CAMRA's beer tie stance "illogical", says City analyst

A leading City pubco analyst has condemned CAMRA's appeal against the beer tie for "lacking substance and logic".

Noting the decision by the Office of Fair Trading (OFT) to launch a six week consultation on its response to the consumer group's 'super complaint', Douglas Jack, a leisure industry analyst for City firm Numis Securities, said there had been 24 probes into the tie in recent years and it was difficult to see what else would sway the OFT's decision.

In a research note published today Jack said CAMRA's claims the beer tie was inflating pub beer prices by around 50p a pint, restricting consumer choice and hitting investment in pubs were "fictitious".

Jack pointed to average beer prices in pubs owned by Punch Taverns and Enterprise Inns as being only three per cent above freetrade pubs and below the current average for the tenanted sector.

This reflected the "higher purchasing power that is passed on to tenants through investment and support", Jack wrote.

"Removing central purchasing benefits due to removing the tie would substantially reduce pub product range, investment, support and supply, driving up prices as a result," he added.

CAMRA wasn't helping tenants or consumers "by attempting to drive down pub profitability through transferring purchasing power to the brewers", Jack said.

"Now that all parties have agreed to the RICs guidelines on rent setting, it should be campaigning for extended central purchasing to reduce pub costs and therefore prices, boosting pub and tenant profitability in the process.

"Thus, its beer tie stance is illogical," he concluded.