Could brewery be next on the Punch buy list?

Speculation is mounting that Punch Taverns may be planning a route back to an old-style brewers' vertical-integration structure following its joint-venture deal with drinks wholesaler Matthew Clark.

Industry analysts are weighing up the possibility of Punch bidding for a brewery as the next stage of its expansion, which has already seen the tenanted pub operator branch out into managed houses.

Punch's deal with Matthew Clark will give the new company a strong position in the wholesaling sector, thanks to the potential to take on hundreds of new pub accounts and the strength of owner Constellation's global drinks brands portfolio.

But analysts and industry commentators believe a brewery may now be part of Punch's long-term business strategy, although chief executive Giles Thorley has ruled out such moves for the moment.

"Never say never - but it's not on our shopping list," said Thorley when asked about the prospect of a tie-up with super-regional Greene King.

Deutsche Bank leisure analyst Geof Collyer doubts whether Punch will follow up its move into drinks distribution with a brewery bid, and said there was "surprise and puzzlement" at Punch's deal with Matthew Clark.

AC Nielsen consultant and market analyst Graham Page agreed that it looked as though Punch was "re-inventing the old tied vertically-driven brewers' structure", and he asked: "What price their buying a brewer next?"

Trade consultant Graham Allman said: "For some time I have predicted that a pubco will see the benefit of brewing and a tied estate, with the Punch deal possibly seeing the start of this."

l MA opinion - p18

Matthew clark moves to dispel Lessees' fears

Matthew Clark has moved quickly to address fears expressed by Punch lessees about the future strategy of the joint-venture company.

Marketing director Graham Donald has given assurances that sales data held on accounts of free-of-tie Punch lessees will stay confidential.

Donald said Punch would not be able to

access customers' accounts, due to strict

confidentiality clauses written into the deal.

Tied pubs will continue to be supplied by Punch on existing deals held with a number of companies. Some of the deals do not expire until 2012. Donald predicted that the formation of the new company would lead to acceleration of investment plans by three or four years.

"We have major investment plans in IT and logistical infrastructure and this deal will allow us to move to the next planned level more quickly," he said.

"The thrust is to broaden and improve

services to our customers and ensure

satisfactory return to shareholders," he added.