‘Monster-tie’ Heineken/Punch deal could threaten tenants, industry warns

Earlier today, the Dutch brewing giant moved a step closer to closing a deal on 1,900 sites after three of the pubco’s top shareholders gave their support.

But the British Pub Confederation (BPC), which represents tied tenants, warned the merger would make Heineken the UK’s biggest brewing pub owner leading to fears over consumer choice and the future of Punch tenants. 

The organisation, which has written to the Competition Commission asking for the takeover to be scrutinised, claims Heineken’s operational model has moved away from traditional wet led pubs to larger managed sites that are focussed on food.

This would be a ‘major concern for any Punch tenant’ running a traditional pub with its heart in the local community, the Confederation said.

Greg Mulholland MP, BPC chair described the idea of one giant pubco as ‘very worrying’, adding that successful pubs generally have the freedom to trade and buy beer from the breweries whose beers their customers want to drink.

“​It would not be in the interests of consumers or licensees to have Heineken buying Punch,” Mulholland said.

“To have a giant brewing pubco taking on one of the two giant pub-owning property companies would be a huge step backwards and could restrict choice for both licensee and customer alike and this must be referred to the Competition Commission. There is also the danger with Heineken wanting pubs to stock their own products that they would be looking to ‘churn’ existing Punch licensees to be able to do so, which would be completely unacceptable”.

3,000 sites

Heineken currently owns 1,049 leased pubs through its Star Pubs & Bars division. The Punch acquisition would give it a combined pub estate of almost 3,000 sites making it the third largest pub company in the UK behind Enterprise Inns and Greene King.

Scottish Licensed Trade Association chief executive Paul Waterson warned the move would create a ‘monster-tie’ that would ‘destabilise an already fragile industry’.

“A backwards move, it represents bad news for brewers, whose route to market will almost certainly be controlled by Heineken. It also signals bad news for drinkers who will be offered far less choice at the bar. Moreover there are disturbing implications for tenants who are already compromised by the tied pub system, especially in Scotland where there is an absence of legislative protection.

“In the event of a monster-tie, price, quality and service in these pubs are all potentially jeopardised. Competition is crucially important to the on-trade and so we hope that the CMA duly investigates.”

'An excellent track record'

A Heineken spokesman told The Morning Advertiser​ that competition authorities ‘always look at deals like these as a matter of course’.

“We will fully cooperate on their deliberations,” he said. “If the deal were to complete we would welcome the 1900 punch lessees into our Star Pubs & Bars business and over a period of time work with them to decide what the best stocking policy is to ensure that their business continues to grow and thrive. We have an excellent track record in investing in our estate [circa £20m per year] and this strategy will continue with these new pubs with a rolling programme of refurbishment and rejuvenation working with individual licensees to transform their pubs into thriving businesses.”  

Campaign for Real Ale national chairman Colin Valentine said: “UK pubs should offer a diverse range of good quality beer and should be diverse enough to serve their respective communities. Any attempt to monopolise the industry goes against the spirit of the great British pub and undermines the ‘local’ in a great local.”