Pub tenants love the family way
Family brewers have told the European Union their tenants are happier and better off than those on newer pubco-style leases.
It's a clear attempt to distance themselves from national pubcos as the EU probes the tie for its review of opt-outs — "block exemptions" — from European competition law.
The Independent Family Brewers of Britain (IFBB) is one of several groups that have given submissions to the EU's Directorate General of Competition, which will decide whether to re-new the exemptions from May 2010.
The IFBB, whose 27 members own 4,227 pubs, surveyed 719 tenants anonymously and 56% agreed or strongly agreed that their rent was fair, with 26% disagreeing or strongly disagreeing.
Around three in four said they received the right level of support in their first year and are happy with support from head office.
In addition, 85% are happy with their relationship with their business development manager (BDM). The average IFBB BDM handles 34 pubs, compared to as many as 55 for "most other pub companies".
The IFBB submission said the "greatest difficulties" are currently faced by "those who invested shortly before the recession in long leases with full commercial rents and a product tie".
A "minority" of these leaseholders, very few of whom are tied to IFBB members, "are in economic hardship, often having paid substantial sums to buy their leases".
A study by an international firm of accountants engaged by the IFBB showed the multiple benefits that accrue to family brewer tied tenants, compared to free-of-tie pubs.
The Association of Licensed Multiple Retailers (ALMR) criticised the "exploitation" of the exemption by pubcos in its submission.
ALMR pointed to the extension of ties since the exemption was last agreed 10 years ago with more products tied. It also pointed out that pubcos now negotiate up-front payments from AWP suppliers, but these aren't shared with lessees.
ALMR urged the EU to reduce the threshold for market sectors considered "de minimis" — too small to be of competition concern — from 15% to 5%.
IFBB said the tie offers "good opportunities for inter-state trading in the EU" — but the Campaign for Real Ale (CAMRA) said the exemption "causes significant barriers to cross-border trade".
CAMRA would not support a renewal of the exemption unless it bans the tie from any firm controlling more than 5% (around 2,700) of UK pubs. The limit is currently 30%.
It points to the "unique features" of the pub market, such as the localised nature of competition, that mean "standard competition and economic assumptions do not apply".
Fair Pint — which last week held an "encouraging" meeting with EU officials and MEPs — backed calls for the 30% figure to be reduced and the de minimis level to fall below 5%.
This would "make it easier for the combined anti-competitive effects of these agreements to be addressed," Fair Pint said.
