Julian Grocock: Pub industry is at a crossroads

And it's worse if you're at a crossroads, because then they fly at you from all directions.

That's how I would paint a picture of the pub industry now, with SIBA's position clearly identified. Oh well, if you're stuck in the middle at a critical junction you might as well have a go at directing the traffic...

We were eager participants in the mediation process. We proposed the development of a leased pub model with optional modular ties. Calling it the "Easy Pub" - and thus paying our respects to Stelios for the analogy we were drawing - we sought to retain low-cost entry to the trade with a full tie (that's the basic cheap ticket.)

Then we would offer optional extras, in the form of tie freedoms. Choose what you want - draught beer, bottled beer, wines and spirits, soft drinks, AWPs - and pay for them because they have to be fully rentalised. Design the package to suit your business plan: if you want to develop a specialist beer house, that's where you want to buy your freedom and you can keep ties on everything else.

That way beer doesn't get disadvantaged by all other ties being eroded away until it's the only product left at wet-rent prices. Any entrepreneur tied just on beer is surely going to maximise sales of everything else, where there's more profit to be made.

The "Easy Pub" also allows for progressive adjustment to your operating model: start off relatively cheaply with the support package that comes with a full tie then, as you grow in success and business confidence, take steps towards greater independence by paying more rent for less control.

At the moment, the problem with this may revolve around pubcos' inflated rental valuations of their fully tied "units", so it might be better to apply the idea from the other end - with a free-of-all-ties and realistic market valuation, and rent discounts for opt-in modular ties. I wonder where you'd end up then with the full-tie rent.

But things are moving in the right direction. Market forces are at work to hasten the process; free-of-tie deals are already being agreed; and rental valuation is under scrutiny. The proposed British Beer & Pub Association code of practice has its merits, but more substantial progress would be achieved if the Independent Pub Confederation manifesto were adopted by the wider industry.

The key question is not whether the required changes will take place - it's whether they will happen with the urgency that is necessary to revive the fortunes of the pub trade.