Pub companies: follow-up - Business, Innovation and Skills Committee Contents

Memorandum submitted by St. Austell Brewery


  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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