Pubcos 'in free-of-tie peril'
A genuine free-of-tie option would put the pubco business model in "serious jeopardy", admitted Punch Partnerships' managing director Roger Whiteside.
Speaking at an All-Party Parliamentary Save the Pub Group meeting in Westminster last week, headed by Liberal Democrat MP Greg Mulholland, Whiteside claimed that going further than the current free-of-tie pricing deals would endanger the pubco's business model.
"Our supply contracts state that as long as we have a tie over those thousands of pubs that we enjoy these prices.
"This would fundamentally undermine the nature in which we are able to galvanise our scale advantage in buying from brewers.
"It would put the business model into serious jeopardy if that were to happen overnight."
Enterprise Inns' chief operating officer Simon Townsend agreed, defending the tied model.
He claimed licensees in the Enterprise estate are choosing the lower rent and higher beer price option in the "vast majority of cases".
He added: "The rent levels we have been able to secure through open-market rent review lettings have declined significantly over the past two or three years and that is a reflection of the market.
"If an open-market rent review were available to us as a whim, whenever we liked it, I can assure you that in the rising market until a few years ago, if we had instigated open-market rent reviews on every pub that would have been wholly unfair, unreasonable and not contained in the contract."
Whiteside agreed that while there have been too many pubs closing, the beer-tie has helped protect many pub businesses, as it shares some of the business risk between the small business owner and its landlord.
He said: "I promise you the tied model has protected them to a greater degree than an unresponsive landlord who simply has a fixed rent to pay."
On the day of the meeting the Business, Innovation & Skills Committee (BISC) confirmed it is to reconvene to look at whether a statutory code of practice is required to govern the relationship between tenants and landlords in the pub industry.
• BISC has not yet confirmed a date for the meeting or who the speakers will be. Written submissions have to be in by 20 June. Go to www.parliament.uk/bis for details.
