Pubco eyes turn to Mandelson
All eyes are on Peter Mandelson to see if he can help sustain an initial bounce in pubco share prices following the Office of Fair Trading (OFT) report into the sector.
The OFT effectively gave the industry a clean bill of health when it ruled that as far as consumers are concerned the tied business mode does not affect competition.
Its decision not to investigate the model further resulted in a share price boost last Thursday for major players including Punch Taverns, Enterprise Inns and Marston's.
As the OFT news spread on Thursday Oct 22 Punch's price surged from 84.8p to a high of 98p, Enterprise Inns went from 118p to 145p and Marston's from 91p to 95p.
Alistair Darby, managing director of the Midland's brewer and pubco's tenanted and leased division, said that while the OFT report has given pubcos a boost there is "still a degree of uncertainty" hanging over the sector.
He said: "The OFT report has come out and it didn't say there are specific concerns.
"This is reflected in the share price bounce. But there is still a degree of uncertainty that remains a cause for concern for people watching the stock market.
"There is still the BEC report outstanding and there is still a need for Peter Mandelson's Business Innovation and Skills department to make a final conclusion.
"If they come out and say on reflection we have seen all the evidence, we have seen what the British Beer & Pub Association is doing, we think significant progress is being made and we are not going to investigate further that will remove that piece of uncertainty and I think that will be reflected in the share price."
BEC chairman Peter Luff MP is set to reconvene the committee before Christmas and while he has not ruled out the possibility of the Competition Commission investigating he has also indicated a degree of satisfaction at the industry's attempts to reform.
However, Darby said that while the OFT report was good news for pubcos there is still much work to be done.
"We are not in any way triumphalist. It would be totally inappropriate because there is still a lot we have got to do to confirm to the doubters that we are evolving and improving," he added.
