Punch to trial free-of-tie prices
Punch Taverns is to trial new leases in September that offer licensees free-of-tie prices and a free-of-tie option on cask ale produced by smaller brewers who brew 36,662 barrels or less.
The company, which is to launch the agreements as part of its new Punch Buying Club, will include the options in longer leases of 10 years or more as part of a package to attract entrepreneurial li-censees and ensure they retain the rewards of out-performance.
Punch will offer licensees a range of incentives to take the longer lease. There will be no rent review during the 10-year term of the lease (although Retail Price Index increases apply). Licensees can opt to earn £120 or £160 per barrel discount — with the extra discount levels reflected in rent.
Those opting for the £120 per barrel discount will earn £40 per barrel for every barrel over the fair maintainable trade (FMT) target. For those receiving the higher £160 per barrel discount, an additional £20 per barrel can be earned for those sold over and above the FMT figure.
Both leases will be tied on ale, lager, cider and machines — but Punch is transferring margin to licensees by making them free-of-tie on beer produced by brewers who qualify for progressive beer duty (PBD). Punch is to consult on whether the free-of-tie option can be flexed to include more than one cask pump.
The new agreements include a more standard five-year option with £65 per barrel discount.
Punch Partnerships boss Roger Whiteside said: "The number-one objective is to attract entrepreneurial licensees and have them stay with us longer.
"The two longer term leases offer upside gains to attract entrepreneurs — licensees get to keep the benefits of their success.
"Licensees will also be allowed a free-of-tie option on PBD cask ale to compete more fully on a local level in the cask-ale market."
The Buying Club agreement will be trialled in a single region in September and then launched nationally in January next year, if successful. After this, all Punch licensees would be given the option to convert to the new leases at rent-review time.
Whiteside added: "It's all about creating a platform for our pubs to do better, enabling them to compete better in the marketplace."
