View Full Version : The Pub Curmudgeon - What goes around, comes round

Blog Tracker
04-09-2017, 12:52
Visit The Pub Curmudgeon site (http://pubcurmudgeon.blogspot.com/2017/09/what-goes-around-comes-round.html)

Hard on the heels of Heineken’s acquisition of Punch Taverns comes the news that Admiral Taverns is being sold to C&C Group (http://www.morningadvertiser.co.uk/Legal/Property-law/Admiral-Taverns-sold-to-C-C-Group-and-Proprium), owners of Magners cider and Tennent’s brewery in Scotland. This represents a further unravelling of the industry structure created in the wake of the 1989 Beer Orders, and leaves Ei Group, formerly Enterprise Inns, as the only non-brewing pubco with over 500 pubs still standing.
In reality, the large tied pub companies were only ever created as an expedient in response to the regulatory framework set up by the Beer Orders. Take that away, and they lose any rationale. It has taken a long time since the orders were revoked in 2003, but it was always going to happen in the end, especially after the pubcos ended up in dire financial straits after the financial crash and their disastrous misreading of the impact of the smoking ban. You have to wonder whether the other big brewers are now casting their eyes over Ei Group.
The vociferous anti-pubco campaigners have always been strangely reluctant to put forward any alternative ownership structure for the industry. They seem to have a naive, pie-in-the-sky vision of pubs all being independent freeholds. But, of course, in the real world, that isn’t going to happen, and it would leave the pub trade fragmented and starved of investment capital. The same would be true if pubs were owned by property companies whose only interest in them was collecting the rent.
Provided that there are adequate safeguards against the creation of dominant market positions, either nationally or locally, I really see no problem with pubs returning to the hands of breweries. Indeed in a way it will help safeguard their future, as their owners have a direct interest in maximising their commercial returns by selling their own products, which would not be the case if they were seen only as a financial investment.
The Beer Orders are likely to go down in history as one of most disastrous and ill-considered interventions in an industry by any British government. As the famous economist Milton Friedman said, “The government solution to a problem is usually as bad as the problem itself”.

More... (http://pubcurmudgeon.blogspot.com/2017/09/what-goes-around-comes-round.html)