Head of Steam delists Heineken over tie
Multiple operator Head of Steam has delisted Heineken as its major supplier after the brewer's pubco arm refused to allow it greater product choice at its one tied pub.
Managing director Tony Brookes said Heineken's "total intransigence" in accommodating his request for more choice shows the failings of the tie.
Head of Steam has also demanded a review of the lease at the tied pub, LYH, a Globe pub run by Scottish & Newcastle Pub Company (S&NPC) in Newcastle, and is encouraging other operators to do the same.
In May 2009, Head of Steam took on the only tied lease pub in its nine-strong estate — Shamrox, now LYH, in Newcastle.
Brookes blamed a "very deficient" products list for contributing to the business's lack of success, with the lack of European fruit beers, draught German wheat beer, "real" cask ciders or perries and very few bottled low-alcohol lagers or world beers.
He says that his company is losing money at the site while S&NPC is making around £100,000 pa.
Brookes proposed five options, all refused by Heineken: buying a guaranteed minimum volume "well above last year's"; having Heineken source the products; having Head of Steam source the products and buy them through the tie; increase the pub's rent and go free of tie on those drinks; go completely free of tie.
He's been offered a small short-term rent reduction, no annual rent increase and some marketing funds.
"All very welcome, but not a solution to our long-term problem," he added.
"Such total intransigence and unwillingness to help a customer with whom they had 30 years of good relationships is not acceptable
to us."
Brookes plans to inform trade bodies and MPs examining the tie. "We are not against the tie per se — we are against inflexibility in leases that do not allow the lessee to run the business in the most customer-oriented and profitable way."
Scottish & Newcastle Pub Company's response
"Mr Brookes is an experienced operator who traded LYH for more than five months and was very familiar with the business before signing the lease in September of last year.
"As with any other potential lessee, we made sure we fully explained the terms of the lease to him before he committed. We were astonished that within days of signing, he requested significant changes to our agreement and wanted to extend the product range to include niche products that we do not carry.
"We offer an excellent choice of products and a wide range of winning brands, including cask ales, which we know help lessees grow their businesses. The additional products requested represent a tiny percentage of all on-trade sales and the pub had traded very successfully without them in previous years.
"We have tried to work with Mr Brookes and would like to continue to do so. We recognise that the market is challenging and have offered him a package of support to help him over the next few months.
"We have a number of other successful pubs in the area and are confident that LYH has similar potential."
