The whys and wherefores of the tie
Two unrelated news events in this weekend's press made me ponder the continuing saga of the beer tie.
The first was that the — until recently — largest corporation in the world went bust. General Motors, once the epitome of US success, went bust.
The second was that rents in the City of London have fallen by 31% from their peak of two years ago — and some believe they are set to fall another 15%.
In the back and forward banter about the tie, it is perhaps not surprising that those with the greatest vested interest continue to suggest that no review is necessary, and that if there is one, the uncertainty created by the review would "damage" the industry.
Some also say that as there have been loads of reviews in the past 40 years, there is nothing more that could be added. With apologies to Mandy Rice Davies for plagiarising her words "they would say that wouldn't they?".
It is for others to argue the whys and wherefores of the tie in other places. But it strikes me that just because this has always been the way, or always in the past been given the clear, and that it suits some of the industry's more powerful interests, does not mean that it is either likely to withstand the calls for review or that its existence is any longer a given.
Ten years ago GM made annual profits of more than $6bn. Two years ago there were no suggestions that the British banking sector was about to be nationalised.
The tie is about much more than the price of beer and the level of rents — it embodies a way of life and a way of operating. But it is not sacred, and would now appear to be firmly in the sights of the politicians.
The tie brings a degree of stasis to the situation that is not apparent in other open markets. Rents would not appear to have fallen by the levels seen in the City of London. And where else in the world do you find the wholesale price of a commodity rising when it is in fundamental over supply and suffering from long-term declines in demand?
The market has already exerted its influence and it could well be here, rather than in the "halls of the mighty" that the future of the tie is eventually settled.
