Pub Companies - Business and Enterprise Committee Contents

Supplementary memorandum submitted by Jeff Rosenmeier

  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 kegs—this 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

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