Brewers defend tied pubs

REGIONAL brewers have criticised a parliamentary committee for concluding that the “tied” business model should be referred to the Competition Commission.

A report from the Business and Enterprise Committee into the pub trade focused on the tied model, under which tenants must buy their beer through their pub company, usually at a higher price than from a third-party supplier.

The committee looked at the activities of the biggest pub companies Punch Taverns and Enterprise Inns, but its findings will also affect brewers with pub estates such as Manchester’s Hydes and JW Lees.

William Lees-Jones, managing director of JW Lees which has some 170 pubs, argued the tie was an affordable way for prospective landlords to take on a pub.

He said: “Someone can go in for between £5,000-10,000 but if you want to buy a pub it might cost £500,000.

“We believe in the pub model. The tie is fundamental, without it our tenants wouldn’t be able to be in their pubs. That’s our raison d’etre as a brewery – to brew and sell it through our pubs.”

Chris Hopkins, managing director of Hydes Brewery said he was disappointed by the committee’s findings which would create “more uncertainty” in the industry.

He added: “At Hydes we currently only operate traditional one-year rolling tenancy agreements which are far more flexible and are not subject to some of the criticisms that have been made of leases.”

The committee concluded that there were indications that the tie pushed up prices for consumers and was contributing to the sharp rise in pub closures. It has urged the Department for Business to refer the issue to the Competition Commission.

Tony Payne, chief executive of the Federation of Licensed Victuallers Associations, said the group was not opposed to the tie but had called on pub companies to pass discounts on beer they receive from brewers on to landlords.

“We’re not against the tie but we believe the licensee should get a fair share of the discount,” he said.