Supplementary memorandum submitted by
I submitted written evidence to you on 26 September
2008 for your inquiry into the practices of the Pub Companies.
After reading written evidence that you received
from our industry representative, Society of Independent Brewers
(SIBA), I find it necessary to provide additional evidence, which
I have attached.
I started Lovibonds Brewery Ltd in 2005 as a
small craft brewery in Henley-on-Thames. As I stated in my original
evidence, Pub Companies and their supply ties have a great impact
on the small brewer by restricting the outlets that they can supply.
For instance, of the 15 traditional pubs in
Henley itself, only one of them is genuinely free of tie and can
take our beer, the rest are owned by Pub Companies, which restrict
supply. This has a great impact on our business, meaning that
we cannot grow locally and we have to travel as far as Windsor
and Oxford to find independent pubs that can take our beer.
This situation is not limited to our area as
I have many other friends in the craft brewing industry that are
in the same position.
In the written evidence from the Society of
Independent Brewers (SIBA), they mention that they have created
a scheme, the Direct Delivery Scheme (DDS), to try and help gain
access to the Pub Companies for its membership. We are a member
of SIBA and I do not want to down play their efforts, but I believe
there are several things wrong with DDS and I hope that you do
not consider it a solution to the problem.
The issues I have with DDS:
The DDS scheme only allows "cask"
beer to be distributed. We don't do any cask beer, as we have
chosen to deliver beer in kegsthis makes us (and a growing
number of other small brewers) ineligible for this scheme.
DDS dictates to each brewer what
they can charge for their beer, based on SIBA negotiations with
the Pub Co. In other words, if I produce a 4.5% alcohol beer,
I will receive the same exact payment for that beer as will my
competitor for his 4.5% beer. I don't believe that all small brewers
have the same cost model and don't believe it is fair to leave
no room for negotiation on pricing. I would almost go as far to
say that this scheme itself is anti-competitive in its nature.
In 1.8 of SIBA's proposal, they propose: "|that
cask conditioned ale is the only product available to pubs that
is produced locally throughout the country, the remedy is to therefore
to exclude cask conditioned ale from the tie."
As I mentioned above, we, and a growing number
of small brewers in this country do not supply "cask conditioned
ale", therefore their statement is incorrect. We are affected
by this tie just as much (actually more given my first bullet
point above) as any other members of SIBA and I would be disappointed
if you were to take their recommendation without considering us
small non-cask brewers. Other examples of small, non-cask brewers
are: Meantime Brewing, Cotswold Brewing and Ridgeway Brewing.
My recommendation is that the supply tie is
removed completely for Pub Companies, allowing publicans from
these Pubs to buy beer (and other goods and services) freely.
I also believe that the number of pubs that a pub company can
own should be limited to 500. I do believe that brewery ownership
is a different scenario as breweries tend to have a vested interest
in looking after their estates. Though I still believe that the
number of pubs they can own should be limited to 500 pubs and
that the publicans in those pubs should also be allowed to purchase
outside of the tie, if they so wish.
25 February 2009