Saturday, 22 September 2012

Baby and bathwater

In a recent discussion on another blog, the question came up as to whether the 1989 Beer Orders were actually the high water mark of CAMRA’s campaigning activities *. For better or worse, they certainly ended up transforming the British brewing and pub landscape, so I thought I would run a poll asking whether people thought they had had a positive or negative impact.

There wasn’t a huge turnout, and opinions seemed to be broadly split three ways, although nobody thought their effect had been “very good” and 72% thought that, overall, the effect had been negative.

Since 1989, we have seen dramatic changes in the industry, most notably

  • The large-scale severance of the traditional link between brewing and pub-owning
  • The transfer of British brewing to foreign-owned multinational companies
  • The creation of giant pub companies which seemed more driven by considerations of property than retailing
I would suggest that, to some extent, these trends were happening anyway, and even without the Beer Orders the situation today wouldn’t be vastly different from what it actually is. But without them we probably would not have seen the rise of the debt-financed pub companies which are widely seen as having had a negative influence on the British pub trade.

Unless there is an overwhelming monopoly, government intervention in markets always tends to be a bad idea, and the Beer Orders rather prove the point that it is fraught with unintended consequences.

It also seems to me that the government of the day embarked on the Beer Orders without any clear view of what the consequences actually would be. Did they think that the Big Six companies would simply sell off their surplus pubs, or even that they would spin off regional breweries with an associated estate of tied pubs as independent businesses? Did they ask them what they would be likely to do?

* I would argue that Progressive Beer Duty is actually the most significant measure CAMRA has ever managed to turn into legislation

5 comments:

  1. The Beer Orders did not create any "surplus pubs". As initially proposed they would have done but as enacted they didn't - all they did was limit the number that could be tied - half the excess over 2,000. The myth that the Beer Orders compelled the national brewers to sell of their pubs seems to be commonplace but it is just that, a myth.

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  2. If you make the entirely reasonable assumption that brewing companies don't want to be saddled with non-tied pubs, then obviously there were huge numbers of "surplus" pubs. OK, they didn't have to sell them, but neither could they keep them tied.

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  3. Actually S&N did keep a non-tied estate from some years after the Beer Orders. That aside, the fcat remains that with bit of imagination and long-term thinking if any of the brewers had kept their estates intact they would still have run a substantial number of tied houses, well in excess of 2,000 (Bass had something like 7,000 pubs didn't they so they could still have tied 4,500), and could I am sure have profited from their non-tied pubs (so I'm not convinced it is necesarily a reasonable assumption that they wouldn't want to be "saddled" with them). It really is an indictment that none of them could see beyond their short term bottom lines that they proceeded as they did.

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  4. I'm not convinced that the present pubco structure of the industry wasn't foreseen by the government. As I wrote on Tandleman's blog recently, I believe the government did anticipate the rise of pubcos. I remember at the time asking people what would happen to all these surplus pubs. The view expressed by the government, and believed by an utterly naïve CAMRA, was that we'd see a massive increase in the number of free houses. Having had relatives in the business, I just couldn't see that. Not being a business expert, I didn't see the pubcos rising either, but I believe the government did, because if any political party knows about business, it's the Tories, and I doubt they could resist a chance to allow some of their mates to get rich.

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  5. Is there not a warning tale here to be told re: minimum pricing?

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