Punch distribution deal 'could trigger MRO'

Punch has told its tied tenants that new distributor Kuehne & Nagel would not be able to deliver orders as quickly as previous supplier Carlsberg.

The change, prior to the proposed takeover of 1,900 pubs by Heineken and Patron Capital, follows current distributor Carlsberg’s announcement to withdraw its UK delivery service.  

Under the terms of the pubs code, MRO can be triggered by a rent renewal or review, or if there was a significant increase in product prices. Another trigger could be if there was a decrease in the level of trade that would be expected at the pub in each month over a continuous period of 12 months.

Chris Wright, head of the Pubs Advisory Service (PAS), said that he has been inundated with Punch tenants contacting the organisation who are unhappy about the changes. He said that tenants can forecast a drop in trade over the 12-month period and that would be enough to trigger MRO.

“The tenants are having to place an order a lot earlier and are disadvantaged. It is not what they signed up to,” he said.

"The intent was that if the landlord changed the terms of trading, the licensee can apply for MRO. We have a significant number of licensees who are going to trigger MRO.”

The Punch Tenant Network (PTN), the campaign group representing Punch licensees, said that it believed this would be enough to trigger MRO.

PTN co-ordinator Chris Lindesay said: “It is a change in the tie. I think it is a trigger event as they are not providing the service that was agreed on. The major problem is that you have to get the pubs code adjudicator (PCA) to rule on that but they will only rule on a case-by-case basis. We want to create a precedent so everyone knows what a trigger is.”

However, Punch has refuted the claims that it is a trigger event.

“We believe that changing who delivers drinks products to our pubs would not constitute a trigger event as defined in the pubs code. However, everyone is entitled to their opinion and interpretation,” said a Punch spokesman.    

“If a publican feels they want to make an application for a MRO assessment on the basis of a new distributor then that their right. If we were to receive an application, we will give it due consideration and assess it in light of what constitutes a trigger event as defined in the code itself.”

Heineken, which has yet to finalise the takeover deal, said: “This is a matter for Punch. As our transaction has not completed, we are not able to comment further at this time.”

The PCA said: “All cases would have to be considered on a case-by-case basis.”