Written evidence submitted by the Independent
Family Brewers of Britain
EXECUTIVE SUMMARY
1. The Independent Family Brewers of Britain
(IFBB) are 29 long established brewing and pub operating companies
located throughout the UK. Collectively we own 4,100 pubs which
are each supplied with beers from their respective brewery. The
exclusive beer tie is a vital part of our business model. In the
previous BIS Select Committee report dated 13 May 2009 Chairman
Peter Luff said "the position of local brewers operating
a small tied estate also needs to be considered; we do not wish
to damage regional brewers."
2. The requirement for change has been acknowledged
by the IFBB and its members, and creation and implementation of
their respective Codes of Practice has been the key driver for
this.
3. We strongly oppose the call for a Free of
Tie option to be obligatory as we do not want to be in the position
of selling competitor brewers beers in our own pubs carrying full
branding of our own breweries.
4. For the same reason we oppose the call for
each pub to have the right to a guest beer from any brewery.
5. The complete abolition of the Tie will result
in brewery closures, the loss of well-known and respected beer
brands and the loss of more of the great pubs for which Britain
is famous. This will impact on all communities—suburban
and rural—in terms of the loss of the hub of that community,
and jobs for local people and local suppliers, plus also have
the effect of reducing consumer choice and competition.
BACKGROUND OF
THE IFBB
6. The Independent Family Brewers of Britain
was formed in 1993 to represent a distinct and unique sector of
the UK brewing industry—the family owned brewery—and
to defend the Tie and highlight its importance to the longevity
of breweries and success of tenant licensees. We represent the
interests of 29 members, who between them own around 4,100 pubs
throughout England and Wales, providing employment for around
36,000 people.
7. The majority of these pubs—around 74%—are
run under the brewery Tied tenancy system (where the Brewer maintains
the fabric of the public house), with both new and experienced
pub licensees benefiting from comprehensive training and support
from their local brewer—our member. In addition, our members
brew over 450 brands of beer and are working hard to introduce
these brands to a new generation of beer drinkers, thus providing
excellent choice for the consumer in both our pubs, within the
free trade (including pub companies) and in bottle and can, to
be enjoyed at home.
8. A brewery Tied tenancy is a short term renewable
tenancy agreement, typically for a three to six year term, with
a full or partial drinks tie, as offered by our members.
9. The cost is low because new tenants only have
to purchase the trade inventory when they enter the pub, together
with stock at value and a refundable trading deposit. The ingoing
cost for a tenancy can vary depending on trading ability of the
pub, but would typically be anything from around £10,000
and £50,000.
10. The risk is low because the member brewery
maintains the structure of the pub, decorates and signs the exterior,
provides building insurance and maintains fixtures, unlike a lease
which are fully repairing and insuring.
11. It should be noted that one of the membership
criteria of the IFBB is that all members must be members of the
British Beer and Pub Association (BBPA), and thus we endorse the
submission that will be made separately by that organisation.
12. It is worth noting that recent research has
indicated that over 57%[13]
of pub failures in the UK in recent months have been free of tie
pubs. Equally, if a licensee has bought an assigned lease and
subsequently failed, this has usually come about because of the
terms of acquiring this lease from a previous lessee rather than
the Tie itself. Within the IFBB membership, during 2009 only 41
pubs[14]
were closed permanently—compared to an industry average
of 39[15]
pubs per week (2,365 in the year).
ROBUSTNESS OF
THE CODES
OF PRACTICE
13. The Family Brewers have taken on board the
findings of the Committee in 2009 and 2010, and introduced their
own industry accredited Codes of Practice, much of which was already
standard practice within their respective organisations. This
has been a challenging but beneficial process which has led to
improvements in working process and practice.
14. The Codes of Practice have ensured that greater
focus is given to following correct processes in all dealings
with existing and potential licensees.
COMPLIANCE
15. Our members maintain a close relationship
with their licensees and this is reflected in the fact we are
not aware of any referrals to PIRRS, nor any disputes which have
not been quickly resolved within the scope of the Code of Practice.
AWP MACHINES
16. Our members offer a variety of AWP agreements
within their respective estates, all with some form of income
sharing with the licensee. This is most typically a 50 / 50 split.
17. There is the potential for the risk of illegal
machines being installed if AWP were to be made free of tie.
FLOW MONITORING
EQUIPMENT
18. Several of our members have such equipment
in their estates, but typically not in every pub. All companies
make the data freely available to tenants or lessees, or available
upon request. No member companies take fines by direct debit without
the authorisation of licensees.
ADVICE PROVIDED
TO PROSPECTIVE
TENANTS
19. General advice is included within the pages
of the IFBB's own website www.familybrewers.co.uk; from which
there are also links to all of our members own websites.
20. All our members provide full support from
a Business Development Manager and within the collective estates
of our members the average number of pubs a BDM looks after is
just 31. This is considered a very low ratio within the industry.
21. In addition, IFBB member companies offer
a variety of training support packages which are centred around
the operational requirements and marketing of the business.
FREE OF
TIE OPTIONS
22. The Family Brewers don't wish to offer a
guest beer from other breweries, but all our members do understand
the principle of consumer choice. Frequently, this is dealt with
by rotating the range of cask ales available by our members within
their Tied tenanted estates—this being achieved by way of
seasonal beers and new product development. If given the freedom
to have a guest beer, a sensible licensee would choose the beer
with the largest volume of sales, and go to the market to find
the best discount and price for that beer. Due to market supply
and demand, the best discounts would thus be available from the
global brewers. Similarly, a local micro brewer could offer substantial
discounts, as they benefit from Progressive Beer Duty (an effective
50% excise duty rate).
23. These concerns demonstrate how the beer tie
is a careful balance between wet and dry rent. A mandatory guest
beer provision would change the balance in the same way as a Free
of Tie option, and we predict the same outcome in terms of brewery
closures.
24. The Family Brewers believe that maintenance
of the Tie is a necessary element of being able to offer the traditional
tenancy to prospective entrants to the Licensed Trade.
BENCHMARKING
25. Since 2008 to the present day the IFBB has
independently surveyed over 1,400 of their members' Tied tenants,
representing approximately 41% of the total Tied tenancies operated.
26. Within this survey:
— 71%
agree they receive good overall support from their Head Office.
— 56%
of tenants agree their rent is fair for the business they do,
with only 26% disagreeing. Given the nature of this question,
this is a positive result in light of the on-going economic situation
and the negativity surrounding Tied tenancies.
— 85%
are happy with the relationship with their BDM, with only 6% disagreeing.
— 72%
agree their brewery has lived up to their expectations so far,
with only 9% disagreeing.
— 82%
would look to renew their agreement when their current agreement
expires.
20 June 2011
APPENDIX
IFBB MEMBERS
Our members are as follows:
| — | Arkells Brewery
| Swindon, Wiltshire |
| — | George Bateman & Son
| Wainfleet, Lincolnshire |
| — | Black Sheep Brewery/
| Masham, North Yorkshire |
| — | Charles Wells |
Bedford |
| — | Daniel Batham & Son
| Dudley, West Midlands |
| — | Daniel Thwaites |
Blackburn, Lancashire |
| — | Donnington Brewery
| Stow on the Wold, Gloucestershire |
| — | Elgood & Sons |
Wisbech, Cambridgeshire |
| — | Everards Brewery |
Leicester |
| — | Felinfoel Brewery |
Llanelli, Dyfed |
| — | Frederic Robinson |
Stockport, Cheshire |
| — | Fuller Smith & Turner
| Chiswick, London |
| — | Hall & Woodhouse
| Blandford Forum, Dorset |
| — | Harvey & Sons |
Lewes, East Sussex |
| — | Holden Brewery |
Dudley, West Midlands |
| — | Hook Norton Brewery
| Hook Norton, Oxfordshire |
| — | Hyde's Brewery |
Manchester |
| — | JW Lees | Manchester
|
| — | Joseph Holt | Manchester
|
| — | McMullen & Sons
| Hertford |
| — | Palmers Brewery |
Bridport, Dorset |
| — | SA Brain & Co |
Cardiff |
| — | Shepherd Neame |
Faversham, Kent |
| — | St Austell Brewery
| St Austell, Cornwall |
| — | T& R Theakston
| Masham, North Yorkshire |
| — | Timothy Taylor |
Keighley, West Yorkshire |
| — | WH Brakspear & Sons
| Henley-on-Thames, Oxfordshire |
| — | Wadworth & Co |
Devizes, Wiltshire |
| — | Young & Co |
Wandsworth, London |
13
Research conducted by CGA Strategy for the British Beer &
Pub Association February 2010 Back
14
Source: IFBB Annual members survey 2010 Back
15
Research conducted by CGA Strategy for the British Beer &
Pub Association February 2010 Back
| 
