Thursday, 26 January 2017

You don’t know what you’ve got ‘til it’s gone

During the 1970s and 80s, the “Big Six” national brewers were very much the pantomime villains of CAMRA, closing traditional breweries, axing familiar brands, restricting choice, pushing up prices and exercising local monopolies. Surely drinkers would be much better off if they were got rid of and broken up. However, in the post-Beer Orders world, where precisely that has happened, it’s questionable whether things, overall, are any better.

It was interesting at the recent Great Manchester Beer Debate to hear the participants, mostly notably veteran CAMRA warhorse Roger Protz, speaking with some nostalgia of the days of the Big Six and the tied house system. Most notably, the brewers were able to exercise some control over the quality of the end-product in their pubs, because it would reflect badly on their brand image if customers received poor beer.

They also had much more control over the pricing of their product rather than simply being at the mercy of powerful wholesale customers. And, as brewers, they had a direct interest in keeping pubs as pubs to sell their product which non-brewing pub companies lack. It should also never be forgotten that, without the tied house system, real ale might well have completely disappeared in this country.

There’s not going to be any return to the old days, but I remain convinced that a greater role for the tied house system would lead to a healthier beer and pub industry and a better deal for drinkers. Many Punch Taverns tenants have been protesting about the proposed takeover by Heineken, on the grounds that it will restrict choice, but to my mind it will give their pubs a more secure long-term future.

It’s a fact of life that in any business, big, powerful companies will be at an advantage over small, fragmented ones, although this commercial reality continues to come as a surprise to some people. A large number of small breweries, often existing hand-to-mouth, are not in a strong position against a small number of dominant purchasers of beer. Enterprise Inns’ decision to unilaterally reduce the price paid to small brewers under their “Beerflex” scheme is undoubtedly hard-nosed, but SIBA is left in a position where they can either take it or leave it. Big retailers have been doing the same to small suppliers for decades – it’s the way the world works.

17 comments:

  1. Protzy & the beardies were advocates of the beer orders at the time. If it takes 30 years for them to admit they were wrong, you've got 20 years to wait before they lament their error of supporting the smoking ban.

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  2. I remember asking - before the effects of the beer orders fully kicked in - what would happen to all the pubs that were likely to be shed by the big breweries. CAMRA seemed to think most of them would become free houses, thus increasing choice. However, even with only my customer's view of the pub business, I thought this was highly unlikely, although I definitely did not anticipate what did happen.

    The Government of the time propagated the same message, although I doubt they believed it. In my opinion, they were, as usual, creating marketing opportunities for their mates in the City, irrespective of the damage it would cause. I wouldn't be surprised if, not only did they know that something like the pubco system would arise, but also that they tipped off their pals of the apparently rich pickings due to become available. The financial crash of 2008 made these investments toxic, of course, not that I care about them, but I do about the damage that has been wreaked upon our pub heritage by spivs and their mates in Westminster since 1989.

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  3. Much as I miss Burton ale I still prefer it now the beer range in local pubs isn't just Allied or Courage.

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  4. Who were the Big Six?

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    1. Bass, Allied Breweries, Whitbread, Grand Metropolitan, Courage and Scottish & Newcastle. At their peak in the late 1970s they owned over half the pubs in Britain, and controlled about 80% of the beer market.

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    2. I remember Whitbread having a lot of not very good pubs (or was it a lot of pubs with not very good beer?), but coming from Stockport I can't remember any pubs locally run by the other five.

      Whitbread are still on the high street, but now as Costa Coffee! I was in one of these the other day, and it was busy, and I thought - these people should all be in the pub! What a sad state of affairs that coffee shops have replaced pubs as places to go. People in said coffee shops don't seem to relax as they would in pubs - they keep their coats on and are usually alone or in couples, no large groups sat around a huddle of tables; and no one getting another round in!

      Michael Deacon wrote a good piece about this in Saturday's Telegraph. You can read the first two paragraphs of it here:

      http://www.telegraph.co.uk/opinion/2017/01/21/addiction-coffee-has-turned-us-big-babies/

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    3. Grand Met, through Wilsons, had the second largest holding of pubs in Stockport after Robinsons. Bass and Allied weren't so heavily represented, but Bass had, for example, the Old King and the Hope, and Allied, through Tetleys, the Pack Horse on the Market Place and the Plough in Heaton Moor. The only Courage (i.e. John Smith's) pub I recall was the Midway on Newbridge Lane, while S&N's tied estate didn't reach this far south.

      In reality, S&N had a lot fewer pubs than any of the others, so it was really more of a "Big Five and a Half".

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    4. Of course Whitbread, whilst no longer a brewer, aren't entirely out of the pub - or at least bar/restaurant - business.

      They own pub/restaurant type places such as Beefeater too along with Costa Coffee and Premier Inn - the latter often having a Whitbread pub/restaurant next door, and all of course "proud to serve Costa Coffee".

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  5. Big businesses do have advantages over smaller ones but they also have disadvantages. They often don’t see changes coming or can’t react quickly enough due to management structures and heavy investments in what they currently do.

    Big brewers largely seem to have left the craft beer revolution to small companies. Now, craft beer drinkers do seem to be against large companies – even against their own small companies that grow – so the big brewers were unlikely to get much of the general craft market but you would think that family and regional size brewers at least might have tried, if only for sale in their tied estates. I am not aware that they have but I am in France.

    Anyway, beer quality must have improved – Roger doesn’t mention the trots so much now.

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  6. But as gaps are vacated, newer big brewers emerge.

    Greene King, Marstons and, to a lesser extent, Charles Wells have been up to the same tricks. Takeovers, closures, Buying out brands, dumbing down products, claiming dubious provenance - I don't really see a whole lot of difference between them and the Big Six of 25 years ago.

    Post beer-orders, things are sometimes structured differently so some of the effective tied estate might be technically part of a PubCo, but it rarely makes a whole lot of difference to the drinker.

    Don't rule out relative newcomers getting big quickly either. What are Brewdog now? A fairly large keg-oriented brewer with (inter)national distribution and a growing estate of tied houses (even though they'd never dream of using the term 'tied house', obviously.


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    1. The share of the overall beer market held by Greene King, Marston's and Charles Wells is nothing compared with the old Big Six, though.

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    2. To be fair to Marstons, their record on brewery closures is better than most. Jennings, Ringwood and Wychwood are all still brewing.
      The changes to their pub portfolio are perhaps another matter, with several hundred wet led community pubs sold or closed and investment diverted to new build "eateries" on retail parks or main road roundabouts .

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  7. The problem comes when one brewer completely dominates one area of the country and forms a virtual monopoly in some towns - for example Greene King in East Anglia. The result is that all commercial or competitive pressure disappear, leading inevitably to higher prices and lower quality beer.

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    1. The same can be said now albeit on a smaller scale, where what we now think of as family-owned independents such as Adnams and Batemans were grown from the predatory takeovers of even smaller brewers, but still almost completely dominating trade in their locale. You can't buck the market unless it's politically interfered with as the beer orders did, and as we discovered, that interference just led to monopolies of a different kind.

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    2. Greene King dont dominate East Anglia other than near Bury, at all though, because Tolly Cobbold were the dominant pub owner and they lost all their pubs to 'pubcos' before the beer orders happened, and then what happened Greene King bought Tolly Cobbold and took over what they had left.

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    3. CAMRA always used to have a policy that no one brewer should own more than 25% of the pubs in any local authority area. I wonder if that is the case for Greene King in any areas in East Anglia.

      Obviously there comes a point where local dominance becomes a competition problem, but I really see no issue with Adnams owning most of the pubs in Southwold and a relatively small area of the surrounding countryside.

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  8. Unfortunately CAMRA's "policy" on this issue is/was of no real relevance.

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