Mark Daniels: A Totalitarian Trade
Pubco bosses must be laughing in to their wallets this morning after Ted Tuppen, Chief Executive for Enterprise Inns, deftly deflected criticism of the beer-tie model and, in one swift move, accused tied licensees of being fraudsters and VAT cheats.
Hang on, did I say deftly? According to my OED that is to do something neatly and skilfully, and in one quick movement, which I suppose is what Tuppen did, but I prefer to think - reading through his statements - that he chose to take a sledgehammer and use it to smash open heads of every one of his licensees.
Fresh off the back of giving Enterprise licensees a scare with the will-they won't-they supply Carlsberg fracas of a couple of weeks ago, Ted Tuppen chose to announce in yesterday's Business & Enterprise Committee that licensees buying outside of the tie were cheating the system, not declaring their income and therefore avoiding paying the appropriate taxes.
He even went so far as to point out that they have photographic evidence of competitive wholesalers supplying to their tied tenants, meaning that Enterprise Licensees probably worry about the wind rustling their dressing gowns when they step outside to pick up the milk, and that working for Enterprise is probably more exciting than searching for the Quantum of Solace. Whatever the hell that is - I've watched that film twice now, and still don't understand it.
Much like I don't understand the pubcos general ignorance of the plight of their publicans. Enterprise, Pub Partners, Punch - they have all boasted recently of millions of pounds being invested heavily in to helping struggling publicans, but I have yet to speak to a landlord who has actually benefited from such help.
Of course, it is possible that there are landlords out their crying crocodile tears, but I seriously doubt it is as many as those who are genuinely waking up in the middle of the night at the moment, fearing for their financial security as we head in to an uncertain 2009.
But Mr Tuppen did trip over his own argument by stating that one of the reasons his licensees buy outside the tie is to buy more cheaply. Well, duh. If there weren't significant financial advantages to be made, licensees wouldn't take the risk, but in a world where rents to pub companies exceed twenty or even thirty percent of turnover, not to mention all the other extraneous costs associated with being a tenant, it isn't surprising that some publicans are taking the risk. After all, with a cash & carry keg of Fosters costing, say, £74 and a tied-tenant having to pay £117 - a saving of 37% - there are many landlords out there who feel they might be able to save their futures with that extra £43 a barrel.
The review in to the pub trade aims to establish whether the business practices currently employed by pub companies and breweries are fair, but the simple fact of the matter is that the figures speak for themselves. Most business-minded people don't mind paying a bit extra for the supposed benefits of being tied to a particular company, but when the costs include crippling rents, extortionate stock prices and empty promises of help it's no wonder that many are taking a Robin Hood approach to saving their businesses.
Ted Tuppen may have handed the VAT man a wonderful Christmas present, inviting him, as he was, to investigate all his licensees for tax evasion, but in one deft sentence he showed that pubcos are no better than Sky or the supermarkets in their intent to crush the small businessman, unable to stop until they have created a servile, totalitarian trade.
