Punch Taverns writes to Prime Minister refuting Mulholland beer price allegations

Mulholland called for Cameron to take action over “crony capitalism” and said: “New figures show that the second largest pubco in the country Punch Taverns in their pubs overcharge the British consumer on beer alone by £4.3bn over 10 years. There is clear market manipulation.”

Mulholland revealed the figures after using new analysis of a Punch licensee Chris Lindesay who runs the Sun Inn, Dunsfold. Lindesay did his own analysis using Punch published figures and British Beer & Pub Association statistics.

His analysis said the percentage gross profit made by pubcos selling beer to their tied tenants is much higher than it appears to be in their published accounts because beer duty is included in the cost calculation. According to his analysis on 2012 figures, Punch showed a 42% profit on selling drinks but when beer duty is removed from the calculation the actual profit on beer in 2012 was 69%. 

Basic scrutiny​

However, Punch has hit back.

External affairs director at Punch Andy Slee said: “We do not hide from the fact that we make profit from owning and running Pubs. Half of our profit comes from property rental ‘dry rent’ and the other half from a wholesale profit on drinks ‘wet rent’.

“Over the period of the last 10 years, the amount Mr Mulholland claims we have overcharged the consumer equates to nearly our total drinks turnover (not profit) from sales to pubs. His analysis therefore does not stand up to even the most basic scrutiny.”

In response to the claims that Punch has overcharged consumers Slee added: “CGA, the industry- leading, independent provider of market data, have confirmed that the price of a pint of beer in a Punch pub compares very favourably  to other types of pubs in the market.

“In fact, in recent years Draught Standard Lager is 7-8p less expensive in a Punch pub when compared to the market average. The serious charge of ‘overcharging consumers’ is therefore groundless and contrary to the facts.

Established principles​

“Mr Mulholland’s case also suggested that all businesses involved in the selling of alcoholic products should ignore the duty element in the cost and sale of products - despite the requirement of established accounting principles and the view of HMRC.

"To do this would affect the way everyone in the sector from Pubco to tenant accounts for their business.

“Punch Taverns, as public listed company, has complied with all accounting standards when dealing with Beer Duty in published accounts for the duration of the period in question.