Saturday 16 May 2009

Protz on the BEC Report on the Pubcos

I think we can assume that there's little difference between the views of Roger Protz and the views of CAMRA. I suppose, behind the scenes at St Albans there could be murmurings "what can we do about Roger, he's such a loose cannon," but I doubt it.

He has offered his (and therefore CAMRA's) response to the findings of the BEC inquiry into the pubcos. His comments seem driven by the naive anti-competitive ideology of the far-left. Please don't jump to the conclusion that by criticising it I must be some kind of Thatcherite greed-is-good Tory boy as it's certainly not the case. However, I do strongly believe that CAMRA's underlying far-left perspective inhibits and damages real ale (and is further reason I'm not a member).

"MPs slam power of the pubcos

Review of the beer tie must not hit independent brewers

Parliament's Business and Enterprise Committee (BEC) wants a full-scale review of the "beer tie" to be conducted by the Competition Commission -- but such a review must be careful to distinguish between the giant national pub companies and family and independent brewers.

The BEC's report this week correctly identified the high-handed activities of some of the pubcos, who charge tenants and lessees exorbitant rents while selling them expensive beer. Many people running pubco outlets have been driven into poverty and destitution as a result of their landlords' policies. The committee of MPs found that many lessees and tenants easrn as little as £15,000 a year in return for working long hours and often seven days a week.

But it's important for any future review to distinguish betweeen the pubcos and brewers who tie their pubs. The tie is the bedrock of independent brewers' business."

Well yes, sadly it is. Unfortunately though the regionals generally tie their pubs for all beer supplies and so often this means they're pally with the mass producers. It irks me that we get this special-case pleading by CAMRA/Protz for the regional cask ale brewers yet they use their ties to flog Stella, Carling, etc.

"If the tie were to be totally abolished, the national brewers would swoop on regional brewers' pubs offering them heavily-discounted lagers and keg beers."

So what? This fear wrongly supposes that a customer (a pub or a consumer) only ever makes a purchasing decision based on purely on price. It denies any qualitative difference between real ale and mass produced beer. It supposes that every pub will go for the cheap mass-market option. This is staggeringly naive, how does Protz view abundant contradictory evidence such as the car market – why aren't we all choosing KIAs, they're cheap? Could it be that Protz's real fear is that real ale will become the relatively pricey option rendering it the drink of the hated bourgeoisie?

"It would be a disaster for cask beer, the only sector showing any sign of growth at present. It would also mean the inevitable closure of many smaller brewers who would be unable to compete with national beer brands in their own pubs."

A disaster for cask beer? Really? What about the micros? SIBA reports that its members can only sell to about one in ten of pubs. Imagine the boost to the micros if they could sell to ten out of ten pubs. Protz again fails to appreciate that rival products compete on more than just price. What about flavour, craft, brand reputation and locality? Protz must have little genuine faith in real ale if he supposes that drinkers will desert it simply because something else is cheaper. Paradoxically and counterintuitively (to Protz at least) a higher price for cask ale may attract drinkers – higher price is often perceived as a sign of quality. I believe the currently bottle boom is partly driven by higher price, supermarket shoppers thinking to themselves "Stella's so cheap now it must be rubbish, I'll give those fancy bottles try, they cost more so must be better."

"In countries where the beer tie is illegal, the situation is far worse than in Britain. In the United States, where brewers are not allowed to retail beer, they sign sweetheart deals with large distribution companies that take only the products from one brewery. It means that smaller craft brewers cannot get their beers on to the distribution companies' trucks. The result is a market skewed in favour of the giant brewers and less choice for consumers."

Well, permit me a bit of vernacular – that's total bollocks Roger.

Could this USA be the same USA that had ten craft breweries in 1980 and something like 1600 today?

The situation with distributors is indeed a tough one. Individual states give licenses to distributors. In some states near-monopolies exist. The major difficulty for brewers is "exporting" beer across state boundaries, not selling beer locally. Inevitably companies like AB get the distribution licenses and getting a foothold in cross-state trade is hard work. The situation within any state is much easier. Breweries can sell to any outlet (although stock has to go through a wholsaler by law - a system that has pros and cons beyond the scope of this rant) and this has been key to the US craft brewing boom.

In 2003 I showed the creator and owner of Sierra Nevada Brewery Ken Grossman the beery sights of London. We talked extensively about the differences between the US and UK systems, he said "I couldn't have done what I've done in your system."

In Britain, the national pubcos -- Enterprise, M&B and Punch -- need and deserve a thorough investigation and should be told to change their ways. But any investigation must also recognise the vital contribution that independent brewers make to local communities and must be allowed to sell their beers through their own tied estates.

Well yes OK Roger. If you must have it that way let's make sure they can sell only their beer in their tied pubs. I don't see why the regionals should be granted use of the tie system if they use it to flog us mass-produced beer they've bought cheaply from the big boys. That seems reasonable. Let's call it the Sam Smith's Rule.


Whorst said...

Doesn't this all seem a tad too complicated? There's got to be a better way.

Curmudgeon said...

Sorry, Protz is basically right. Allowing independent brewers to have tied estates that don't exceed say 2% of the entire market serves to enhance competition and diversity.

If the tie was completely abolished, then as Protz says the vast majority of pubs would be swamped by national brands.

Obviously micro products would survive in their little niche, but the market share of national brands would go up from 80% to 98%.

Anonymous said...

I believe we are all after good pubs that serve a good pint with a wide variety of guest beers.Let the best run houses survive.People vote with their feet.

Alison said...

Fab, I thought I was the only ale-loving person who didn't join CAMRA on political grounds. Totally out-dated protectionism. There might be an argument to support particularly rural pubs (e.g. some now act as post offices and community centres) but by and large, you can't subsidise this or any industry long-term. I'd love to join CAMRA, spread the good word of real ale, and prove that ale is attractive to a sporty, youngish (20s) females not just beardy middle-aged blokes. Too bad they can't just stick to promoting nice beer. Oh, and the busiest, most-loved pub round my way is the most expensive... but we all go there cos the owners are dead nice and they know how to look after their beers.