Memorandum submitted by St. Austell Brewery
THE BREWERY
TENANTED "TIE"
I write on behalf of St. Austell Brewery which
was founded by my great great grandfather Walter Hicks in 1851.
In addition to owning 175 pubs and operating a wholesale
division we are a significant private sector employer based in
Cornwall with around 1,000 people on our books at any one
time. We trade across the South West in Cornwall, Devon, Somerset
and West Dorset.
When considering the brewery "tie"
I would ask that the BISC do not confuse long-term (assigned)
leases, more commonly used by pub companies, and traditional three-year
(renewable) tenancy agreements that are available through most
traditional regional family brewers such as ourselves.
We are strongly of the opinion that our agreements
are intrinsically fair and have stood the test of time. The brewery
tie is of strength both to the tenant and the brewery.
It is not in our interest to have pubs that
are closed because our business cannot afford that so we are constantly
seeking ways to work with our tenants to ensure they survive in
these difficult times. We are entirely flexible in our approach
and any support is tailor-made to the individual pub.
As brewers and retailers we rely completely
on the beer "tie" and the outlawing of it would certainly
lead to more not less pub closures. The impact on the local economy
and employment market is obvious to predict.
As a long-established family-run company we
are very concerned by the potential damage to our business and
to the interests of our tenants that any significant changes to
the traditional tie would threaten.
We rely upon our traditional relationship with
our tenants that for generations has proved to be a well-tried
and tested and mutually beneficial business model. It is also
important to note that the tie benefits the consumer in terms
of wider product choice and competition.
Entering into one of our tenancy agreements
offers good value and a comparatively easy way of starting up
your own business. It is as easy to exit the agreement, by just
giving a notice period, as it is entering it so that if by choice
a tenant wants to move the business on he/she is not tied to a
long lease that may or may not carry a premium for it.
St. Austell Brewery, as a member of the BBPA,
has been happy to sign up to the new Code of Practice on the Granting
of Tenancies and Leases and the industry now needs to focus on
making that work in practice and not be wasting more time on another
possible referral to the Competition Commission. Trading conditions
are challenging enough at present without more uncertainty and
red tape than we already have and that would result from any further
intervention.
Please would you take the above evidence into
account when the Business, Innovation and Skills Committee consider
the future of the "tie". Thank you.
16 November 2009
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