Tied down: The beer tie and its impact on Britain's pubs
Previous IPPR research has found that one of the key factors lying behind the pub industry's economic problems is the 'tied lease' model, which means that a publican who leases their pub from a pub company, or 'pubco', generally has to buy all of their beer from that company, rather than directly from the brewery, and pubcos' opponents argue vigorously that this 'beer tie' is forcing otherwise profitable pubs out of business.
This report makes a new and important contribution to this debate. Its findings are based on a national survey of tied and non-tied publicans undertaken by CGA Strategy in April/May 2011. The survey provides robust quantitative evidence on the pub trade and demonstrates real variations in performance between tied and non-tied pubs.
The local public house is an integral part of Britain's culture and way of life. Outside the home, the pub is the most popular place for British people of all ages and classes to relax and socialise. And yet pubs are under considerable pressure, with the latest figures showing that pubs are closing at a rate of 25 a week.
We believe that the government should act to reform the way the industry operates. The OFT decided not to refer this matter on competition grounds, because it did not find evidence that consumers suffered from a lack of choice in a competitive market. However, even if this matter cannot be pursued on narrow competition grounds, the fact that a significant proportion of publicans appear to be being put under significant financial pressure is matter of serious concern. This is not only because of the personal financial hardship involved but also because the sustainability of vital local amenities is being put under pressure.