Punch licensees ignoring right to jettison beer ties
Fewer than 50 Punch licensees have exercised their right to jettison the beer tie which would enable them to negotiate lucrative free-trade prices direct with brewers.
The vast majority trading on Punch's Growth Lease agreement, introduced four years ago, have opted to continue buying beer and lager through the company.
The free-of-tie option gives lessees the chance to negotiate their own supply terms with brewers but is accompanied by a rent increase to compensate for Punch's loss of wholesale beer profit.
Director of customer services Francis Patton said: "There are not many lessees who are completely free of tie on all products and few have taken the option on beer supply available to them.
"Many are already free of tie on wines, spirits and soft drinks but have decided to stick with Punch for beer supply."
Hosts need to balance free-trade brewery discounts with increased rent charged for freedom of tie.
Brewers give the biggest discounts to licensees who agree to stock only the company's products, which limits the range of beers available on the bar.
Punch offers Growth Lease discounts of up to £46 per barrel on beers and lagers sourced from a range of different brewers and suppliers.
The discount rises to around £85 per barrel for licensees signing up to an alternative form of lease which offers different terms.
"Going free of tie will work for some licensees but many prefer to remain with the company.
"Taking advantage of our deals brings a high level of product mix," Patton added.
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Your CommentsKen Nason via email 17/08/2006"Totally pointless comment without an insight into the increase in rent imposed on tenants by Punch.
Of course it would be of no advantage to a tenant to ditch the tie if Punch raise the rent by a greater amount than the tenant would enjoy by being free.
So, as there has been very little take up it would be safe to assume that this is in fact the case.
As usual the Pubcos do no favours for their tenants only their shareholders whilst presenting a propoganda led image of caring. No doubt they will use this trojan offer to vindicate their actions at any future investigations into the trade.
Robert Feal-Martinez via email 17/08/2006"What Mr Patton neglects to point out is the option to go free of tie is in 99% of the cases is worthless as the increase in rent mirrors the benefits of increased free trade discounts. Punch are not giving anything away. In fact it would be to their advantage for the tenats to free of tie. It is inevitable in 3 or 4 years time the whole tied model will go. By not having to police a tie Punch can reduce staffing and headoffice costs."
