Chief executive Ted Tuppen wrote a letter to the Publican’s Morning Advertiser last week, saying Enterprise is considering the introduction of an additional contractual obligation where the licensee will be protected against “unjustified” beer prices.
Margin increases
The Federation of Licensed Victuallers Associations (FLVA) operations director Martin Caffrey told the PMA: “The margin increases since the introduction of the beer orders has in certain instances trebled.
“We looked specifically at the last February increase at some individual brands and compared against wholesale delivered credit price. Some of the enlightened pubcos did not increase prices as they saw that their tenants were having a difficult time.
“But for some pubs the increase was double that of the brewer increase.”
He said the FLVA believed it was fair for the pubcos to take their margin because of their bulk buying power.
However, he warned: “We suspect and we know that in freetrade negotiations with the exception of duty increases there is a contractual price hold between supplier and pubco or at least a margin maintenance.”
'Smoke and Mirrors'
Fair Pint campaigner Simon Clarke accused Enterprise of “smoke and mirrors” over its plans, claiming the problem is that the ‘wholesale trade price’ is in itself “artificial and manipulated”.
He added: “It is just flannel to try and give the impression that they are self-regulating on prices. It smacks of desperation.”
However, he did think the announcement from Tuppen was a good start to resolving the issue.
“If they [Enterprise] did fulfil this commitment, choosing the market rent-only option would be less attractive and, assuming their price commitment rebalances risk and reward in the eyes of his tenants, they would choose to maintain tied terms rather than sever them.”
Abuses
Former licensee Alan Yorke, who was the first to use the Pubs Independent Conciliation & Arbitration Service (PICA-Service), asked for more details on the plans.
On the PMA forums he said: “Pricing abuses are not part of the industry framework code or the Enterprise code of practice and therefore a tied lessee has no recourse to the PICA-Service if discounts or beer list prices change.”