Closing time? 'Beer tie' vote hits British pub sector

19th November 2014, Comments 0 comments

Shares in Britain's pub operators plunged Wednesday after parliament voted to scrap historic rules which force pubs to buy beer from them, in a move which could force hundreds of pubs to close.

Enterprise Inns -- the nation's largest operator with 5,500 pubs -- and rival Punch Taverns both saw their share prices slump by almost 17 percent.

Lawmakers in parliament's lower House of Commons voted late Tuesday to overhaul the 400-year-old "beer tie", under which publicans purchase alcohol exclusively from their parent company in return for reduced rent.

About one third of Britain's 50,000 pubs are subject to such agreements.

Lawmakers voted 284-259 in favour of an amendment to allow tenanted landlords to buy their beer on the open market.

Campaigners said the move will increase competition and ensure the cost of a pint remains affordable, arguing that current rules force punters to pay more for drinks.

Liberal Democrat MP Greg Mulholland, who proposed the reform, said it would "simply bring back market forces into a sector that frankly has become grotesquely anti-competitive".

However, Britain's pub industry warned it could spark hundreds of pub closures and thousands of job cuts, while slashing investment in the sector.

"This amendment, which was not supported by the government, threatens to have serious unintended consequences for publicans and the industry at large," said Enterprise Inns chief executive Simon Townsend.

Punch Taverns, which has 4,000 pubs, added that the vote would have "significant adverse consequences for Britain's community pubs".

It said government-commissioned research showed the measure would result in between 700 and 1,400 more pubs closing, causing 3,700 to 7,000 job losses.

The British Beer and Pub Association's chief executive Brigid Simmonds said: "This change effectively breaks the 'beer tie', which has served Britain's unique pub industry well for nearly 400 years."

Pressure group CAMRA -- which campaigns for traditional beer in Britain -- welcomed the vote.

"Allowing over 13,000 pub tenants tied to the large pub companies the option of buying beer on the open market at competitive prices will help keep pubs open and ensure the cost of a pint to consumers remains affordable," said CAMRA chief executive Tim Page.

In Wednesday trade, shares in Enterprise Inns slumped 16.65 percent to finish at 102.6 pence and Punch Taverns tumbled 16.83 percent to close at 126 pence.

"Real ale aficionados will cheer, but ... small businesses could see further damage to an already ailing industry," cautioned IG analyst Brenda Kelly.

CMC Markets analyst Jasper Lawler added that the change "should be a boon for local brewers and may help large beer company sales if publicans pass on some of the savings to consumers."


© 2014 AFP

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