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New Small Business, Enterprise and Employment Bill confirms Statutory Code for Pub Companies

With confirmation in the Queen’s speech that the Government will introduce a Statutory Code for Pub Companies in this legislative session, Brigid Simmonds, Chief Executive of the British Beer & Pub Association commented:

“It is important for the health of the pub industry that this legislation is implemented as currently proposed and calls for free-of-tie options remain unheeded. Proponents of legislating for landlords to be forced to offer a mandatory free-of-tie option, fail to see that reducing the commercial buying power of the pub company would destroy the model and threaten the closure of vast numbers of pubs throughout the country with thousands of vital jobs lost – as acknowledged by the Government’s own economic analysis. Why would the pub company invest capital in a business if they did not know that at the end of five years they would still be making a reasonable return from their drinks tie? Regional breweries, often major local employers would be under serious threat of closure without the guaranteed route to market via their tied pubs.

“The grass is always greener – this could not be more true for proponents of free-of-tie who maintain that their beer would automatically be cheaper and the beer choice wider. This is not necessarily true and if it was, it is highly likely that they will be tied to a different distributor or wholesaler, who in return for cheaper beer will insist on loyalty to their brand, or range of drinks. You only have to look at Europe where there are only 2 or 3 brands on the bar.

“In reality, the support for the tied pub by the pub company is far greater than anything offered by a commercial landlord. They have a shared interest with the lessee as co-investors in making the pub succeed. Pub companies have sought to protect tenants and lessees from the hardest impact of the recession. Year on year and for the past four years, beer has been cheaper in tenanted and leased estates than in independent estates and in tied pubs a much greater proportion of local cask ale is sold; some 81% compared with 60% in independent pubs. The distribution of beer from smaller breweries is achieved through the buying power of the larger pub companies and a competitive market. New routes to market for smaller producers have opened up through their engagement with pub companies, who have recognised that consumers are demanding a broader range of drinks in their pubs.

“Light touch legislation is one thing, but at the end of the day, pub companies need to be able to support small individual tenants who with very little capital are able to run their own business. Anything which dilutes this support would be very unwelcome and destabilising for the pub sector.”

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