Last week in parliament, the crucial vote on whether pub companies with more than 500 pubs and at least one tenanted or leased site would be forced to offer a Market Rent Only (MRO) option, took place.  As it stands tied pubs are forced to buy beer at inflated prices from the pub company as well as paying a ground rent which is often above the true worth of the property.  The beer price inflation can be startling which is why it is called the “wet rent”, the ground rent being the “dry rent”

As an example (as told to me by a 20+ year veteran of the trade), a good session ale direct from the brewer will cost about £60 for an “9” (or 72 pints), of which a landlord expect to sell 62 pints once pull through wastage is accounted for over a few sessions.  When this is distributed via SIBA (Society of Independent Brewers), the costs increases to £70 to cover their costs, not an extortionate amount for a convenient centralised system.  This is what the pub companies buy at, but when it is sold to their tied tenants, the cost has jumped to £120, so now instead of paying about 97p per pint (pre taxes and costs), tied tenants now pay about £1.93.

When you sell 1000 pints a week, £970 (97p per pint difference) per week or £48,500 per year makes a difference between struggling to make a profit or paying yourself the minimum wage for the long hours you pull behind the bar, computer keyboard and in the cellar.   If you are a couple then you can take £15,000 per year each out of this and start planning for your life after the pub trade when you have to pay for your accommodation and utilities as an individual.  It also means that you could employ staff to give you a break during the week with the remainder.

The amendment to the Small Business, Enterprise and Employment Bill, New Clause 2 as this is catchily known as in Parliamentary terms (called NC2 from here on) was passed by 284-269 votes, despite a last minute attempt by Jo Swinson, Minister for Employment Relations and Consumer Affairs to introduce an change which would add a delay of 2 years whilst a “rigorous” review was done into whether the clause was needed, with her adding that the MRO would only be implemented if the review finds tenants are not sufficiently protected by the current system.

If the pub companies were going to clean up their act, they would have done it in the last 6 years, another 2 years will make no difference and the majority of MP’s agreed with this view and voted for introduction of the clause into law as soon as legislature allows.  So what does the change mean.

First of all, total freedom to pick your own beer is not included.  The pub company can mandate a choice of brands which can be sold in their pubs, however tenants can buy these beers from any supplier to get the best price if the pub company is strongly tied to brewery (eg : Greene King Inns).  This could be of course be offset by threats from the brewery that the supplier will be cut from their distribution chain if they supply the pubs in the breweries chain.  This applies even if the tenant has an MRO agreement.

The pub company must offer an MRO option at the following times, new lease or tenancy contract; agreement renewal, rent review; five years after last rent review.  The pre-condition of this is a) when the large pub-owning business gives notice of, or imposes, a significant increase in the price at which it supplies products, goods or services b) upon an event outside of the tenant’s control, and unpredicted at the time of the previous rent review, that impacts significantly on the tenant’s ability to trade c) when a pubs ownership changes hands.

The tenant must give notice of intention to pursue an MRO and a period of 21 days of internal negotiation is needed before they take this into a 90 day consultation period where a mutually agreed independent assessor, of which the costs are split 50/50, can investigate the commercial situation.  After 90 days he can submit a fair MRO rent, the tenant can then pay no more rent than submitted and existing ties are no longer valid.  There is a clause that says pub companies cannot discriminate against MRO agreement tenants.

So it gives the tenant a fair deal on paper, but like before, pub companies will find a way around this, they did with Beer Orders 1989 and I’ll bet you a tenner its not the last we see of the pubco dirty tricks.


Pubpaper 784 – The real reason for the local pub!

Posted: 9th November 2014 by santobugtio in Pub Paper, Writing

The local pub is important, along with the local shop, chippie, post office and takeaway, it’s what differentiates a housing estate from a village.  There are places where people can meet and interact as part of day to day life, they give people a reason to stay in the local area and the create networks of contacts and friends over time.   How many times have you heard someone who lives on one of these faceless new mega estates that they don’t even know their neighbours as they just “reside” there, not “live” there.

Nothing demonstrates this more than Bonfire Night at my local pub The Cock and Bottle, Southowram.  It’s become a bit of a tradition now for the Cawood family (who own the pub) and the staff to put on a bonfire, fireworks, pie and peas and all the trimmings you’d expect from a fireworks night.   The pub car park and pub itself is full with people, some of which are regulars, some of which only come once or twice a year for special events such as this and they put on a great show.

But the fireworks are not the most important bit of the night in my opinion, they may take all of the glory, but it is the entire village getting together for an occasion we should be focusing on.   My youngest daughter does not like fireworks, the noise scares her rotten, and I’m not particularly bothered about watching them, so I normally end up taking her inside the pub while the night sky is being lit up and my eldest girl and wife stay outside to watch.

The value of nights like this show when seen in the family dynamic, my eldest went off with one of her best friends to watch the bonfire, my youngest was playing in the back room of the pub with her best friend from school.   Friends from the village we haven’t spoken to for a while were caught up with, all of this on a basic level strengthens the backbone of the village.  Where else would you within a couple of hours arrange to get your boiler serviced, provisionally plan to do some band photos, whilst talking to multiple other people and having good quality family time.

If you go a a big display, its “wham bam thank you maam”, as soon as the fireworks have ended everyone goes home.  Here people stayed about after the festivities, chatting and drinking, having a good time.   We stayed another hour or so after everything had finished, other groups stayed on a lot longer.  You saw people drifting between conversations within the pub throughout the night, people with mutual acquaintances joining in conversation creating new links, social circles being crossed over.

We all have multiple social circles where we live and most of the time we see them in isolation, just off the top of my head, we as a family have “friends from the kids dancing lessons”, “playground friends from my daughter’s primary school”, “cricket club friends”, “people who I’ve worked with on charity events” and “local trades people who I’ve employed / done work for”.  If I sit down and think about it there will be many more.  There is limited crossover most of the time, but where you do get blur these circles new business dealings and personal relationships form.

This needs a melting pot to soften these social circles.   When you have local pub owned by local people who used to be regulars at the pub and know a lot of the village through its previous incarnation, it breeds loyalty and when you give back to the community with events like this, any success is well deserved.   Its not just about a bumper night behind the bar on the night, but encouraging regular return visits outside of such event, planting the idea in peoples heads that instead of driving out to the pub, why not walk down to the local.

Such custom is the lifeblood of village local pubs and wherever they are they deserve our support, the more custom they get the more they can afford to put things on for the community, because if they can’t pay the bills, the fireworks aren’t going to happen.


My “most hated brewery” of all time, Greene King (frankly I’d rather go dry than drink most of their beer), who also manage 1900 of the country’s pubs and bars have had a takeover offer of £774 million accepted by the board of the Spirit Pub Company, the managed pub company spun off from Punch Taverns a few years ago.  Spirit brands include Chef and Brewer, Fayre and Square, Flaming Grill and Wacky Warehouse.   Greene King brands include their self branded pubs, Hungry Horse and the Loch Fyne restaurants.  Both groups lead off food based venues, rather than wet led sales.

Adding in Spirit’s 1200 pubs, it means the combined group will have control of approximately 3000 pubs in the UK.  Of these 1800 will be managed pubs, with the remainder leased, tenanted or franchised.  Despite the two companies wanting to concentrate of managed estates, they are quite happy to keep the high turnover third party ran businesses, such as the cream of the Punch Taverns tenant estate that was hived off with Spirit when it was created in 2011.

Personally I do like the Chef and Brewer chain, decent food, normally holding a decent ale or two, and located in generally nice locations and as a parent Wacky Warehouse can have its uses from time to time, but you do find that the pubs adjoining them are not the place for a quiet relaxed meal as they do seem to always have those handful of families who have never taught their kids how to behave in a public arena and don’t know the meaning of parental control.  The same could be said of Hungry Horse in the Greene King group, which has a similar food / drink / play business model.

This does highlight the synergies between the two groups, and where they can save money.  Flaming Grill,  Fayre and Square, Greene King brand and Hungry Horse are all “ping and pop” venues, excepting the cooking of grilled / fried items.   Everything is prepackaged with instruction of which program to use and for how long to cook it for in the Merrychef (these are large industrial microwaves which can cook 6-8 meals at once.   The kitchen is that automated that menus can be programmed into the Merrychefs so any judgement is totally removed from the kitchen staff s jobs.  Sounds soulless, it is, I’ve worked in chain retail catering, both in the kitchen and as part of the head office behind the restaurants and I don’t envy the people who do it one bit.

With Greene King taking over, two things are inevitable, the first is that suppliers will be consolidated, meaning the spaghetti bolognaise at one of the chains will be the same as another due to volume purchasing discounts across the group, however with a lot of these pubs not many people will recognise this merging of product ranges.   The second and more serious issue will be the homogenisation of beer choice across the group.  At most of these chains it isn’t brilliant as it stands, its normally a choice of Carlsberg Tetley or InBev core brands with one or two (three in places like Chef and Brewer) real ales to choose from, of which at least one will be a major regional or national brand such a Fullers, Timothy Taylor or Black Sheep.

However if you visit a Greene King owed pub you will have the choice of Greene King IPA, another bland GK beer such as Old Speckled Hen and if lucky a guest beer and usually an uninspiring one at that.  The first thing that Greene King will do it move their beers into the Spirit brands to the exclusion of external beers once existing contractual obligations expire, which means another 1200 pubs where I am having to drop onto Becks or similar continental beer for an acceptable drink.   One of the big attractions of spending £774m is that you now have 1200 more pubs to sell the groups beers to, thus improving turnover in another arm of the business, as well as merging the profit from Spirit into your bottom line, at the end of the day they money spent on the acquisition has got to be reclaimed from somewhere.

We should be opening up our pubs to new beers, interesting beers, but this move is like slime moving across the country, homogenising our life and taste experiences wherever you go, thankfully we have a glut of great independent pubs, some of which are doing a great job despite leasing from a pub company and suffering the high costs, they deserve our support more.

Beer 52 Beer Box Review

Posted: 3rd November 2014 by santobugtio in Writing

I’ll start this piece with a declaration, the beers covered in this article were supplied compliments of for review on their request.  My aim is to be honest about the beers sent.  First lets detail the eight beers that were sent

  1. Freigest Abra-x-as – a smoked tart wheat beer from Main, Germany
  2. Belhaven Scottish Oat Stout – a Greene King owned company, not expecting much
  3. Cerdos Voladores – an honest made beer produced in Barcelona (I’m not any wiser either)
  4. Panda Frog Project Ascendancy – Belgian Double IPA Weizen Hybrid – should be interesting
  5. Einstok Icelandic Toasted Porter – I’ve had this before and its a decent ale, a good friend also really liked it
  6. Medus Blonde – a french beer, my french is poor but apparently it is in the spirit of beers of Belgium and Northern France
  7. Redwillow Wreckless Pale Ale – I’ve had Redwillow beers before and not been disappointed, I may have had this before, but can’t remember
  8. Oppigards Golden Ale – a Swedish beer, my swedish is even worse than by French, I’ve picked up a few words from Wallander and the Bridge, but it extends to cheers and swearing, so I can’t add anything past the name.

A decent mixed box from the initial unpacking with some I know and most I don’t. at £24 per box of 8 beers its about par for the course if they come up to expectations.  So now onto each beer in detail, I’m no expert in individual taste components in beer, but I know what I like or don’t like in a beer, so that is what you’ll get.

Belhaven Scottish Oat Stout

I don’t like to prejudge beers, but this is is a Greene King owned brand with a poor reputation when it comes to opposition to new pub groups entering a town where they have a dominant position (see Pubpaper 704).  But lets move onto the beer.  Initial smell from the bottle is pretty uninspiring.  The beer does not improve once poured frankly, a slightly “burnt” taste which disappears to nothing quickly, head reduced to nothing in next to no time.  In the glass it doesn’t smell of anything at all.  As it settles its taste mellows to something fairly neutral, but never gets to the point where you’d want to try another one. It is a 7% beer on the bottle, but I’ve had pints of 4% stout which tasted stronger.  Greene King all over, I expected no more than I got from this beer.

Score 3/10

Cerdos Voladores

Again initial nothing in the bottle, but once opened it develops a decent head and retains it for a good time unlike the last beer.  The producers state on the bottle “This is our rowdiest beer made with the finest hops”.  The hops certainly come through and the taste matches its 6% strength.  However the hops are slightly unbalanced in this beer, it needs more citrus / sweeter notes to temper the heavy bitterness of the hops used.  I love heavily hopped beers, give me one of Brewdogs high strength heavily hopped beers and I am a happy bunny.  That is to say this is not a bad beer, it is actually a decent drink which could do with some refinement.  The beer leaves a not unpleasant after taste of hop bitterness on the tongue, and is certainly a vast improvement on the Belhaven travesty.

Score 6.5/10

Redwillow Wreckless Pale Ale

With by far the best aroma out of the bottle so far, Wreckless is the first beer out of this box that I really looked forward to pouring into a glass.  It has a nice maltiness on the nose, with hint of hops.  When poured, it looks, smells and tastes like a classic pale ale (this one at 4.8%) should do.  The hop bitterness balanced with more citrus notes from a good balanced blend of the crop.  The beer has nice pleasant aftertaste which lingers just long enough and encourages repeat drinking, something the previous two did not.  After a while the flavours settle and the citrus notes rise in taste balance, giving a slightly different, but equally good experience.  Redwillow have kept their usual standards up with this beer.

Score 8/10

Panda Frog Project Ascendancy

The aroma out of the bottle is citrus notes, and is rather pleasant,   This continues when poured and the initial taste just re-enforces the notes.   This is the opposite of the last beer, where bitterness gave way to citrus, but is none the worse for it.   This beer however develops the bitter hop taste you expect from its 7.4% whilst keeping a grapefruity taste in the background.  It does remind me in taste of some of the mid strength (6-8%) Brewdog products.  A red colour in the glass, this is a nice beer in its strength range when compared to other beers, maybe lacking a little refinement, but the second beer in a row I’d happily repeat is a good sign.  The aftertaste starts the beer as it finishes with a citrus grapefruity flavour, and I’m not tiring of it.  I’ve not had a Panda Frog project beer before, but is a brand I’ll keep an eye out from now on.

Score 7.5/10

Oppigards Golden Ale

A fairly neutral nose on this golden ale (5.2%) which remains the same in the glass.  The taste is lightly hopped with not a great deal of depth of flavour, maybe a little bit of citrus coming through over time.  After taste is fairly non existant and quickly disappears.  However as a beer it causes no offence and would happily drink this in preference to mainstream ales.   The problem for me is that although it may be craft beer by origin and relative lack of distribution, It could be any other brewery making this beer, there is nothing to differentiate it from the crowd.

Score 6.5/10

Freigest Abra-x-as

And as a total antithesis to the last beer this one hits tongue with a bucket full of tartness, but in a pleasant way.  Nothing on the nose in the bottle, it opens up in the glass.  The beer is a Lichtenhainer Weisse at 6%, a tart wheat beer from the home of such beers Germany.   I really did quite enjoy this beer, the initial impact of a grapefruit being squeezed into your mouth subsides and the hop bitterness starts to balance things off slightly, but tart always wins the battle in this beer.  The flavour coats your tongue for a nice period after you have drank it and is not a taste you want to wash away.  It certainly is not a beer you could drink all night due to its strong flavours, but one or two would add to a good nights drinking,  If you don’t like lemons and grapefruit in the rest of your life, this won’t be the beer for you, but if not, its definitely worth a try.

Score 7/10

Einstok Icelandic Toasted Porter

A decent porter, which I have tasted before from Booths.  The aroma is light at first, but develops in the glass to a nice malty smell with some sweetness.  The body is light and the taste is what you would expect from a beer of its style, slightly crisp as well.   The roasted malt flavours come through in the flavour, but left me wishing they’d break through a little bit more.  The aftertaste is pleasantly bitter, but disappears just a bit too quickly for me.   It is certainly a beer I would drink again however, and I know friends like this one as well.  You don’t get many Icelandic beers coming over here, but this doesn’t do the country’s reputation any harm at all.

Score 7/10

Medus Blonde

A nice nose out of the bottle with a well balanced flavour, slightly on the citrus side.  A really easy drinking beer with some nice tastes on the tongue as it settles.  The aftertaste is similiar with slightly bitter citrus tang with a head which lasts nicely. This is one beer I could drink a lot more of.  There is not a lot more I can say about this beer, its not overly complicated, not pushing any boundaries, but it simply works really well as a drink. This beer ranks equal top with Redwillow Wreckless in the batch I received.

Score 8/10

Beer 52 Concept and the Box

Looking at the scores we have scores of 3.5, 6.5, 8, 7.5, 6.5, 7, 7 and 8 out of 10.  After a poor start, we get a decent run of good beers, but 3 beers below 7/10 shows some improvement is needed in the beer selection, dumping Belhaven into a very deep hole for a start.

Overall I think this idea is a good one, although for £3 per bottle inc delivery (£24 in total) it is a tad overpriced if you get a couple of beers which are not up to scratch or you don’t like.   Also it is a bit of pot luck what you get judging by other beer bloggers who have reviewed this package.  Sure I could get better value for craft ale by ordering direct from producers and probably your local specialist, especially when you consider they are mostly 330ml bottles, not 500ml bottles, but if you want to try different beers and brands on a monthly basis then this could suit you.  I’m all for innovation in the beer industry and whilst not everything will appeal to me, it doesn’t mean it won’t suit others down to the ground.

If this is for you then you can get £10 off your first order using this link and using promotional code NORTHERN10.

Pubpaper 782 – The Local Pub Scene – Brighouse

Posted: 30th October 2014 by santobugtio in Pub Paper, Writing

Brighouse is not a big town by any scale of the imagination, you can walk through its centre in about five minutes, but where it does punch above its weight is when it comes to pubs.  Taking in the wider area to the Beck and Red Rooster, the town quite frankly has some great places to drink. The establishments I mention are for different reasons, but they are all good at what they do.   But before I dive into detail I must also mention that the music scene rivals any other town in the Calder Valley and quite frankly Halifax town centre as well.   On a weekend you can find at least two venues playing live music on any given day.

I’ll start with Jeremys, next to Sainsburys. A more upmarket bar, but with a decent choice of ale, beers and cider.  Offering good food and a nice atmosphere whether drinking day or night time and one of the very few places in the valley to commit to playing live music for three days over the weekend (the only other place which does this from my mind is the Puzzle Hall Inn, but this does it for four nights a weeks Thursday to Sunday).   Whilst the music is definitely more mainstream than the Puzzle Hall Inn and other local music venues, with a higher contingent of cover bands, the quality of the bands is good and the venue allows room for both drinkers and dancers.

As we move up the Huddersfield Road, we get to the pub with two names, the Commercial / Railway Inn.   It’s best described as someones house with a bar and license and that is what I like about the place, you are made to feel at home by Trevor and Sue, the owners, there is no pretense, its a good honest boozer.  With great staff such as Jason who’s passion for music is pushing the events at the pub.   Slightly more relaxed, less formal, the bands are picked from the numerous quality local bands, of which some a bit more eclectic.   The jam nights are just starting up and even if you are tone deaf and do not play like me, sitting in on a bunch of musicians messing about with a bunch of instruments is one of the better ways to chill out on an evening.  There is a decent range of well kept good ales on offer as well rounding off the pub nicely.

Back in the town centre we have the Ship Inn, this pub has had its troubles in recent times and I’ll admit I’ve been slightly slow in warming to the place since Mark and Jason left, but as couple of visits a few weekends ago has shown that the pub is back where it should be.   It has taken a while to get its old atmosphere back in my opinion, but hard work by Marsha who has been at the helm for a while has now seen its return.  The beers range is good with a mix of local and quality UK regional beers on offer, with the excellent Oakham Citra and JHB on offer that weekend being typical of the choice.  The welcome is warm and they are now building up a regular live music choice.  With a good friendly bunch of locals, as per the Commercial, making it a pleasant place to be, I can happily add this to the pubs for quite an (un)healthy pub crawl in this small town.

Before I go onto my final venue, I have to mention a couple of lesser frequented venues, love or hate Wetherspoons, the Richard Ostler offers a decent range of ales, ciders and european beers at a good prices and that can’t be knocked, the food is not to everyones taste, but it does a job.  Opposite from Jeremy’s is the Barge which is again a good honest boozer, with a regular rota of bands and decent beers adding to the local music scene.  I’d give this a bigger mention, but space does not allow, The Red Rooster has served good beer for a long time and on recent visits they’ve definitely had more lesser seen beers than before and is well worth a visit for its 6 hand pumps and proper pub atmosphere.

To my final pub, I’ve mentioned the Beck before, slightly out of town but worth the trip.  A good range of well kept beers from across the brewing spectrum from this freehouse, many from the regions brewers and a good choice of real cider.  This bar seems to be a regular hang out for local musicians and their Sunday afternoon music events draw a good knowledgeable crowd.  This traditional but modern pub ticks all the boxes for my criteria for a good ale house….a great place to start or end an evening of Brighouse hostelries….

663x414xRain-or-Shine1.jpg.pagespeed.ic.LD5_vA8s7j 200px-San_Miguel_Beermen_logo.svgI was searching for beer related news this week when up popped the headline “Balanced San Miguel Beer opens with win over Rain or Shine”, a slightly surreal combination of words. On further investigation it appears in the Phillipine Basketball League there are two teams, one called “San Miguel Beermen”, the other “Rain or Shine Elasto Painters”.   It shows that outside of countries and sports where there is a healthy flow of TV rights money, that you can pretty much name the team if you give them enough money, to the point that in the same league there is also a team just called “Kia Sorrento”, with every team having a company name in their title at some point.

Here in the UK, there have only been a couple of cases of sports clubs being named after the sponsor, eg : Total Network Solutions in the Welsh League.   The sponsorship of our big sports teams used to have some of the biggest beer brands in the UK on show, Liverpool had Carlsberg for many many years, Carling and Tennants did their stint on the Rangers and Celtic shirts.  Now only one team in the Premier League is sponsored by a beer brand, Everton with Chang.   Most of the money from beer companies which goes into football is done by being the “official beer supplier of” or “in association with” a team or competition.

For major international competitions it is the way to become the exclusive supplier of alcoholic beverages to event venues, look at Budweiser for the World Cup.  The beer world has changed over the last 50 years and you can see that in the advertising.  So many brands are owned by the international brewers such as AB-InBev, MillerCoors and Heineken that when they spend money trying to get your attention they want to make the advert usable in as many countries (with titles translated and voice overs re-recorded) as possible.


Beer Mats at Cross Keys, Siddal (click image for bigger photo)

If you go into places like the Sportsman in Huddersfield you can see the old 1960’s and 1970’s Bass promotional artist drawn posters in the back room, still showing the “traditional side” of English life hooked into a pun or tagline promoting the beer.  Take a visit to the Cross Keys in Siddal and you can see a collection of beer mats on the back wall  with some dating back to the same period. Half of those would not be allowed now, examples being ones extolling you to smoke an Embassy Filter with your pint of Double Diamond, Hobsons Black Beer “Nutritious and Refreshing” and Ansells Mild and Bitter “Stronger, more satisfaction”.

Back in that era there were still many local breweries serving the immediate town or county, some of these growing to be regional brands.  They didn’t need big campaigns to get peoples attention, the local pub was a “Websters” pub, a “Tetleys” pub, a “Boddingtons” pub.  When I lived in Leicester, you had 2 choices in that era, you typically either drank in an “Everards” pub or a “Banks’s” pub, your ale came from one brewery with lagers and ciders brought in from a number of the big brand names, with the ubiquitous Guinness and national offerings such as Carling, Skol and Harp all being typical lager choices.

As the 1970’s progressed into the 1980s brands and breweries were brought up and amalgamated into the “Big Six”, these were Whitbread, Scottish and Newcastle, Bass Charrington, Allied Breweries, Courage Imperial and Watneys, the last being particularly reviled by beer drinkers for the famously awful “Red Barrel”.  These big six companies also controlled the pubs and therefore choice of supply, this monopoly eventually leading to the 1989 Beer Orders separating estate and brewing operations, which was then circumnavigated by clever company restructures to ensure that the supply between brewery and pubs continued as per the status quo.

This investment meant that the chosen brands out of the amalgamated companies had to compete on a national level (as well as closing down the local breweries and merging the brewing operations to regional hubs, essentially replacing the local brand with the chosen ones after a few years when the local brand was shelved).   In the 1980’s, setting the pattern you would see going into the 1990’s, national brands were advertised heavily in press and on TV whilst local brands were left to slowly disappear off the radar excepting Point of Sales and Signage advertising.

55698Brands developed their own distinctive long running campaigns, Boddingtons “Mancunian” Campaign, Hofmeisters “Follow the Bear”, Carlsberg “If Carlsberg made…best in the world”, the Skol “Viking” campaign and Carling “British v Germans” all caught the publics imagination.   This continues until this day with almost every big beer subject to ongoing multi year campaigns.

Even now small to medium breweries don’t advertise on print or visual media on any scale any more, but with the internet, word of mouth does as good a job.


Pubpaper 780 – The Trouble with Punch

Posted: 19th October 2014 by santobugtio in Pub Paper, Writing

clients-12-punch_taverns-100When we talk about the large pub companies, one of two always get mentioned, Enterprise Inns or Punch Taverns.   The latter has just its it debt restructuring proposals approved this week, so this week I shall discuss them further, following on from last weeks mention.

Punch Taverns, which deals with leased and tenanted pubs was formed in 2002 after number of acquisitions and mergers over the preceding years.   The group has 3,800 pubs as well as a 50% stake in a leading drinks distributor Matthew Clark.   The managed pub division was spun off from Punch in 2011 and Spirit Pub Company now manages or leases 1200 pubs separate to the larger company (you will recognise their brands such as Chef and Brewer, Fayre and Square and Wacky Warehouse play gyms).

Punch Taverns make their money in 3 ways, sales of beer to the pubs, rent on the property and profit sharing on leisure machines aka fruit machines.  The pubs within Punch are split into 2 divisions, core and non core, the core getting investment “to make each pub the best of its type in its marketplace” with non core being helped to make enough money to make them interesting to other potential buyers in the medium term.  Not that the core pubs were safe from sale, in the year to June 2014, 257 pubs were sold for £91m of which 51 were classed as core.

The company is not one entity however, with 10 sub companies existing within the shell of Punch Taverns, and its shareholders are in the majority hedge funds with one alone owning nearly 20% of the company (pre restructure).  The company has really gone nowhere in the last 4 years, with turnover stagnant and the debt as likely to move as frenchman living next to a brothel (courtesy E. Blackadder).   Overall the company is worth £300m with liabilities of over £3bn.   Revenue is on the decline, as is the operating profit, but if you sell 5% of your pubs, then this is expected.

debt-collection2If the restructuring had fell through, to quote their own documents “The failure of the Restructuring…would be expected to result in…default…which would be likely to result in….the appointment of administrative receivers“.  They were in deep financial trouble. The debt notes by which they raise funds are generally taken out for a set period and interest rate, payable by a certain date.  Imagine a mortgage but with minimum payments every 3 months which won’t cover the full amount and facing a lump sum at the end equal to 70% of the houses value, similar to interest only mortgages which used to be offered by banks.

However if you were in trouble, couldn’t pay the mortgage and asked your banks to hold off any payments for 6 months, you would be evicted and the house sold.  It’s not as easy with a business, if it goes under you are not only losing the value of your holding in the business, but the recoverable assets will only be worth fractions of the value.  That is why when you have £1.6bn of debt notes, your investors give you a bit more flexibility.   Their various debts are due up to 2028, but even then they would owe £716m on these notes still.  The new plan actually involves them paying more off (only leaving £516m), but having longer to pay on the shorter term debt with a payment window at the end of 2014.

But they still list a great number of risks to the business going forward.  Beer sales are declining due to home drinking, health concerns and legal restrictions imposed in 2006 (are they still not factoring in the smoking ban after 8 years of it being in place).   Gambling spending on fruit machines is reducing, people can now bet on sports via their phone apps for a cheaper, longer lasting gambling buzz.  They state the pub trade is seasonal, and this affects money coming in from pubs in wet sales, but this is a known fact across time immemorial.   Competition is cited in the trade, again nothing new since the Roman times.

They also state a potential shortcoming that they may not be able to adjust to customers tastes over time, they have shown slow responses to peoples choices in drink in the past, so there is no reason why it won’t happen again (think about them introducing a “mainstream craft” beer choice for tenanted pubs about a year ago, only 6 years behind the curve).  Finally they warm that they might not be able to execute the plan correctly…well there’s confidence for you.   They recognise that they need to keep their “talented employees”, the same ones who they doubt can pull off the plan.

IMG_9391 blogThey also mention the inability to attract the right quality of tenant, when other companies in the competing sectors may be offering a better deal on rent and drink prices / freedom to buy at best price.   If it is a choice of being shafted on multiple fronts or being treated fairly and allowed to make a living, why go for the shafting unless you are a masochist.  Linked to this is the “risk” of the need to make capital investment in pubs to make them attractive to potential “partners” as they call them.   People don’t pay good money for rubbish, so again is a known part of the business, why can certain pubs charge more for the same product, the perceived quality of the premises and surroundings.

Lastly one of the risks lower down the list is non payment by “pub partners” aka tenants, but this is a rod they have been making for their own back, they charge too much for beer, too much for rent and these two things in combination can drive a pub out of business in double quick time, but only after most struggling landlords have put thousands of private savings into the business to prop it up.   Reasonable rents and beer prices could mean cheaper beer at the retail end and more footfall making up for the lower gross profit.  Just look at Wetherspoons, cheaper food, cheap beer, busy pubs with all sectors of society in attendance.

If Punch don’t have confidence in themselves, why would the tenants, the worry for them has not gone away, but been merely postponed.




Pubpaper 779 – Label Perfection and Punch Troubles

Posted: 9th October 2014 by santobugtio in Pub Paper, Writing
Tags: ,

15671-c1I’ll open this weeks column with some news from the World Beer Awards 2014.   Every year over 1000 beers are entered for consideration from over 60 countries in 9 categories, with 7 for distinct beer styles, an overall winner and best beer label.   I’m delighted that one of my favourite beers, Great Heck Black Jesus, a fantastic 6.5% Black IPA has won the best label award this year.  Judges said “Good use of green shades giving the feeling of coal mines. Excellent technical illustration using simple shapes to further create even more detailed shapes. The use of symmetric and consistency of design over the entire label make this a worthy winner.”.  Congratulations to the team over in Selby whose range of beers including Yamika IPA, Shankar IPA and Amish Mash are all worthy of an extended session.   The other regional winners from America and Asia (Black Jesus won the European Award) provided strong competition and were excellent designs, so it shows how strong their branding is, something repeated across the range.

Looking at the winners in the beer style categories, awards were spread between America, Germany and Belgium and Australia, with no other British winners.  However we did pick a number of Gold Awards in the European section of the competition.  Brew Dog Libertine Black Ale won a Best Black IPA award, Thwaites Nutty Black won a Best Mild award, whilst Brew Dog won a second award with a Best Chocolate and Coffee Award with their Cocoa Psycho, a cracker of a 10% beer I’d recommend you to try, rounding off the hat trick for them was their 5am Saint in the Best Amber category.

When it comes to what we would call more traditional beer styles in this country we also got an impressive haul, with Gold Awards for Hook Norton (x2), Jennings, Thwaites (x3), Harviestoun, St Austell (x2).  Thornbridge also won a brace of gold medals   What this shows is that our breweries, whether they are defined as craft, real ale or volume producers, can compete with the best in Europe.  Of course the Germans and Czechs are dominating the Lager Category Gold Awards as that style of beer is their speciality, and if the Belgians didn’t win the Belgian Style Gold Awards, something has gone seriously wrong with their brewers.

Now onto what on the surface is positive news for Punch Taverns pub tenants after the company’s proposals for restructuring their debt was accepted by the Royal Bank of Scotland and Lloyds Bank.  This process has been rumbling on for very nearly a year now.   Other shareholders including Hedge Funds had accepted the deal offered prior to the banks giving the thumbs up.  However there are doubts if any benefits will reach those on the front line behind the bars of the pubs they lease out.

The company finances are still not healthy, using a medical analogy, the patient is out of intensive care, but is being kept in for observation.   Hedge funds returns and debt servicing are taking the majority of the money out of the business and both costs will not be reduced to aid the tenants.  In fact interest rates will only realistically go up and hedge funds will demand more dividends or move the investment on someone else who will do the same.   Punch Taverns recognise that a good chunk of their value derives from their property portfolio, so are reluctant to sell to tenants at a reasonable market price, knowing that they can sell to supermarket or takeaway chain at a premium for conversion to retail or catering without planning permission.  Even if they don’t sell the pub they can lease for far more than a sitting pub tenants would be able to be charged, per square foot a Tesco Express which has all day demand can make far more per year than a pub where its services are in demand to wildly different degrees across the day and week.

All the major pub companies who aren’t tied to breweries are in the same position, highly leveraged with debt, serviced at the cost of the pub tenants.   Enterprise Inn’s stock market shareholders demand their pound of flesh as much as any hedge fund.   You see a happy landlord, you can pretty much guarantee that they are freehold and keeping all the money they make and buying the beer they want at reasonable prices.  Freedom brings happiness in most walks of life, pub management included.


Pubpaper 778 – Open All Hours?

Posted: 8th October 2014 by santobugtio in Pub Paper, Writing

It has been 100 years since the opening hours of pubs were brought into line from what we would recognise as modern operating times.   The first act controlling hours came about at the start of World War One in 1914, when naval and military authorities got the powers to control opening around harbours, barracks and other premises related to the war effort.  A year later this was power was extended to civilian authorities.  Under these powers opening times were limited to the hours between 8am and 10pm, down on the previous limits of 6am – 12.30am (except sundays which were still limited to the old times of 1 – 2.30pm and 6 – 10pm).

However this would not last long, when the 1915 act came in, it limited pub opening hours to a mere five and half hours a day, allowing 12 – 2.30pm and 6 – 9pm trade.    For anybody who is near or over 40 years old, you’ll remember going to the pub with your dad on a Sunday and having to drink up for the 3pm bell before going back after 6pm when the pub re-opened.  This is the legacy of a previous 18th century act, but drinkers now had this all week as the war waged on.

Drinking was considered an evil by the government of the time with Lloyd George outlining how a minority were refusing to work a full week, because quoting “let us be perfectly candid. It is mostly the lure of drink. … Drink is doing us more damage in the war than all the German submarines put together“.   The original intention for this was to align opening hours with meal times and to restrict drinking outside of these core times, hopefully meaning that people would be less likely to get drunk with enforced breaks.

The popular reason for this was that it was to stop ammunition workers blowing themselves up whilst still affected from the previous late night, this is the extreme end of the line, but it was true that it was to make people fit of a long day of work.  However once the war ended, any hopes for a quick reversal of these laws was optimistic.   Some concessions were given regarding closing at night with an extra hour granted after the declaration of peace in 1919, and landlords were given more freedom to choose their opening hours in 1921 when pubs outside of London were allowed to open 8 hours a day Monday – Saturday and 5 hours on Sunday between 9am and 10pm.

This allowance still effectively enforced an afternoon break in opening hours as your 8 hours were needed to offer beer at core hours namely Lunch (12 – 3) and Evening (6 – 11), and Sunday drinking effectively was held at the status quo.  Since 1881, most areas of Wales had been dry on Sunday with no pubs opening, however in 1961, law came in to allow areas to vote on whether they would be “dry” or “wet” area on a Sunday.  Most areas went “wet” over the next 37 years with only the county of Dwyfor left by 1989 (who went wet in 1996).

The pub hours we take advantage of today didn’t really come into being until the late 1980’s.  In 1988, the 8 hours restrictions were removed and pubs were allowed to open through the day with no afternoon break.  However it would take another 7 years before we could enjoy an afternoon session on a Sunday.   In 2003, the biggest change in 90 years took place when open licensing hours came into force   This allowed pubs to open later into the evening, with the possibility of 24 hour trading.  This meant that instead of having to go to an overpriced nightclub to drink past 11pm, you could carry on your current place of drinking or extend you crawl into the night.   Town centres suddenly became far more competitive for the local monopoly that ran the local clubs, although in reality there was always a number of impromptu “private parties” which started after drinking up time.   In most local pubs outside of town and city centres, these “private parties” were happening at least once a weekend if not twice,  otherwise known as the Lock In.

So look at your local pub now, closing at 12.30 or 1am is the normal now on a weekend, and if you look at a Wetherspoons, the original times of 6am – 12.30am are pretty much identical when you include their early breakfast hours and its only took 100 years to get here.



Pubpaper 777 – Brewdog moves, Pump Room blues

Posted: 25th September 2014 by santobugtio in Pub Paper, Writing

A catch up with the news from the beer world this week, and I’ll start with Brewdog, our favourite anarchic Scottish craft brewer.   If you like their beers and live in West Yorkshire there is good news for you, they have secured a bigger site in Leeds further to the north which will open in March, with the existing unit at the Corn Exchange being converted into BottleDog, their retail operation.   They have also secured the Blind Tiger in Brighton, the pub I wrote about 4 months ago when it was forced to close down when it had issues with its music license after complaints from newly moved in residents above the pub..  The pub had a 160 year history of live music, more of this later.

The Bottledog concept is already in place near Kings Cross Station in London and I visited the shop when I was down there with work a while ago, taking a very pleasant walk from London Bridge station via St Paul’s Cathedral, Camden and the Grays Inn Road just to visit this shop before catching my train back.  Personally it was hog heaven for me in there, a very good choice of beer from all over the world, good knowledgeable staff, with prices from about £2.00 a bottle all the way up to collectors money.  The only thing limiting how much beer I purchased was how much weight my bag could carry.

One recommendation though, don’t get to Peterborough on the London to Leeds express service and find the weakest beer in you bag is 7%, you’ve drank half your purchases (inc. a 10% porter), then go for a few pints at the craft beer bar in Leeds and just about catch the last train home from Leeds.   I sobered up about 10am the following day after that trip back from the big smoke.

Having one more locally is even better and lets be honest, if there is more high quality beer shops of the likes of this and Beer Ritz, also in Leeds, then the world is a better place to live in.  We all love our beer, this is why you are currently reading this in Pubpaper over a pint at some Calderdale pub (or on the internet, either way you are most welcome), and if it means we can get more of the better beers in the world, that does me nicely.

Soon there will be even more Brewdog beer to fill these shelves and many others as they plan to increase production capacity by 80% with 12 new fermentation tanks, it seems the world can’t get enough of their beer with 21 bars currently open and another 6 planned at least.   They may not be everyones cup of tea, but plenty of people seems to like this particular brand of tea.

Wrapping up the Brewdog news we have the Blind Tiger in Brighton. After the complaint they were given a deadline to sound proof the pub to comply with the noise abatement order which was issued by the council.  The cost of this was too much for the pub and they chose to close the pub despite the bands bringing in a lot of customers, it wasn’t enough profit to afford the £20,000 costs of the work.  It’s good to see the pub re-opening again, and hope Brewdog make a success of it, hopefully annoying the original complainant at the same time by its success and the noisy crowds under his patio windows next summer.

Last week one on my fellow writers in Pubpaper mentioned the Pump Room in Halifax closing in December last year to make way for parking access to the newly planned shopping centre which is to be built on the site, the adjoining properties and the car park currently behind Argos.  I wrote about this two and a half years ago when the plans were going through the council process.   So 9 months after it closed, nothing has started on the complex, which Halifax needs like a hole in the head, given the council owned Northgate House complex is due to be replaced by shopping facilities.  There is simply not that much disposable income in the area to support all these shops.

The Pump Room was a viable pub economically, so why did it not stay open up to just before the work was to impact that particular part of the development, I can’t think of a valid reason why not.   It wasn’t as if it was a pub company copy cat venue, it had its own place in the psyche of the towns drinkers, especially for the football crowd on the way to the Shay.  Sadly I don’t see it opening again even if the shopping development doesn’t go ahead in its current guise, something very possible knowing the people who plan these structures, just see Bradford for a prime example.