Kung Hei Fat Choi
Skeletons in the sliding centre

Be careful what you wish for

Interesting article in The Independent (When the locals bought their local) about a pub that has been bought by its customers.  

Ten years ago this corner of northern Salford boasted eight pubs within walking distance of the Star. One by one they've closed their doors.

Before Christmas the Star nearly went the same way. Robinsons, the brewery, decided to sell up and gave three weeks' notice of closure. But the Star's locals formed a co-op and bought their drinking hole for £80,000.

This is not an isolated example:

According to the British Beer and Pub Association 39 pubs are closing every week. A new report from Co-Operatives UK estimates that 2,700 pubs will collapse in the next 12 months, compared to 2006 when there were just 316 net closures.

Any landlord can give you a litany of reasons for why the industry is so tough; from spiralling energy costs to tax hikes and the smoking ban. But two things get them most animated: the "beer tie", which forces half of the country's pubs to buy drinks from a particular brewer (often at vastly inflated prices), and the multinational companies known as "Pub Cos". Half of the UK's pubs are owned by Pub Cos, the two biggest owning a quarter.

The dominance of the Pub Cos can be traced to 1989 when the Thatcher government tried to inject competition into the pub industry. Breweries with more than 2,000 pubs were ordered to sell off their excess, and offer a "guest beer". The cleverer breweries worked out that there was nothing to stop any number being owned by a company that didn't make beer. So they set up property companies to own vast numbers of pubs and force licensees to buy off a brewer.

I know hindsight is a wonderful thing, but I remember wondering at the time whether one or more of the large brewers might decide that there was more money to be made in running pubs, and sell off their brewery business.   As they did.  The Guardian had a good article about this some time ago (Calling time) describing the way these huge “pub companies”operate:

'We buy beer cheap'" - from the big four breweries, Scottish and Newcastle (now owned by Heineken); Coors; Carlsberg; and Inbev (better known as Stella Artois) - "'and sell it dear, and that's our profit.'" There isn't much space, in this model, for a publican to make money. 

The Supply of Beer (Tied Estate) Order 1989 and The Supply of Beer (Loan Ties, Licensed Premises and Wholesale Prices) Order 1989 were intended to increase competition in brewing, wholesaling and retailing, by ensuring that no brewer could own more than 2,000 pubs. However, the consequence of this legislation was the creation of stand-alone pub companies, the pubcos, to whom brewers sold their pubs. The pubcos were exempt from the beer order legislation, because they did not brew the beer themselves.

So the government legislation totally failed to achieve what was originally intended.  In fact it has made things worse by moving control from the big brewers to the shadowy pub companies that are only interested in profits.  Smaller breweries find it just as difficult to sell their products into local pubs, and many landlords struggle to make a living.  It’s somewhat ironic that a Conservative government should have tried to interfere in the market in this way, but hardly surprising that it had such unfortunate consequences.   


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