Consolidation and corporate pub ownership in the UK

[Uncle Bobby]

See this article from the Guardian on consolidation of pub ownership and consolidation of brewery ownership in the UK.

The story centres on a pub in Lewes, East Sussex (south-southeast of London) which is being boycotted by locals for it's ham-fisted approach to local tastes. Locals had been drinking beer from a 200 year old brewery down the road, Harvey's. But the brewery was not owned by the pub's corporate owner, the medium size chain, Greene King. Therefore Greene King did not make nearly as much money on a pint of Harvey's as it did on a pint of its own beer. So GK dumped Harvey's. And now the local people are so angry, they have abandoned their 18th C. local pub.

Interesting quandry. Beyond the issues of consolidation and the inclination of corporate players in the brewing sector to suppress competition (explored ad nauseum in our thread on the Lakeport takeover), there is another here: what do you do when a fundamentally public space is in private hands?

In Canada, we do not even think about it. Pubs do not have as prominent a role in our lives -- and that in itself is both a weakness and a strength. However food markets do occupy an analogous place in our lives, at least insofar as they are public amenities which anchor communities. In Britain and much of Europe, they have public markets at many crossroads and old village centres, even wthin central London. The land they occupy is owned by the local municipal council, but are filled with a multitude of small business holders. In Canada, we have supermarkets -- large retailers of food which replace an entire range of traditional smaller grocers.

With the exception of St. Lawrence Market (a drop in the bucket of the overall grocery industry in the GTA), all public grocery markets are in private hands. Which is fine, right up until the point where the grocery store does not encounter sufficient competition and raises its prices. Or, as is happening in my M&D's neighbourhood, the grocery chain simply pulls out.

Suddenly the local community has been shut out of a decision which is critical to its well-being because the amenity at stake is completely private.

I'm getting further and further off topic, (and increasingly vulnerable to being shouted down as a "socialist" and a member of the City's political cadre) but you get the picture.

I don't have the answers, but I hope I can use this forum to ask a few questions.

-Uncle Bobby

[pootz]

Andy, the brewer/owner at Neustadt went through this corporate pub-brewer system..he has a wealth of tales about the marketing manipulation going on with the big brewers and their pub systems. It's one of the reasons he immigrated here to brew and sell beer without interference from brewing combines/cartels.

Bobby: You needn't be branded a socialist when defending laissez-faire capitalism against criminal market forces like combines, oligopolies or market share manipulation through corporate coersion/fixing.

When we have a healthy capitalist system the small buisnessman can coexist with the large business concern..each offering a differnt niche' and still in competition for the consumer. The shelves shouls have a full array of brands and prices offering something of value to a wide arry of consumers...the cheapest is not always the most desired product...it's just one niche.

When the capitalitst free market is in trouble the small business man or producer has no place in the economy and cannot carve a profitable niche'...that signifies too much control by one or both of 2 forces....corporate feudalism or big government interference...and lord help the consumer if these two forces ever almalgamate in some area of the aconomy.

Was it not the perversion of the "guild" system which was co-opted by the corporate preditors to start "buying" shelf space in retail chains that will eventually put competition out of business? We see this today to a certain degree and it would be much worse without the rudamentary anti trust laws we have in the various provinces....it is tilting the level playing field.

[Beermat]

I know the Lewes Arms quite well. It's a practically perfect community pub which is also friendly to visitors. A lot of people walk past numerous other pubs to drink there. And just about everybody there used to drink Harveys, the excellent local ale. I was there one frosty evening when the licensee (a woman named Claire) followed a departing regular who had had one too many, to make sure he got home without harm; it's that sort of pub. To boycott this wonderful pub is the act of desperate people, and Greene King's intransigence in the face of such strong local feeling is appalling. I had assumed they would have backed down before now. It's corporate bullying at its worst.

Nick

[old faithful]

I read the story carefully. Personally, I think GK made an error here. The first rule is, listen to your customer. Since breweries can own pubs, under certain conditions, in the U.K., it is inevitable that this kind of issue will arise and I think it should, strictly as a business matter, be decided by what the cutsomers want. The boycott is the true test. If people filter back and drink GK's beer, fine. That is the result of a free market system (the very system that allowed a small regional brewer to get bigger - all brewers want to grow and prosper - and allows people to sell their own beer in their own pub). If the boycott risks shutting the place down and it ends up being sold or GK caves in, the market has shown its result that way.

As a legal thing, I am not of course an expert in the law of the U.K. I doubt what GK has done is anti-competitive, though. Clearly there is tons of Harvey's beer in Lewes. Someone who wants to drink it badly enough can choose another pub in the town. If GK's products were dominant in that area in Sussex, it might be different but I don't think that is the case.

However we must remember: successful small companies get bigger, inevitably some get bought up or will close. Many new ones will open, too, as has happened in England in the last 30 years. Nothing stays the same forever nor does anyone have the "right" (IMO) to drink any particular kind of beer at any particular place or time. They have the right to vote with their feet, though, and clearly that is happening here. It will be interesting to see the result.

Gary

[BeerMonger]

Well said Gary...I read the other posts an hour or so ago and was fighting the urge to write (I penned the "socialist" comment some time ago)...anyone seen Comrade Stalin lately?

[old faithful]

Some of what we see as reflected in the Guardian article is I think a very English phenomenon, one by no means to be disdained or dismissed without qualification but which in certain cases reflects an enduring conservatism in the culture. The emotion and outcry that accompanied the announcement of Young's merger with Charles Wells was another example and there are countless others. It is a culture that accomodates change less well than other places and there is good and bad in that. Those "of a certain age" who liked rock and roll will remember The Kinks' album, Village Green Preservation Society. Ray Davies summed up that specific kind of Englishness in that record. Because of it, real ale exists today and indeed flourishes, which is a good thing. But we see oddities (to my mind) such as CAMRA protesting the closure of local breweries which are the result of a willing seller wanting to sell to a willing buyer! And those conversions of older buildings give jobs to people and opens up new housing for many. There is good in that. I think it is stories such as these that remind us that England (more specifically than Scotland or other non-English parts of the U.K.) is a deeply conservative, traditional country, whatever the name of the party that happens to be in power at the time.

Gary

[BeerMonger]

"But we see oddities (to my mind) such as CAMRA protesting the closure of local breweries which are the result of a willing seller wanting to sell to a willing buyer! "

Or others protesting a willing seller (Lakeport) to a willing buyer (Labatt). God forbid that should happen in Capitalist society!

[old faithful]

Yes, and Creemore is a better example, maybe. But look at all the fine micros we have, and the increasing experimentation and skill they exhibit. That is the good side, and it's major. The only part that shows weakness is the retail side and that is because, in my humble opinion, of government control.

Gary

[Uncle Bobby]

Thanks for both your comments, Comrades faithful and monger.

Both the competitive environment and the cultural environment are integral to the situation. Although I am at a loss to suggest a resolution to either the specifics outlined here, or to the overall situation in the British brewing sector, there are a number of issues outlined here which are not only unfair, but uncompetitive. In my mind, it's the difference between a footrace and a footrace with basball bats. I.E. it's not the fastest runner who's is going to win, it's the lumbering lump with the lumber.

The situation also offers us some analogies to the situation in Canada, even though legislation here proscribes the close vertical integration of retail outlets by producers as is the case in the UK brewing sector.

I was curious about one big detail that goes unmentioned here. I tried to research it after I made my post, but could find nothing. That is, what is the UK legislation regarding pub ownership by the breweries? The legislation was changed in the early 90s to allow increased brewery ownership. But there was a concession that the breweries had to make in terms of allowing "guest beers", in both their "owned houses" and their "tied houses". I found this bit of UK legislation, but no real language explanations as to how this is intended to work and how it actually works in practice.

But my understanding was always kind of fuzzy. And that regulatory framework has been under fire from the EU as being discriminatory because a "guest beer" had to be a "cask ale", a style produced only in the UK. Certainly the guest beer provision appears to be unenforced in the instance of this pub in Lewes. Whether or not it is (or ever was) in force, I cannot ascertain.

Thanks,

Uncle Bobby

[Derek]

I remember reading about the change in legislation in (the last chapter?) the book "Man Walks into a Pub: A Sociable History of Beer" by Pete Brown.

IIRC, it didn't quite work out & they changed it again.

On edit: he mentioned the 1989 legistlation & subsequent pub sell-offs (page 347 for those who have it), but I didn't find anything after that...

[Tapsucker]

"But we see oddities (to my mind) such as CAMRA protesting the closure of local breweries which are the result of a willing seller wanting to sell to a willing buyer! "

Or others protesting a willing seller (Lakeport) to a willing buyer (Labatt). God forbid that should happen in Capitalist society!

Don't forget the last part of the capitalism food chain: the customer. They could buy and sell as many pubs as they want. Who cares who owns it? In the end the bank owns it all and that capital is probably foreign anyway. The real point is, in their stubborness they are not giving the patrons what they want and the patrons are gone, albeit with some encouragment of disgruntled regulars.
I don't see an ideoligical issue here, just bad business.

[Beermat]

Promising news from the Brighton and Hove Evening Argus:

Harveys row firm may make U-turn
By Andy Tate
Comment | Read Comments (7)
The boycott of the Lewes Arms pub has now lasted over 100 days

The pub company which caused an uproar when it banished Harveys Best Bitter from a pub may be preparing the ground for a dramatic U-turn.

Greene King, stung by intense criticism and an ongoing boycott over its decision to exclude the locally-brewed beer from the Lewes Arms in Lewes has launched a root-and branch reorganisation of its business.

Mark Angela, managing director of Greene King's Pub Company and the public face of its battle with Harveys drinkers, is to leave and a new Local Pubs division will be set up.

A statement on the company's website said: "In the Local Pubs division... pub managers will be given greater autonomy and flexibility to match the individual pub offer to local market needs and opportunities."

Greene King's chief executive, Rooney Anand, said: "The increased specialisation brought about by the split will ensure that we continue to recognise and celebrate pub differences and to provide the best possible service to all our customers."

The move could be interpreted as a sign that the chain wants to rebuild its bridges with the community, following a period of bad publicity.
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The Suffolk-based company has already made a compromise by agreeing to consider the return of Harveys on a temporary basis as a guest ale.

Norman Baker, Liberal Democrat MP for Lewes, said yesterday he hoped Greene King would either announce a full U-turn and reintroduce Harveys on a permanent basis or sell the pub, in Mount Place, Lewes.

He said: "For Greene King this has been a PR disaster. How many more bad headlines are they going to need before someone sees some sense?"

The campaign to keep Harveys in the Lewes Arms, which was bought by Greene King in 1998, has been backed by local members of the Campaign For Real Ale.

Lewes Mayor Merlin Milner has described Greene King's behaviour as "a good example of corporate homogenisation".

Coun Milner pointed out that Harveys Best made up 80 per cent of cask beer sold at the Lewes Arms prior to its removal.

Greene King was asked to provide a comment for The Argus but failed to do so.