Meet the Enterprise lessee who bought his way out of the beer tie

A few years back, visiting the Bree Louise near London's Euston station was a rather solitary experience. But entering its doors today reveals a very different proposition, as it is frequently packed with drinkers enjoying a few pints in a bierkeller-like atmosphere.

Its transformation from average boozer to destination venue for beer drinkers is down to the hard work of its licensee Craig Douglas. Over time, he has gained the pub a reputation for having one of the widest ranges of cask beer in the country. His constantly changing selection has made it a year-round beer festival.

What makes this transformation even more impressive is that the pub is on a lease from pubco giant Enterprise Inns, which as licensees around the UK know, can be restrictive when there is a desire to stock an unusual range of non-tied beers.

The big difference at the Bree Louise is that Craig last year bought himself out of his tie on cask beer. He now enjoys the freedom to stock whatever weird and wonderful brews he can find.

A visit to the pub could reveal beers from Otley, Dark Star, Downton, Nethergate and Ascot, along with the London-brewed ales of Sambrook's, Redemption and Windsor & Eton. Often, there is also a selection of boutique brewers' beers.

Reaching this current state of bliss took lots of effort from Craig. He believes his story might provide the inspiration for other licensees who are tied on beer but have a strong desire to offer a much wider choice of real ales and make themselves a destination pub for drinkers.

The journey began in April 2004 when he took over the lease on the Bree Louise. Within two years he had raised the number of handpulls on the bar from three to five, and installed two gravity-fed barrels on the back-bar with ice blankets.

At this stage in mid-2006, he says: "I started talking to brewers and recognised the difference between buying direct compared with through the Enterprise/Society of Independent Brewers (SIBA) direct delivery scheme. It could be £100 versus £60 for a barrel."

Severing the tie

Only when Craig expanded to six handpulls on the bar and five gravity ales (with cooling probes fitted) on the back-bar did the accusations come from Enterprise that he was buying cask ale outside the tie.

The figures delivered to the pubco from the Brulines monitoring equipment did not match those provided by Craig. His defence centred on the inability of the Brulines system to differentiate between the large amount of water he was pulling through the pipes each day and the amount of beer being dispensed to customers. "I challenged them to a test in the pub using three barrels containing water and two with beer. Brulines couldn't tell the difference," he recalls triumphantly.

However, after much consideration Craig asked to remove himself from the tie. Discussions followed and in March 2009 "they let me go free of tie on real ale at a cost of £27,000 per year".

Enterprise had been charging the Bree Louise a barrelage fee of £90 per barrel (36 gallons each) so by charging £27,000 per annum the pubco could recoup this £90 for each of the 300 barrels per year that the pub had sold during the previous 12 months' trading. "They knew how many barrels I was selling and what they'd lose from me being out of the tie and they recouped this by adding £27,000 on top of my annual rent," he explains.

With this big hole in his finances, Craig says he "immediately began contacting brewers to deal direct and try to get better prices". He soon realised that since he was getting better deals per barrel, he was soon going to offset this extra 'rental' payment to Enterprise. For example, he buys his barrels (72 pints) of Dark Star Hophead for £60, whereas they would each cost him £110 if bought from Enterprise.

Although his negotiations with the likes of Dark Star are helped by the fact the Bree Louise now does good volumes, and Craig also buys other beers from the brewer, he says the benefits to pubs selling lots of real ales outside the tie are obvious. And the selection he has on offer has attracted new drinkers to the pub, as well as accolades from CAMRA, which has created a virtuous circle.

Everyone's a winner

To satisfy demand Craig now operates 11 gravity ales on his groaning back-bar and eight handpulls on the main bar, and on busy Friday nights he says he can run out of all the gravity-fed beers, which are then replaced the next morning.

This has resulted in sales since the break from the tie increasing by 40 per cent and he expects further annual gains of 10 per cent over the next few years. These benefits have not been enjoyed solely by Craig, as he says Enterprise is also sharing in the transformation of the Bree Louise.

Not only does the company effectively get its annual barrelage fee upfront for the year (regardless of how well or badly the Bree Louise performs) but Craig says the sales of lager, Guinness and ciders he continues to buy from Enterprise have increased by between 30 per cent and 50 per cent.

"They've got their rental increase of 40/50 per cent, which is money in the bank for them, and as we also sell lots more of their products they then make more money there too," he says.

With this mutually advantageous backdrop Craig says he now has "nothing but a fantastic relationship" with Enterprise and that they now regard the Bree Louise as a showcase pub that operates to a new model and which could be replicated in its extensive estate of leasehold/tenanted pubs.

"Enterprise has intimated a roll-out of the arrangement in certain demographic areas because we have proven the model. It is in the interest of Enterprise to identify pubs where they could agree similar deals to ours," he suggests.

For this to be successful it will also require licensees to recognise the potential of making the leap out of the tie. "I'd recommend tenants or leaseholders speak with Enterprise and look for the same deal as the Bree Louise," says Craig. "I'm not sure if licensees are even aware of this possibility. They just get their rental bill and pay it. They don't see the other potential options."

Cannily, he recommends licensees hold back on offering real ales while under the tie, prior to doing a deal with the pubco, to ensure the rental increase is calculated on a lesser barrelage. And then go "gung-ho on real ale" and hopefully boost output.

With Enterprise seemingly showing the first signs of more flexibility in its arrangements with tied licensees, Craig says there might be opportunities for other agreements to be made with the pubco. He cites the potential to go outside the tie for products that Enterprise cannot supply - such as organic lager. At the Bree Louise he now buys in Freedom lager directly from the brewer.

The same applies to specialist ciders. The Bree Louise buying in obscure ciders has helped drive sales of the Enterprise-supplied Westons Old Rosie, which now sells more than twice as much as it did before Craig went free of tie.

Commenting on the Bree Louise's agreement, a spokesperson from Enterprise said: "This type of arrangement has always been available for negotiation if the specific circumstances of the pub business opportunity merit consideration."

In an interim statement, the pubco said that whereas most Enterprise pubs are tied for the supply of beer, some 18 per cent are already free-of-tie for the supply of cider and 65 per cent for the supply of wines, spirits and minerals.

The spokesperson added: "In all new agreements from July 2010, we will be offering a free-of-tie guest ale option exclusively for locally sourced cask ales supplied by brewer members of SIBA located within an approximate 20-mile radius of each pub."

But although Craig has shown that the numbers do stack up for licensees to buy themselves out of the tie on cask beer, he says success ultimately depends on their commitment to providing a great choice of beers.