Robert Sayles: Is it time for Ted to go?

Many of the pronouncements made by politicians in the run up to the recent general election were met with a fair degree of scepticism by many in the on-trade, myself included it has to be said.

The overriding suspicion was that MPs were indulging in little more than electioneering and that once seats in Westminster had been secured, all interest in the complex issues besetting the pub trade would quickly dissipate.

The performance of Greg Mulholland last week at a pub trade event dispelled all such notions. By going into the "lions den" and saying what he said, Greg has sent a powerful message to pubcos; they are still very much under the spotlight and complacency is no longer an option.

His speech also demonstrated to publicans that his commitment to our industry has not wavered, his determination to see the job through remains as resolute as ever.

He, like many of us, is far from happy with the current pace of reform. Many pubcos are, in his view, stalling on the recommendations made in the Business Innovation and Skills Committee's report; others he suggests are making changes whilst simultaneously "kicking and screaming".

Nevertheless it was his attack on Ted Tuppen, Enterprise Inns's chief executive that inevitably stole all the headlines. It is clear that there is no love lost between the two men; Greg Mulholland sees the business model adopted by companies such as Enterprise Inns as the primary reason the industry is where it is today.

Mr Tuppen on the other hand regards Greg Mulholland's actions as little more than political interference, by a man who possesses little understanding of the industry he claims to support.

It must be said that government has not exactly been supportive of our industry in recent years; crippling tax rises on alcohol and the introduction of the smoking ban have undoubtedly hit our industry hard. Given this, is not the idea of a politician seeking to apportion blame a bit rich?

That said, Ted Tuppen has, rightly or wrongly, attracted a substantial level of criticism over the years. He would argue that few questioned the viability of the tied model during good years and that he should not be expected to shoulder the blame for an economic downturn which has devastated all areas of the economy, not just the pub trade.

Greg Mulholland's verbal assault on Mr Tuppen will inevitably draw comparisons with the barrage of criticism Sir Fred Goodwin, former head of Royal Bank of Scotland (RBS) was subjected to following the ill fated acquisition of ABN AMRO. This decision led ultimately to the collapse of the bank, the much publicised departure of Sir Fred and widespread outrage when details of his pension filtered out into the public domain.

Like RBS, Enterprise has been guilty of some questionable investments which have left them saddled with crippling liabilities; the sharp downturn in the market has only exacerbated the problem.

It is worth remembering however, that not all pubcos are in such a precarious position. Only last week, London brewer Fullers announced that it had the capital necessary to fund further acquisitions; clearly those that remained frugal during the boom years are now in a position to begin reaping the benefits.

However, the question many are asking is why Greg Mulholland felt compelled to launch such a vociferous attack against Ted Tuppen? After all, the CEO's of the other major pubcos were present so why was Ted singled out for special treatment?

To understand why we need to look at the way our industry is run. Pubcos are without doubt a cohesive lot; they have, over the years become accustomed to conducting business behind closed doors, away from prying eyes. It is not an industry that welcomes scrutiny, least of all from outsiders.

Many aspects of the business model are strictly controlled, pubcos do not make major changes in isolation; they move in unison or they don't move at all. This helps explain why for example, no pub company has attempted to break ranks by lowering its beer prices in an effort to support existing tenants and attract new ones.

I visited a small brewer/pubco recently and was astonished to find that they charge more than Punch Taverns; how can that be justifiable?

This pricing policy has led to allegations that pubcos are operating what is, to all intents and purposes a cartel; the counter arguement to this is that the OFT has looked into it and concluded there is no case to answer.

Nevertheless examples such as this do give some credence to Greg Mulholland's assertion that many of the small brewer/pubcos have forsaken their values by 'getting into bed' with the pubco model.

The way in which our industry operates therefore makes it inevitable that fundamental reform to the business model will only come about when there is consensus amongst all the major players that it is an appropriate course of action; this process will inevitably involve Ted Tuppen.

Love him or loathe him, he is without doubt an iconic figure within the industry; his position, both at Enterprise Inns and the BBPA ensure that he will have a major say in how the industry moves forward. In my opinion he is the key to the whole process, if he were to ratify reform then in all likelihood the rest of the industry would fall into line.

Greg Mulholland is well aware of this, but was he correct to say what he did? Is it indeed time for Ted to follow the lead of Giles Thorley at Punch Taverns and step down?

In some ways walking away would be the easy option. Further pressures on disposable income are inevitable as the economy grapples with the after effects of the worst recession in decades. Prospects in the near term look difficult for most businesses; factor in the additional constraints we face and the outlook appears positively daunting.

I have little doubt that Ted Tuppen will stay and that he will do what he thinks best for his company. Whether that translates into tangible benefits for his tenants and the industry as a whole remains to be seen.