Publican Sam

Now showing at a cinema near you...

2013-05-17T09:44:00.001+01:00

... if you have your say on the government's pubco/tenant regulation consultation

(Oh, okay then, it's 29 days as of today... but I'm away for a family birthday bash/reunion this weekend and don't expect to be up to blogging... needless to say it will involve at least one visit to the pub...)

Roll VT ...

2013-05-16T12:59:00.000+01:00

... Nuff Said Eh?

New Dinoasaur Species Fossil Found In Solihull ...

2013-05-15T12:28:00.000+01:00

Ted Tuppen, head of Enterprise Inns is reported as saying the movement of a mere £102 millions of economic value from pubcos to tenants mooted in the current government consultation on pubco regulation will lead to "unintended consequences", such as pubcos not having any incentive to support their tenants.

Amazing how Mr Tuppen can spin anything to his company's benefit. According to my daily email from Langton Capital, reporting on first half figures for Enterprise the support they provide is enumerated thus:

"The group subsidised lessees to the tune of £3m in H1 (no change on last year)"

Note the use of the word subsidised there, one assumes this means rent concessions? Perhaps if the rents being charged were not excessive (along with tied product pricing) no such subsidy would be required... oh, but wait... isn't that the point of the consultation and proposed regulation?

This £3 millions subsidy is presumably continued in H2, thus leading to an annual subsidy of £6 millions? If so the mean average subsidy across the estate is of the order of £1,049 per pub. Not the £10,000 per pub quoted by Mr Tuppen.

More from the Enterprise report:

"Capital spending is now less defensive in nature; it should settle at around £60m per annum"

Is this the £10,000 per pub per year "support" Tuppen speaks of? Sorry but capital expenditure on the fabric of ones own bricks and mortar can hardly be described as "support" for ones tenants.

If one reads elsewhere on Publican's Morning Advertiser about the number of tenants claiming tax credits, a fair proportion of whom are likely to be Enterprise tenants, then perhaps the natural conclusion is, despite their best efforts some tenants simply cannot earn enough to live on without being "subsidised" by other taxpayers. Hardly evidence that the existing pubco model is sustainable, let alone fair, and is only evidence for the urgent need of reform as champione by #fairdeal4yourlocal .

As for "unintended consequences" ... well those arising from the original Beer Orders, which, allowed the rise of such debt-laden behemoths as Enterprise have been pretty horrific for the national estate ... a 30% loss of pubs since the early 1980s.

Does anyone think things could become more dire for tied tenants if Tuppens portents of doom become manifest, as opposed to the "last chance saloon" mutterings of the dinosaur from Solihull?

I think not ... unless Tyranosaurus Tuppen would like to elaborate on his comments, one can only hope that T.Tup is in the same evolutionary dead end as T.Rex ...

One step forward, two steps back...

2013-05-09T11:47:00.000+01:00

Publicans have a lot to thank MPs for recently... instigating the consultation into regulating the dreaded pubcos, scrapping the beer duty escalator (even though they introduced it in the first place) ... but some of them really haven't got a clue as reported in Chin Chin ...

Not The Queen's Speech ...

2013-05-08T15:10:00.000+01:00

The pomp and circumstance of the state opening of Parliament by The Queen may seem anachronistic but it does give 'Joe Public' an intimation of what Her Majesty's Government is going to be springing on us in the not to distant future.

More importantly it's what's not in the speech that can sometimes matter ...

"Just because something is not in the Queen's speech does not mean the government can't bring it forward as law, but we have not made a decision,"

(In an interview on the Today program on BBC Radio Four, with the wonderfully combative John Humphrys, touching on minimum pricing for alcohol, Jeremy Hunt ~~esteemed~~ Secretary for Health stressed that no final decisions had been taken).

Perhaps it's because of propoganda from the health lobby such as this Guardian newspaper report in which it's claimed by researchers in Canada that minimum pricing reduces alcohol harms and hospital admissions; something neo-prohibitionsists have been touting for a long time.

Interesting then to see this response from Miles Beale of the Wine and Spirit Trade Association

"The Institute of Alcohol Studies claims evidence from Canada shows minimum unit pricing for alcohol brings significant health benefits. Using their own estimates of population attributable fractions, researchers in British Columbia say between 2002 and 2009 a 10% increase in average minimum price was associated with a 32% fall in alcohol-related deaths. But actual hospital records show that the number of alcohol-related deaths in British Colombia in that period went up – from 1,073 to 1,169."

"There is another problem. One state, Alberta, does not have controls on the sale of alcohol, but shows no discernible difference in drinking patterns and health harms compared with the rest of Canada. This shows there is no simple link between alcohol price and harm, and that cultural factors are the most likely indicators of consumption patterns"

Dr Perry Kendall, British Columbia's provincial health officer, makes this damning acknowledgement that provincial governments in Canada have introduced a minimum price for alcohol:

"mainly to bring in money rather than to protect public health".

It simply won't do for mainstream media to perpetuate the myth that minimum pricing for alcohol is the panacea for the societal problems of alcohol (mis)use ... so my hat's off to Mr Beale for pointing this out.

Pubs, as responsible retailers, have huge restrictions put on them regarding promotional pricing etc, yet the off-trade (principally the major supermarket chains) are allowed free rein to peddle 'pocket-money' priced booze.

Surely the myths, half-truths and sometimes outright falsehoods trotted out by the health lobby mustn't be allowed to influence politicians to introduce minimum pricing in England & Wales, if they do it won't be pubs that benefit (after all we're already pricing well above the mooted 45p per unit), not will it be brewers. It will only be the likes of supermarkets that benefit from this multi-billion pound windfall.

You can bet your bottom dollar they won't be using any such government largesse to fund alcohol awareness programs, reduce the price of healthy food options, introduce a living wage for their employees languishing on minimum wages or pay increased tax revenues for the Treasury it their accountants have anything to do with it.

I know it's only Wednesday but ... Nurse! Meds! Stat!

Market Intelligence Report

2013-05-07T12:13:00.000+01:00

The latest Market Intelligence report on the How To Rub A Pub website is on market research into the use of vouchers by UK "out of home diners" you can find it by clicking here.

For more on vouchers, here's an earlier piece on the subject: " Woucher or Oucher ? "

Hot off the press ...

2013-05-04T11:05:00.001+01:00

A Fair Deal for Your Local ...

2013-05-02T09:08:00.002+01:00

Today sees the launch of Fair Deal for Your Local ... so if you run a tied pub, drink in a tied pub or supply a tied pub then show your support by joining the campaign.

As you can see there's a bloody big button over there top right ... click it ... yes click it now!

Help put a stop to the abuse of the beer tie and tied tenants by pubcos and some brewers ... in addition to the campaign resources at

www.fairdealforyourlocal.com

here are some additional things:

If you have a Twitter account and want to show your support (even for a day, before June 14th when the consultation ends) please change your profile header to this:

If you have a Facebook page you can show your support by using this:

... and finally for good old fashioned poster lovers:

Market Intelligence Report

2013-05-01T11:37:00.004+01:00

To see the latest research into the UK wine market and how it impacts the pub trade click here

Mike Tye ... the new voice of Little Britain ?

2013-04-29T10:13:00.000+01:00

I picked up on this little piece in the Propel Info daily newsletter this morning, which, I reproduce below:

Spirit chief executive Mike Tye has condemned the consultation on statutory regulation of tenanted pub companies as a “waste of government time”. Tye, whose company operates circa 450 leased pubs, reported that the company had not had a single dispute with a licensee leading to arbitration. He argued that the voluntary code had not been given enough time to work. A recent meeting with Chancellor George Osborne on 4 April had centred around a “growth and jobs” agenda, Tye reported. “Making it (an) uncertain (environment) for licensee and pubcos – that will constrain growth,” Tye said. He argued, with some emotion, that the consultation was a “waste of government time” before adding, “Not that I feel strongly about it.”

So the consultation is a waste of time Mr Tye? Easy enough for you to say as your company makes some £78,000 per leased pub (according to your 2012 company report) and you personally trousered £475,000 salary, plus a bonus package of up to 150% of salary ... for those of you without a calculator to hand that's a staggering £1,187,500 ! By the way this handy little graph demonstrates what it might truly be:

No doubt you are worth every penny of the 79 times you get compared to thousands of tied tenants in Britain's pubs Mr Tye, after all you oversee a large managed and leased pubco. Who knows you may even be worth a maximum of 133 tied tenants ... but I sincerely doubt it.

You say that there's not been a single dispute resulting in arbitration? How many didn't get that far, with perhaps the tenant being evicted without arbitration? Maybe you want us to believe that the Spirit Group is so benevolent a landlord that all of its tenants are entirely happy with the way your business model operates? Who knows, having inherited some of the crown jewels of the Punch estate on Spirit's demerger from the boys in Burton, perhaps all your tenants are earning enough to make a decent living. In which case good on them, however, I find that difficult to believe either.

For thousands of tied tenants (sic) the government consultation is long-overdue as the self-regulation process isn't limited to the past couple of years, it's the result of over a decade of investigations by Parliament into the tenanted pub trade. Exactly how much time did you expect to be given, to make self-regulation work? 15 years, 20, 25?

I wonder which emotion was evinced at your meeting with the Chancellor earlier this month? Could it be fear? You believe regulation will create an uncertain future for pubco and tenant, I believe it will create a more certain future with at least the £102 millions of value being transferred from pubcos to tenants. A future where tenants may earn a living, invest in their businesses and who knows, maybe the seed money will result in jobs and growth in the sector. The fear I sense is that perhaps your vast pay packet may be somewhat in jeopardy? Perhaps that's too crass of me but hey ho ... as younger voices would say ... bite me!

Maybe Mr Tye isn't exercised about the consultation as he believes his company will escape the mooted 500 floor for tenanted pubs before a pubco becomes a designated pubco under the proposed legislation? I feel there will be plenty of representations from tenant groups and others to ensure the legislation applies to all landlord companies irrespective of size; something I will push for and encourage others to do as well.

The Propel Info soundbite makes you sound like Vicky Pollard ... "yeah but no but yeah but no ..." and I would put as much stock in her, albeit fictitious, promulgations as I do in yours. One can only hope that the Chancellor has time for a cosy little sit-down with representatives of tied tenants who Vince Cable recognises as having their lot made much worse by pubcos ... "Whilst the financial crisis has brought into stark relief the slow process of sectoral decline, it is undoubtedly the case that the activities of the major pub companies, with their highly leveraged business model, have intensified the crisis"

(P.S. for the sake of clarity I should point out the picture at the top of the piece did not come from Propel Info)

How do you compare to ...

2013-04-25T09:30:00.000+01:00

In response to a request by the Parliament's Business Industry and Skills Select Committee to the Royal Institute of Chartered Surveyors (RICS) to produce a national and regional benchmark for pub rents RICS has for the last year been tracking pub rents.

If you are looking to take on a pub from a brewery, pubco or private landlord you might want to know the average rent, turnover, wet/dry split etc for your area.

To help you decide if the rent on your dream pub is above or below average I've analysed the figures which you can download by clicking here, to find out where your area ranks within the country.

The headline figure you might be most interested in is the percentage of turnover the average pub pays to its landlord as rent:

Region	Rent as % of Turnover
Wales	6.8%
South West	9.0%
South East	10.0%
South Central	9.3%
North West	7.6%
North East	7.1%
Midlands	10.1%
East Anglia	9.4%
London	11.7%
National	9.0%

Nanny ... go fly a kite!

2013-04-24T10:40:00.000+01:00

Further to my earlier piece on the ludicrous excesses of the Portman Group , Big Hospitality, a sister publication to the Publican's Morning Advertiser, reports this morning that Mr Schekter has said the ruling will probably put the brewing part of Laverstoke Park Farm out of business:

"The fact is that it will cost us over £50k to repackage our ale and lager and in the process, lose our brand identity on the bottles," he said. "The brand has taken me over 10 years to establish and would cost millions to relaunch so we have no option but to leave it as it is and it probably will put our beer out of business."

"What the Portman Group has done has nothing to do with responsible drinking and in particular under 18-year-olds drinking,"

"They (the Portman Group) admit that our beer does not attract teenagers and their "hypothesis" about a four year old possibly picking up an open bottle of beer from the kitchen table is absurd."

Hear, hear, Jody ... and shame on you Portman Group, how many jobs will this put in jeopardy?

One can only hope that two things happen:

retailers decide to ignore the Portman Group "ruling" and retailer bulletin requesting retailers not to stock it
that Laverstoke Park Farm as an entire business entity survives what must be such a crushing financial blow

Nanny doesn't always know best and I, for one, think it's time she retired as it would seem it's her that is throwing her toys out of the pram over this one, not her erstwhile charges.

17 Questions That Could Secure The Future Of Britain's Pubs...

2013-04-23T11:38:00.000+01:00

Warning this post is very long ...

... but then again so is the pubco regulation consultation document (a hefty 67 page document that can be found here) .The consultation is now underway, so first of all congratulations to the government for listening to ordinary tenants and not being fobbed off by the self-regulating pubcos and their various stooges.

The consultation will last eight weeks, until June 14th, with the government making its response within three months of its completion ... so plenty of time to become involved, be you publican, brewer or even a customer. Before rushing into completing the offline or online response form the Department for Business Innovation and Skills (BIS) has made available, those with an interest in the future of pubs in this country would do well to read the entire document.

Luckily for those that have neither the time nor the inclination, I have had a good look at the consultation document and the 17 questions it poses for our industry. Contained in the 67 pages are the background to the consultation, some very good synopses of various arguments and more importantly some warnings of "unintended consequences" that may form the government's response to this vox populi. To assist your journey through this process, and, who knows, maybe even influence your response to the consultation here are my thoughts ...

Dr Vince Cable's Foreword

On the 20,000 pubs that have closed over the last 30 years and the effect of the world financial crisis : "Whilst the financial crisis has brought into stark relief the slow process of sectoral decline, it is undoubtedly the case that the activities of the major pub companies, with their highly leveraged business model, have intensified the crisis" Spot on Dr C

On the unwillingness of certain pubcos to adopt swift and meaningful self-regulation after 11 years of select committee hearings and four reports into the pub industry: "After considering the various options, I have therefore decided to consult on establishing a Statutory Code and an independent Adjudicator for the pubs sector to govern the relationship between large pub companies and their tenants. At the heart of this intervention I propose to establish both an overarching fair dealing provision and the core principle that ‘a tied tenant should be no worse off than a free-of-tie-tenant’ ** enshrined in statute.

(** TTNWOTFOT as it's a pain to type out)

I would like to be clear that I am not proposing to abolish the beer tie. When operated as envisaged and fairly, it is a valid business model being used responsibly by companies both large and small. Were it to be removed, the British brewing industry could be significantly disadvantaged. What is clear is that it is the abuse of the tie, like the abuse of rent calculations and other factors, that is causing problems in certain circumstances." Again Dr C, spot on.

Why is Government Considering Action?

The long history of discontent within the industry from many tied tenants at the way they have been treated by some of the pubcos and the lack of progress by those same pubcos to reform their respective business models is the short answer to that.

The government makes it quite clear that its aims are to force pubcos to treat tenants fairly and equally and not in terms of the (failed) competition issue fought by CAMRA in 2010. It notes that :"Although it is clear that the tie can be a good business model when operated responsibly, abuse of the tie can cause serious hardship." Something that many tied tenants can attest to.

The government has to be commended for not heaping all the blame for this industry's woes on the pubcos and makes the case for blame being apportioned, in some measure, on some tenants: "This problem can be exacerbated by tenants who go into the pub sector as a ‘lifestyle choice’ rather than as a commercial business decision. Many publicans do not shop around for pubs or invest based on business reasons; rather they choose a pub they like or on the basis of the attached living accommodation. There have also been concerns raised regarding the chronically low levels of literacy and numeracy amongst tenants. The tie gives an additional route of abuse as beer prices are changed more frequently than rents. The tie also complicates the relationship, making it tougher for tenants to know if they are getting a good deal. In one CGA survey 73% of respondents only looked at one pub owning company when deciding which pub to rent."

The document also acknowledges, quite rightly, that not all pubcos or estate owning breweries should be viewed with the same opprobrium as the likes of Punch or Enterprise: "Tied tenants are also more likely to face serious hardship - 46% of tied publicans earn less than £15,000 a year, compared to just 23% for tenants who are free-of-tie. Although the tie is not universally bad – the latest independent annual survey, conducted by CGA strategy, showed 7 out of 10 tenants would sign up again with their pub owning company – the fair working of the beer tie is particularly important because of the hardship many publicans face including the possibility of losing their home (which is the pub)."

Proposals and Impact

In short the government proposes fair treatment and the over-arching principle that tied tenants should be no worse off than free of tie tenants, by means of a Statutory Code and an Adjudicator to enforce that code. BIS estimates that £102 millions of value within the national tied pub estate would be transferred from property owners to tenants when legislation is enacted. For the 20,000 odd tied tenants this would mean increased profitability (on average) of £5,000 per pub ... which for the 42% of tied tenants who earn less than £15,000 from their pubs would be a very welcome fillip. (Oh, and bohoo, squish, squish, for the poor buggers in Solihull and Burton who would have to foot the estimated cost of the Adjudicator of some £2millions per annum; which, the government intends to recoup from an industry levy).

A Statutory Code & Adjudicator

Whilst self-regulation has resulted in albeit reluctant concessions by the pubcos (PIRRS and PICAS and Codes of Conduct) BIS concludes that "Both pub companies and tenants have now accepted that a self-regulatory code cannot address the fundamental issue of the balance of risk and reward between pub companies and tenants." No rational observer of this long-running saga can argue with that (oh, apart from Enterprise, who even today, was trotting out their tired old mantra of "low cost entry" as justification for their continued abuse of the tied pub system).

The Government proposes an Adjudicator along the lines of the well established Groceries Code Adjudicator; the Adjudicator will have two roles, that of arbiter and that of investigation. Here's my first word of caution on the proposals, page 17, Box 1 outlines a scenario whereby the adjudicator wishes to investigate possible breaches of the Code and samples 200 pubs to see if this is the case. My question, that will form part of my official response to the consultation is: "Who chooses the 200 pubs? The pubco or the adjudicator?"

The proposal for which companies are designated as pubcos bound by the code is for those with estates of over 500 pubs ... apparently this would take care of 90% of pubs that are subject to the abuses of their landlords. Well, I believe that small companies can be just as unscrupulous as their bigger competitors, and that if there is to be a logical and moral consistency to the legislation that it should apply to all pubcos and all brewers. For those acting in the honourable tradition of operating the beer tie as the consultation puts it, there is nothing to fear. It would appear I am at odds with the likes of the Independent Pubs Confederation, CAMRA and the All-Party Save the Pubs Group and, no doubt, Family Brewers, but hey ho I thought the basis of good law was that it was applied evenly and the protections it afforded were equal for all? At least the consultation indicates that this could be reviewed if necessary.

The government proposes that all pubco and brewery tenants (within the scope of the code would be treated the same whether they are a lease-holder or a traditional tenant.) So some consistency there then.

Well done to the authors of the consultation document for spotting that it wouldn't be beyond the wit of pubcos to circumvent the code by packaging their pubs into sub-500 estates as the code will apply "at the level of the top company within a group".

The Future of Self-Regulation

If the 500 floor is enshrined in the legislation then "the Government considers that it would be strongly beneficial if companies with fewer pubs than the statutory threshold continued to operate a self-regulatory regime, in particular with regards to the creation of company codes and their certification by an appropriate body such as the British Institute of Innkeepers. The Government considers that whether or not smaller companies were willing to operate such a regime is likely to influence its decision of whether to set a statutory threshold for the Code of 500 pubs." - a wise precaution in my view.

It puts forward the alternative for smaller groups "to voluntarily commit, in their contracts with tenants, to use the arbitration function of the Adjudicator to resolve disputes." For tenants of smaller companies this is better than nothing.

Content of the Proposed Statutory Code

To ensure the core principles of fairness and TTNWOTFOT comes about the government is asking some key questions:

Whether the overarching principles of the Code are correct;
Whether the Code should include a mandatory free-of-tie option;
Other possible ways of ensuring tied tenants could be made no worse off than free-of-tie tenants;

If you're a tied tenant you'll also be pleased that the issue of re-balancing risk and reward are firmly on the BIS agenda:

The right to request open market rent reviews (if none in the last 5 years, if the price of tied products increases significantly and if something beyond the tenant's control affects their ability to trade);
Transparency through the production of parallel tied and free of tie (FOT) rent assessments ;
Outlawing the gaming machine tie and any other non-drink ties;
A guest beer option that can be sourced from wherever;
A mandate in the code to prevent flow-monitoring equipment from being used to prove breach of the tie.

I would bring the attention of readers to pages 29-33, which, outline the arguments for and against the mandatory FOT option, having considered this for a long time I would make the response that a mandatory FOT option at this stage and in the current economic climate would result in "unintended consequences". However, once the code has been enacted and a period of adjustment has passed for the industry, perhaps government might re-visit this option? A good point might be at the three year review of the project mooted in the document. So, no to a mandatory FOT option. This may be an unpopular, even heretical view, but better a continuation of a responsibly operated tie than the wholesale decimation of the national pub estate by the likes of Tesco, MacDonalds et al if there is a mass sell-off of pubs, say, due to the collapse of one of the over-leveraged behemoth estates.

Powers of the Proposed Adjudicator

In brief, as I am sure you are as weary of reading this as I am becoming of typing it ... the proposed Adjudicator's role and powers would be enshrined in the Pub Adjudicator Act. Firstly to act as arbiter on behalf of individual tenants seeking redress against their landlord and secondly to act in a prosecutorial and investigative role against pubcos who may be systematically breaching the code. This has to be a good thing, for a guard dog without teeth is no use at all, so my response to the question on powers would be yes, bring them on!

The proposed incremental sanctions the Pubs Adjudicator would have at their disposal range from the "lightest touch" of recommendations; a requirement to publish information about a pubcos breaches of the code, the so-called "name and shame" option; and, finally, financial penalties. Although no details of the fines tariff are contained within the consultation document I would strongly urge them to be stiff enough to act as a deterrent, yet be proportionate to the breach in question. One thing I shall add to my response on this is that pubcos, when found to be in breach, should be forced to make financial restitution to their "victims".

Funding & Accountability

The proposal is an industry-wide levy against the pubcos and brewers with estates over 500 (i.e. those that fall within the scope of the code) ... yes, make the polluters pay, as long as pubcos are prevented from passing this and other code compliance costs on to tenants, then subsequently to their customers. After all we've seen the gouging pubcos indulge in over such things as "licensing costs". What is pleasing is that after a flat rate dependent on estate size in the first year is the proposal to charge those pubcos with the worst record of breaches more in the second and successive years.

The Code

This runs to many pages (pp40-56) and in the main seems to be a balanced and proportionate solution to the current inequalities in the tied pub sector, however, the devil is in the detail and here are a couple of things you might consider in your response to the consultation:

(p45) Should pubcos insist, rather than encourage, prospective tenants thoroughly inspect the premises they are looking to take on? In my opinion, with their lamentable track-record, some pubcos will use any wriggle room they can find to circumvent regulations if it's in their own best interests. Simple solution ... allow pubcos not one nanometre of wriggle room.

(p48) The draft code calls for pubcos to publish their national price lists for tied products ... the only question is "Which national price list?". Would that be the brewers' with no discounts or the net price the pubco pays? Of course both parties will resist the latter option on the grounds of "commercial sensitivity", but in my opinion unless the latter is disclosed there can be no transparency for tenants trying to work out whether they are getting a good deal. So if you're making a contribution to the consultation I'd recommend highlighting this issue.

(p50) deals with the roles of Business Development Managers (or whatever title each company gives them) and calls for BDMs to be trained before carrying out rental negotiations. My questions on this would be "Trained by whom?" and "Trained to what level?". Again in terms of wriggle room the code should stipulate a level of training commensurate with a full and proper understanding of current (and future) RICS guidlines by an approved RICS trainer.

(p51) The miscellaneous provisions call for the code to be incorporated into new lease and tenancy agreements, which, is fair enough. It also proposes incorporation at the next rent review for existing agreements? Why the wait, which for some tenants, depending on the enactment could be as much as five years? A side-letter attached to existing agreements within, say, 28 days of legislation coming into force would be a suitable way to ensure all tenants were aware of the new code and they could rest assured they were protected by its provisions from the outset.

Buidlings Insurance has always been a bone of contention for tenants and the code makes some sensible proposals for dealing with this in an open and transparent manner. The only thing missing from the disclosures required of pubcos is the amount of commission they receive from their insurance brokers in return for placing their business with them. I shall be making a specific response as to my certain knowledge (from a previous incarnation as a national estate manager) that commission rates as high as 25% of the premium charged to tenants is quite the norm. You might wish to raise this matter in your submission too.

(p53) Back to wriggle room again, the code says designated pubcos "may" produce their own Company Code of Practice ...why not "must"?

The remaining provisions seem adequate to me, which, brings us to one of the main issues the code seeks to address ... rent assessments. I really have no quibble with this section save the "sample rent assessment statement" pubcos have to produce to prove TTNWOTFOT . The accompanying guidance notes make mention of "trade insurances", "regulatory compliance costs" and "licensing & social responsibility costs" ... yet they do not appear as cost lines in the sample statement. Why not? While we're on the subject of licensing costs there is no mention of the two TV licence costs, PRS for Music or PPL licensing costs, why are they not included?

Then there is the age old problem of "special commercial or financial advantages" (SCORFA) ... for once the pubcos will be required to fully list all the "benefits" they bring to the business relationship with their tenants and have to justify and quantify these costs in advance of any rental assessment ... this should prove very interesting as pubcos seek to quantify these benefits.

Well, there you go folks, apart from one thing, one of my recommendations to compliment the many industry benchmarks the code seeks to incorporate into the process of rent assessments is that pubcos should be mandated to give any prospective tenant a copy of the current RICS Pub Benchmarking Survey. This would allow prospective tenants to not only understand where their rent, turnover and more importantly rent as a proportion of their turnover sits within the national picture, but also within their respective regional marketplace.

I'm sure you'll all have your own views, perhaps you'd like to share them in the comments box? I'm always happy to take on new ideas and thoughts and if they make sense to me I shall include them in my responses.

In the meantime ... I'm going to lie down in a darkened room ...

Happy St George's Day ...

2013-04-23T08:01:00.002+01:00

He may (or may not) have been born on this day, but records show he definitely died on this day in 1616 ...

... enjoy the sun and, of course, have a pint in your local pub !

(If you want some trivia for your quiz here's an earlier piece with some quotes)

As a post-script to this piece ... a friend of mine commented on how amazing it was that the Bard couldn't shoe-horn in some reference to how "bloody rain sodden" this sceptered isle is!

Pubco Regulation Consultation ...

2013-04-22T09:09:00.002+01:00

At long last the consultation by government into regulating pubcos is underway ... a full copy of consultation document can be found by clicking on the cover (below)

Bet they're well busy in Burton and Solihull right now ... tenants should get equally busy as this is a once in a generation chance to put things right ...

Nanny knows best ...

2013-04-21T09:28:00.001+01:00

I used to have a high regard for the Portman Group, I say "used to" advisedly having seen this report in the Publican's Morning Advertiser on the long-running dispute between this 'august' trade body and Laverstoke Park Farm over the latter's label for its organic ale (pictured).

The crux of the matter is the cartoon picture of former Formula One champion Jody Scheckter drawn by his son and used in the label (Mr Scheckter is the owner of Laverstoke Park Farm) breaching the Portman Group's strict rules on imagery that might appeal to children in alcohol packaging and marketing.

After a long-running dispute the Portman Group has re-issued a retailer bulletin "requesting" retailers not to place orders for the beer in question: “Unlike many responsible producers, Mr Scheckter refuses to work with the Portman Group's free Advisory Service to ensure Laverstoke's labels comply with the rules. The Advisory Service will continue to be available to him. The Portman Group Code is supported by over 140 organisations including all the major retailers who have given their commitment to abide by the rulings of the Independent Complaints Panel. They have been requested not to place orders for the products in their current packaging after 17 May 2013.”

As I said at the start of this piece I have been a long-standing supporter of this quasi-judicial NGO and its history of alcohol awareness education, its now defunct proof of age scheme and campaigns to encourage social responsibility within the alcoholic drinks industry. However, their "vendetta" against Mr Scheckter seems to have taken on new dimensions with slurs and innuendo taking the fore.

As far as I can see, from the Laverstoke Park Farm website Jody is enjoying his retirement from motor racing in the role of 21st century "new age" gentleman farmer, his business seems to go out of its way to promote healthy organic produce ... even its ales are organic. He doesn't seem to be encouraging toddlers and small children to finish off their day at the farm and shop with a drunken binge on his lager or ale. It would seem that it is only his business acumen in getting his award winning ale to feature in Sainsbury stores that has brought this to a head.

Where was the Portman Group been when these labels were used?

Is the Portman Group so naive as to believe that a childish drawing is going to encourage children to drink beer? In a totally unscientific experiment (don't all rush to call Child Line on your speed dial) I gave a 3 year old and a 7 year old a sip of bottled ale (not Mr Scheckter's by the way) to see whether they would like it. (They were a la maison on a family visit.) Result? Two binge drinking demon spawn? No, of course not. They both turned their noses up and grimaced at the taste and smell of it and promptly demanded something more palatable to them.

Jonathon Birdwell, from the Demos think-tank, has this to say on how children develop into binge drinkers:

"Over the past three years, at Demos we have been investigating the influence that parenting style has on a child’s eventual behaviour. From character skills to the likelihood of binge drinking, the evidence is clear. Our research has found that parenting style is one of the most statistically reliable influences on children’s drinking patterns as teenagers and adults. As the government consults on a minimum unit price for alcohol, we argue that a focus on parenting could be more effective.

The equation of effective child caring is actually quite simple: high levels of warmth and affection, combined with consistent enforcement of discipline. This tough love approach leads to the best outcomes for children.

In the latest report, Feeling the Effects, quantitative data from 17,000 people found that parents’ drinking habits have a discernible impact on their childcare style and children’s own future patterns of alcohol intake. Research found the more a parent is seen to drink, the less likely they are to be an effective, ‘tough love’ carer. A mother’s level of intake, in particular, was influential, increasing the likelihood of children drinking excessively as adults."

I have for a long time wondered where the Portman Group gets its authority, for I can find no legislation, regulation, orders in council, or statutory instrument, which, puts its activities, promulgations or guide-lines into law. It operates without parliamentary scrutiny, authority or control much the same way as other private companies (such as Phonographic Performance Limited or PRS for Music, who are also well known to the pub trade).

I did, however, find this "Memorandum of Understanding" (from 2006) between the Portman Group and the Department of Health, which makes its role abundantly clear within successive administrations' broader Alcohol Reduction Harm Strategy. Of particular interest is the Section 9 Principles that "underpin" the Portman Group's activities, to wit, they "should act in the interests of the public and should undertake programmes that are, evidence based." (My underscoring).

Where is the peer reviewed, independent study definitively linking cartoon characterisations and alcohol consumption in children? If it existed, was it used in their prosecutorial submissions? Apart from the single (yes you read that correctly single) complaint relating to the offending label, where is the evidence that children have been encouraged to start drinking this, or any other beer for that matter as a result of this or other beer labels? Have the Portman Group even commissioned a study, no matter how small compared to the 17,000 in the Demos quoted study?

In the absence of its legal standing (sic) one has to ask if its moral and temporal authority is divine? It would seem so, from the heavy-handed and authoritarian stance it takes from time to time, Mr Scheckter's case being a good example. If the Portman Group wishes to continue to be taken seriously as a valued partner in society's efforts to encourage responsible drinking and drinks retailing, then taking on such a high profile "prosecution" is somewhat self-defeating as the general public, in which I include myself, will think that the Nanny State (including its unofficial agencies) has gone too far. Let's not even get started on how out of touch the Judge was who presided over the case.

As Voltaire was oft to say, "with great power comes great responsibility", or was it Stan Lee? Anyways, whoever said it first, the Portman Group should learn to exercise both before it launches any similar actions in the future.

In the mean-time, I'm off to hitch up the horses and don my child-catcher costume and lure kiddiwinks into the nearest pub armed with only a bottle of Laverstoke Park Farm's Organic Ale ... mwoah-ha-ha!

(P.S. The pump clip images come from the tegestologists' favourite The Pump Clip Museum an online resource for all things relating to beer pump clips.)

National Minimum Wage Increases ...

2013-04-16T12:47:00.001+01:00

So the government has decided to keep the National Minimum Wage (NMW) at this, juncture,and has increased the minimum rates all businesses in the UK have to pay their staff ... the increase this year is a miserly 1%, which, as inflation currently stands at 2.8% means a real-terms cut. NMW remains and looks to remain, substantially below the Living Wage.

For pubs, even this modest rise may prove too much, so to help publicans understand and plan for the rises on October 1st 2013, I've added a simply wizard 'app' to the How To Run A Pub website.

Easy to use, free to download it allows pub owners and managers, to input the various NMW rates and staff hours so they can see the extra headline changes to their respective payrolls.

... always happy to help.

It's Child's Play Really ...

2013-04-15T09:55:00.002+01:00

Just a quicky today ... if you want a considered approach to tackling "binge drinking" from political "think-tank" Demos ... then read on it certainly seems to make more sense than some of the current thinking on Minimum Pricing.

Post Scripts ...

2013-04-12T10:07:00.000+01:00

The Publican's Morning Advertiser reports on a letter to the Telegraph from some of the "leading lights" in the UK pub and brewing industries supporting Minimum Pricing for alcohol

Here's the full text of the letter

SIR – We urge the Government to stick to its plans to introduce a minimum unit price (MUP) for alcohol, to address the costs to society of irresponsible alcohol sale and consumption, and to encourage drinkers back into pubs and clubs.

The important role of pubs in communities across the country is often under threat from the easy availability of excessively cheap packaged alcohol.

The Government has public support. In a recent YouGov survey the majority said the Government was right to try to reduce the amount of cheap alcohol sold in shops.

Yet at the same time, the Government’s plans are being undermined by some who seek to distort the public’s understanding of how MUP would work. For example, 46 per cent wrongly believe MUP would increase the price of alcohol in pubs.
MUP will not solve all alcohol-related ills, but it will encourage responsible drinking.

The recent move to scrap the beer duty escalator and cut duty by 1p per pint is also welcome, in discouraging consumption of higher-alcohol products – drunk mainly at home – such as spirits, wine and strong ciders and beers.

By introducing MUP, the Prime Minister has a great opportunity to save lives, to save money and to protect British pubs.

Rooney Anand Chief Executive, Greene King

Stephen Glancey Group Chief Executive Officer, C&C

Mike Benner Chief Executive, CAMRA

William Lees-Jones Managing Director, JW Lees Brewery

Stuart Bateman Managing Director, Bateman’s Brewery

Steve Richards Chief Executive Officer, Novus Leisure

Peter Marks Chief Executive, Luminar

Keith Bott Managing Director, Titanic Brewery

Jonathan Barker Managing Director, Mitchell’s of Lancaster

Tony Brookes Managing Director, Head of Steam

Michael Kheng Director, Kurnia Licensing Consultants

p.s. you'll need to set the level at over £1 a unit to make a difference to most pubs

p.p.s. you'll also have to explain to the majority of UK consumers why you've handed the likes of Tesco, Morrisons, Sainsbury, Co-Op, Aldi, Lidl, Waitrose etc a multi-billion pound windfall at their expense

p.p.p.s. you'll need to set aside a considerable "fighting fund" for all the government lawyers to defend your action in the UK and European Courts

p.p.p.p.s. or you could just consider applying existing legislation (i.e. The Licensing Act 2003) to the "off-trade" and prevent them from running irresponsible drinks promotions the same way you do with the "on-trade"

Oh, OK then, the post scripts are mine ...

Make "them" pay ...

2013-04-11T15:30:00.003+01:00

Half-baked? Half-Wit?

Speaking during his weekly Call Clegg programme on LBC Radio, Mr Clegg, the Deputy Prime Minister, said he supported the idea of imposing levies on people who get “blind drunk” and end up in hospital or at a police station. Here are some highlights:

“I’ve actually got quite a lot of sympathy with the basic principle that says why should someone that goes out and gets completely blind drunk, behaves appallingly, gets themselves into trouble and a scrap - why should other people always have to pick up the tab to help them out?”

He said it was unacceptable for the taxpayer to continue to pick up the bill for the National Health Service to treat patients whose injuries were caused as a result of excess alcohol. Mr Clegg added: “It’s quite difficult to do it but I actually think the principle you’re talking about is a not entirely bad one."

“Some-one who wilfully through their own actions basically creates a lot of trouble and hassle for the NHS which everyone else has to pay for, at some point you might want to say to them maybe not on the first occasion but… I don’t have the how but I do understand the why.”

Mr Clegg said it was correct that pub landlords should be required to “cough up in order to deal with the problems they create” He added: “The rules have changed so that local authorities can get nightclubs and pubs and others where there is evidence that they are systematically turning a blind eye to the problem that they are creating, that they have to chip in as well, for instance to shoulder some of the policing costs.

“That was something that I was very supportive of. You know what it’s like, there are parts of our towns and cities where frankly it can be a bit of a no-go area on Thursday, Friday, and Saturday night."

“And I don’t see why people who create some of that problem shouldn’t shoulder some of the costs for dealing with the problems that they partly create.”

So let's have a look at what Mr Clegg has to say in some detail shall we? Because whilst I can fully understand where he's 'coming from' I can't say I agree that the ever-increasingly-demonised social drinker or hard-working, law-abiding publican should continue to be the whipping boy for 'sound-bite' politicians.

If one is to directly charge drunks for their policing and hospital costs (above and beyond what they pay in duty and tax) then surely it should be the same for careless drivers? As I reported earlier the extrapolated costs of careless or dangerous drivers is some £52 billions a year to the economy. Will Mr Clegg be seeking to recover the costs from those who through their own choice end up pranging their jalopies and then require the emergency services and the NHS? If the answer is yes, then by all means come after drinkers. But why stop there? What about all those wilful toddlers that will insist on falling off swings and roundabouts who require medical assistance? Will their piggy-banks be raided to pay for the nice doctor?

Mr Clegg seems to have been woefully ill-briefed or is being deliberately ingenuous to suggest pub landlords alone should “cough up in order to deal with the problems they create”. What about the off-licences and supermarkets who supply all the alcohol at 'pocket money prices' to many drinkers so they can 'pre-load' before they ever reach a pub on their night out? Will Mr Clegg be fining the off-trade where there is evidence that their sales have caused a visit to the local nick or A&E department? If the answer is yes, then by all means come after pub landlords who continue to serve those already drunk ... the mechanism is there ... it's called The Licensing Act, 2003.

If ever there was a sector of the alcohol retailing industry that "are systematically turning a blind eye to the problem that they are creating" surely the off-trade must be the prime suspect? If Mr Clegg had the political balls to take on all of those "people who create some of that problem" I would have some sympathy for his point of view. But to single out pubs and clubs as the only ones to "shoulder some of the costs for dealing with the problems that they partly create” is crass and indefensible. At least Mr Clegg has the honesty to intimate that pub landlords are not wholly to blame.

Perhaps if this proposed policy were applied even-handidly across both the on-trade and the off-trade then no doubt the Treasury's coffers would be full enough to provide the policing and alcohol education needs of society so that town-centres stop being "no go areas".

I've neither the time nor the inclination to tax my brain with how this would be applied, just as it would appear our ~~esteemed~~ Deputy Prime Minister failed to do. How would one work out the proportionality of responsibility for either a pub landlord or a supermarket manager? Or for that matter a careless driver or the car salesperson who "bigged up" the speed and power of the latest hot hatchback? Perhaps Mr Clegg should engage his brain before opening his mouth?

Although if it ultimately ended up with Jeremy Clarkson being financially responsible for his endless deification of the internal combustion engine, that might not be a bad thing ... and to quote Jezza ... " and on that bombshell, goodnight!"

April Newsletter ... out now

2013-04-06T10:21:00.000+01:00

The latest How To Run A Pub Newsletter is out now .... you can view it here and you can sign up to receive it directly to your inbox ...

Consult or be damned ...

2013-03-29T14:16:00.000Z

Well, it's only taken the best part of a decade, dozens of hearings, a veritable mountain of evidence and countless contributions to the pubco debate, but the long-awaited government consultation on a statutory code to regulate the pubco-tenant relationship is upon us.

As I and many others have said, this will be a once in a generation chance to put the largest sector of the pub market into an equitable state. Lined up on one side will be the pub owning companies (both brewers and non-brewers) and on the other their respective tenants.

Its terms of reference have yet to be formally announced but one that must be included is the over-arching principal that recent committees and parliamentary debates have determined: that a tied tenant should be no worse off than a free of tie tenant.

For this to succeed the pub trade will have to convince our political masters of the current imbalance between landlord and tenant in the industry. The former will claim their business model is both fair and sustainable, whilst the latter will claim the opposite.

For me it's quite simple, when 66% of tied tenants earn less than £15,000 a year for their endeavours and most pubcos and tied pub owning brewers earn some four times as much from the same pubs there is a patent and inescapable imbalance. (I would venture the current parlous state of tied pubs is probably a major factor in the fact that 85% of pub employees earn less than the Living Wage, so if for no other reason than ensuring there is a more equitable division of profits to allow thousands of pub workers' pay to be lifted to this level, then there has to be change).

Not until the entrepreneurial skill and labour of the tenant is perceived to be of equal value to the capital commitment of the landlord and this is codified in strict regulations with a powerful adjudicator able to enforce them will the ailing tied pub sector be something we can all be proud of and not remain the current shabby example of sharp practice and unfettered greed on the part some landlords, that quite frankly as a veteran of the industry I am quite ashamed of.

Already the doom-merchants and nay-sayers are trotting out their customary warnings and some from quarters that would surprise you. For instance the operations director of the Federation of Licensed Victuallers Associations (FLVA) seems to think a free of tie option for tenants would be unworkable as he seems to think that the average pub tenant will not have the wit or resource to screw as good a deal out of drinks suppliers as their landlords. Obviously Mr Caffrey from the FLVA has never heard of buying groups or crowd-purchasing.

To his credit, however, he does point up the absurdity of limiting the effects of any regulation to those companies with estates in excess of 500 pubs. He is quite right to say "there should be one rule for all". So that's another over-arching principle to add to the list, no escape for small estates who can be just as ruthless as their larger counterparts. Besides which, even parliament cannot be thick enough to think that clever corporate lawyers and accountants aren't already working on ways to split the large estates into sub-500 sized parcels to avoid regulation.

Of no surprise to this writer is the usual clap-trap from Brigid Simmonds, the mouthpiece of the British Beer and Pub Association (BBPA) who claim to represent all pubs and brewers in the UK. The BBPA is a misnomer if ever there was one, as they represent not pubs and publicans but pub owning companies (some of whom brew beer, some who don't). She warns of "unintended consequences" of seeking a free of tie option for tied tenants ... I'm just wondering what those may be? Are such veiled threats the last resort of some of her incorrigible members? If so the battle may already be won for tied tenants as there is a mood afoot in this country that is distinctly set against bullies and corporate fat cats.

She goes on to tell us "it is vital for the trade that the tied model works well as a successful business model for both partners" ... it's a bit late for that love; after all the major pubcos have had more than enough time to prove the equability of their business model. Unfortunately for them, successive Business and Industry committees have seen the evidence from both sides and come to the quite natural conclusion the current business model of high property rents and even higher tied product ~~gouging~~ pricing is not working for the tenants.

Ms Simmonds says "it is not in their [pubco] interests for it to be abused" - perhaps she should have a quiet word with her organisation's tied pub owning members as many of them have been abusing the traditional tied model for nearly 30 years. Apparently the BBPA is "fully prepared for the model to be tested as part of the consultation" , no doubt they will be, for it's definitely in their interest for as little movement from the status quo as possible.

So the battle lines are drawn and it's now up to the thousands of tied tenants in the UK who think and can easily prove they are constantly on the shitty end of the pubco stick to have their say. It behooves all tenants (tied or free of tie) to contribute to the consultation and counter what will, no doubt, be a well-orchestrated effort by their respective landlords to attempt one final feat of legerdemain and avoid regulation and change.

I say both tied and free of tie tenants as the implications for both (and the free-trade sector of the pub industry) cannot be escaped ... for one, a truly free-market rent structure and drinks pricing environment where even the traditional "back street boozer" can generate sufficient income for its licensee to live on and who knows maybe even invest in the future of the national pub estate.

So dear reader, if you're a tied publican or you drink in a pub owned by one of the more rapacious pubcos then urge your host to have their say. The current state of affairs cannot continue with thousands of hard-working publicans forced into penury at the hands of morally bankrupt landlords and to do nothing to ensure future generations of publicans get a fair shake of the stick would be an abrogation of their responsibility that no excuses such as "I don't have the time" or "I don't do politics" will forgive ... unless, of course, you are happy with your lot, in which case spare a thought for many of your colleagues in the trade who are being systematically ripped-off.

Remember when the well of "bottom end" tied pubs finally dries up who do you think your landlord will turn on next?

For a more succinct version of this piece ... look at this short message:

They think it's all over ...

2013-03-22T02:51:00.002Z

Further to my post (yesterday) ... I got an "answer" from Toby Perkins ...

... it's time that all the political parties gave the UK's drinkers, pubs and brewers an unequivocal answer and not the usual half-answers ...

Ooh it pains me to say but ... cheers George!

2013-03-21T18:38:00.001Z

So it would appear that Mr Osborne has at last seen sense and taken note of the overwhelming chorus of discontent from the UK's pubs and brewers and not only scrapped the iniquitous beer duty escalator but chucked in an extra penny a pint reduction in base beer duty.

I'm no fan of this chancellor (or to be fair most of his predecessors) but it would appear that he is not as economically illiterate as I have accused him of being. Perhaps the voices of small businesses have been heard in the hallowed halls of the Treasury ... with a £2,000 break on employers' national insurance contributions he is at least trying to help business in these difficult times.

For most publicans, it won't be a way of funding extra staff (which is what he wants), as most licensees I know are operating at minimal margin and this NI holiday will go towards existing bottom lines.

He also has to be congratulated for cancelling the next fuel duty rise ... at least suppliers (both wet and dry) to the pub trade will not have that excuse for rises in their products

Good news for companies and sole traders alike with the increase in personal tax allowance to £10,000 and reduction to 20% for corporation tax in 2014 ... again a welcome boost to struggling licensees' pockets.

In an unusually conciliatory mood I have to congratulate Enterprise Inns for quickly announcing their intention of passing the duty drop on immediately (to bloody right as this cost them absolutely nothing)... I don't think my old "friends" (not) in Burton at rival pubco Punch have made any such promulgation.

When the hoo-hah and industry-wide back-slapping has died down perhaps it will be pertinent to remind ourselves that this 1p drop in duty will still leave Britain's drinkers, pubs and brewers suffering the second highest duty level in Europe. Remember CAMRA reckoned (pre-budget) that £1 of the price of every pint goes to tax and duty in the UK ... so let's not carried away with celebrating that we'll only pay 99p per pint until the next budget.

The scrap the beer duty escalator campaign has all but been won ... I say "all but" as Toby Perkins indicated prior to the budget that Labour (who if you remember introduced the beer duty escalator) ~~would~~ might have to retain it if they come to office after the next general election. I have twice asked him if Labour would re-introduce it should they get their hands on the purse strings ... but have yet to have a reply.

If one assumes that Perkins, Balls, Milliband et al aren't feeling politically suicidal then perhaps we can rest easy on that one ... but resting on our laurels over the other issues that affect the pub and brewing industries is not an option. Reform of business rates, reduction in the rate of VAT for the hospitality sector, stopping the off-trade running irresponsible pricing policies (via licensing law not minimum pricing) and regulation of the pubcos must remain at the top of our industry's political agenda.

I have a sneaking feeling that we're all going to pay a lot more after the next election but until then I shall be spending my new found "duty wealth" and tax allowance down the pub ... any pub ... don't care which, but most certainly not the supermarket ... cheers for now!

P.S. Sorry to all you cider-makers, vintners and distillers ... I guess the well ran dry ... maybe next year?

Budget Message 2013

2013-03-17T20:46:00.000Z