Pub Companies - Business and Enterprise Committee Contents

Further supplementary memorandum submitted by Nigel Wakefield

  As always some further thoughts after having read the transcripts.

The key problem regarding the tie are obviously the discounts, not necessarily the selection of beers and other products.

  When I first bought a freehold pub the maximum discount available to me was about 5% which made minimal difference to my selling price.

  The Pub Co's without exception have forced the discounts to comparatively extreme levels, some three years ago the Coors Area Manager was having to raise the price of one of their beers way above their selling norm so that certain Pub Co's could achieve their £200 per brewers barrel discount, likewise a colleague who runs a small brewery has to do the same to supply a particular Pub Co.

  If discussions were held with brewers and genuine wholesalers restricting the discount available eg 5% brewer to wholesaler, 5% wholesaler to retailer, brewer to retailer 10%, this would effectively stop the present disparity and exploitation of discounts, this would also apply to supermarket chains, hopefully restricting the sale of cheap beers.

  The retailer would then be in the position of selling competitively, the present system has got completely out of hand with all Pub Co's picking up excessive profits from discounts which are not passed on to the tenants. If after some research, it should mean that the Pubs would be able to sell beer more competitively and the supermarket prices would rise or be at least vaguely comparable. The percentages are purely an indication and if the idea was acceptable would require in depth discussions with brewers, one major brewer was complaining recently that they were only making £10 on every barrel sold to the Pub Co's, if correct the industry is being dictated to on all scores by the Pub Co's.

  The extreme discounts in a free of tie market would make little difference in a substantially tied market it creates very serious problems if 90% of the discounts are not passed on. If this was applied to all the products that Pub Co's theoretically control the tie would become largely irrelevant, until they found another direction to extract benefit from the tie, if there are any left.

  The more that I see and read about my original submission based on rental valuations convinces me that any assessment not based on business viability will cause more hardship, having met a number of surveyors since making my submission, the comparables method is so hit and miss and these surveyors have no experience of running pubs, it is a frightening farce.

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