of where industry outsiders have spoken out on the tie before fully understanding the way it works across the trade.
So the tie may be fundamental to the existence of the family brewers - but how content are their tenants and lessees with it?
It's true that the vast majority of complainants over the tie have come from the 'big two', and Wells contends that publicans working with smaller operators tend to be much happier customers.
"The tie works very well for our licensees," he says. "Publicans get better support with us. If I was choosing, I'd go with a company where I can see support is demonstrated on a much more substantial and sustained level," - although he adds: "I do know of bloody good Enterprise pubs where the licensee says they are really happy."
The biggest difference, he declares, is about property - the brewery tie generally sees the tenant run the business with the brewery repairing, improving and often insuring the property.
"The two things that are most important for the family brewer are both around capital planning - what you are going to do with your brewery and what you are going to do with the pubs you have," says Wells. "The tie affords the planning space for capital expenditure in the pubs and the brewery."
So Charles Wells Pub Company, for example, is full of happy customers?
"I'd be very happy for you to walk into any of our pubs and ask the licensee what they think about the tie," he says. "Our position has always been that if someone is in financial difficulties we will help as much as we can. With our experience we are very clear about how much money they should be making - and conversely, we are very clear about how much money we should be making."
Drinking less, drinking premium
"There will always be a tension between someone who's owning a property and someone operating the business within it," Wells continues.
"One half would like the rent up, the other half would like the rent down. But that's not enough to challenge the tie in itself."
Wells believes the problems facing pubs today are more to do with changing consumer trends - more, even, than the price of beer, despite the latest two per cent rise announced in last week's Budget.
"Today's issues around pubs are very definitely around consumers. If you look in any retail market it is almost always the consumer behaviour influencing everything that happens," he says. "Two examples: consumers are drinking less, and they are drinking more premium brands. If your pub counter still looks like standard lager and standard keg bitter you need to wake up!"
It is social change, more than anything, that is driving the changes in the pub market, says Wells. "And if licensees are aware of how that translates to their particular case, and if they have the support, then it can be made to work."
But perhaps not for many pubs tied up with the family brewers if the current pressure results in wholesale changes to the beer tie.
"We are in danger of throwing away the good stuff about what makes the tie work without gaining anything in return," declares Wells. "I believe we are likely to see breweries close and pubs close even faster if anything happens to the tie."
Who are the Independent Family Brewers of Britain?
The IFBB claims to represent "all that is best in the world of beer and pubs" - quite a claim!
Brought together in 1993 with the specific aim of defending the beer tie, the organisation's key objectives this year include recruiting more licensees into the industry and winning over the next generation of cask ale drinkers.
The 27 members of the IFBB own more than 4,200 pubs in England and Wales, with the vast majority run under the tenanted system.
