Wednesday, December 13, 2006

GUEST BEERS

One of the ideas put forward as a way out of the impasse is for Harveys to continue to be on sale in the Lewes Arms as a “Guest Ale”, possibly on a reciprocal basis with a Greene King beer offered in one or more Harveys pubs. A few facts may lubricate the debate:

Brewery-owned pubs generally fall into two categories: they are either directly managed by the brewery, or leased to tenants.

In tenanted pubs, the tenants enter into a contract to buy specified beer from one source and in return pay rent lower than the market rate. In managed pubs, the manager is a direct employee of the owners and, in effect, sells whatever the owners wish to put on sale.

Even after recent sales of pubs, Greene King has more than 2,500 across the country, with both tenanted and managed pubs in the estate. The tenanted pubs have varying restrictions on what beer they can sell – for example, the Lamb in Lewes can have a guest ale (as long as it’s not Harveys!).

What is on sale in the managed pubs, like the Lewes Arms, is a matter for Greene King management in Bury St Edmunds.

Harveys has 47 pubs, all tenanted, and none of them have a “Guest Ale” provision in their leases. Just as with any contract, Harveys can’t change this even in one pub without the consent of the other party – the tenant.

It may well be that a “Guest Ale” provision in all pubs (see below for an explanation of the origin of this term) would be a good thing, and indeed CAMRA has a campaign to this effect.

But the playing field between Greene King and Harveys in this instance is hardly level: Greene King management can just tick a box and Harveys will be on sale in the LA for the indefinite future, as it has been since they bought it in 1998.

Even assuming anyone would want to buy Greene King beers in a Harveys pub, Harveys simply can’t impose that on a tenant. Who carries the cost if a barrel of IPA takes up bar space, then goes undrunk and passes its drink-by date?

Anyway, there is no proven demand from drinkers for Greene King beers to be introduced into new pubs in Lewes.

In the case of the Lewes Arms, and other Greene King pubs in the town, the demand for Harveys to be on sale is amply demonstrated, not least by a 1,200-signature petition.

It may yet be that some reciprocal guest ale solution can sort out this mess. This blog is not privy to whatever has been going on. But whatever the outcome, let’s not blame Harveys for the actions of Greene King.

As Peter Messer has succinctly put it, it’s not a matter of Harveys being a guest ale in the Lewes Arms – Greene King is a guest brewer in Lewes, and should behave with better manners.

“Guest Beer”

This term stems from the measures taken by the Thatcher government in the 1980s to break the vertical ties between brewers and their tenanted pubs.

The Guest Beer provision introduced with the Beer Orders never applied to managed houses like the Lewes Arms. In any event, it was abolished with the Beer Orders in 2002.

As it happens, the pub ownership threshold for brewers subject to the Orders when they were introduced was 2,000: Greene King now owns more than 2,500 and
Wolverhampton and Dudley, the other major “regional” brewer, also owns more than 2,000.

Some landlords still refer to “Guest Beers”, which adds to the confusion. Many national pubcos have restrictive leases that oblige tenants to buy all but one of their beers from the pubco: hence the term “Guest Beer” for those they are free to buy in. In Lewes, this is
Harveys in all cases unless otherwise forbidden.

The detail of the Beer Orders, for those who are interested:

A 1989 competition report aimed to loosen the tie between pub retailing and brewing to facilitate easier entry by, and increasing competition between, brewers, wholesalers and pub retailers.

Most of the recommendations were implemented, mainly by imposing the following changes on “national brewers”, that is, brewers with an estate of more than 2,000 on-licensed premises:

  • their retailers would be free of tie for non-beer drinks and low-alcohol beers
  • those retailers would have the right to buy one cask-conditioned beer and (as amended from 1998) one bottle-conditioned beer of their choice on the open market rather than through the brewer (the Guest Beer provision)
  • and they were allowed only to tie a certain number of pubs. This forced the national brewers to sell or free from tie about 11,000 of the then estimated 60,000 UK pubs

The competition authorities reviewed the Beer Orders in 2000 and concluded that since 1989 there been significant structural change, leading to an improvement in competition. In particular, over a third of the UK’s pubs had been transferred to retail pub chains that had acquired buyer power in relation to the national brewers.

On
19th February 2002, the U.K. government announced its intention to revoke the Beer Orders in their entirety.

The Campaign for Real Ale, CAMRA, is campaigning for a
Guest Beer Right to be reinstated for both tenanted and managed (like the Lewes Arms) pubs.

CAMRA says: A guest beer right would allow these pubs the choice of stocking one cask conditioned beer of their choice. This would have two huge advantages:

  • Increasing consumer choice. Allowing pubs to stock one beer of their choice will help them attract new customers by allowing them to stock an appealing guest beer.
  • Supporting small brewers. The biggest hurdle facing Britain’s small brewers is access to market. A guest beer right would transform the fortunes of small brewers by enabling all of Britain’s 60,000 pubs to sell one beer from a small brewer.

Research commissioned by CAMRA shows clear consumer demand for locally brewed beer. 55% of people indicated that they would like to see at least one locally brewed beer in every pub. In addition 31% of all adults who visit pubs would buy a locally brewed beer in a pub over non- locally brewed beer.

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