Ties That Bind I

It hadn’t occurred to me, though it really should have, that the British Government is now a considerable player in the pub trade. It was pretty much inevitable, given that the financial crisis is derived from an artificially inflated and then over-exploited property boom, that at least one of the failed banks was going to be a pubco owner.

So, my hat is tipped to Private Eye (1240, p29) who have had a good look at the ridiculous and incestuous relationships between the PubCos, the government, and the Government’s “independent” body of pub valuers, RICS. This Labour administration (by “this” I mean New Labour, not Broon Labour) has continued the trend established in the 80s of setting thieves to encourage thieves when it comes to regulation. In the process, they managed to create the conditions for a scam even more ridiculous than the tied lease.

Guild Skills

A potted history, for those who are not directly engaged in the pub trade. Brewing in Britain used to be a socially embedded skill; that is most farming establishments in the Anglo-Saxon era would have incorporated brewers. During the Norman period this began to change, as central authoritarian control was formalised legally and practically across the island [1]. In cash-strapped times the crown would sell monopolies, and many of the monastic (and later secular) lords of Britain secured such licenses. Set against this trend was the rising power of the guild system in the medieval period. This both established a taverning and brewing industry in Britain’s nascent urban centres, and then eventually split the trade between brewers and publicans.

Beer doesn’t like shipping much; beer then liked it a lot less. We’d had to invent an entirely new type and process of ale-brewing in order to supply our troops in India. As a result, the vast majority of publicans would have a local competition between brewers for their custom: also, bear in mind that a good deal more beer was brewed and drunk at the time. As the modern era of big-corporate economics began in general to consolidate competition into cartel, so did the UK brewing trade move away from local beers to national breweries.

The tied lease is one of the most bitterly resented aspects of the plutocracy in Britain. Customers don’t like it; publicans loathe and detest it, even the government has been known to question its ethics. But we should not forget that once upon a time it did actually make sense. It began with the slow and steady purchasing of pubs by large, usually urban breweries leveraging high turn-over to become regional capital powers. This in turn happened alongside the development of an effective heavy transport infrastructure.

If a brewer owns a pub, it changes the nature of the pub quite fundamentally. What a brewer does is make beer. Their business, then is, the sale of as much of the beer they’ve made as they can possibly organise. Therefore, a pub owned by a brewery is a shop-front; it exists to sell beer. Terribly simplistic analysis, you might say; what pub doesn’t? Well, think on it this way; what does a free-house publican actually make?

I don’t make beer, or vodka, or mead (yet!). I sell them but I don’t make them. My job is to create a place they can be consumed in which is of value in itself; effectively, my job is to sell a good time. So a pub run by someone like me is concerned with many things; atmosphere, facilities, personalities, and so on. A pub run by a brewery is concerned with one thing only; how much beer (what the owner actually sells) went over the bar?

There is a certain logic to a brewery tie; we make beer, you run our shop, you sell our beer. It can be pretty unpleasant, but it does make some sense. Over time, however, things have changed. As the keg revolution swept the world, the nature of British brewing and the nature of corporate brewing across the western world changed radically. It was a change of attitude, equipment, technique, and above all a change of major players.

In the 1970s they discovered you could make and sell and alcoholic drink that tastes like nothing at all in huge quantities for quite cheap, using modern industrial manufacturing methods. The brewers who thought like that started making a lot of money: Carling, Fosters, Four-Ecks and Stella Artois became household names. The huge companies began to consolidate, and got further and further away from the original purpose of the pubs they owned; selling a good time.

Cui Bono?

So the first part of my question is this: who benefits from the tie in the modern world? For whom is it good? It doesn’t improve the quality of beer; in fact, if anything there has been a conscious manipulation of market expectations towards relatively tasteless beers. This has been executed through the tie; if there is no alternative at your local to Stella or to Guiness that’s what you drink. It doesn’t help the customer; initially such beers were cheaper over the bar than their craft competitors, but they aren’t now. It doesn’t help the publicans; in fact, it is the source of much misery and heartache. It certainly doesn’t help the pubs; look at closure rates, and look at the advent of vertical drinking establishments where there is no individual soul at all.

The only benefit in this system is to the faceless corporate owners of big, international conglomerate breweries: the plutocrats who run the Great Machine. And hey, guess what: this isn’t even the system we have, any more. Though there have been victories on the other side as well (through the work of CAMRA among others) the story of the last thirty years is about how publicans became chained, not to breweries but to people who aren’t even in the trade at all. So who are these people reaping the benefits from thousands of pub closures every year? Tune in next post to find out a little more about them.

Editor’s Note: Also, I’m in the middle of my summer Ale Festival at my pub. Do feel free to drop in if you’re in the area of East London!

[1] Another factor here is that the Norman nobility drank wine, and while they did create a vintner industry here during the warmth of the medieval period, our climate wasn’t a good one for wine. Mead brewing fell almost out of our skill-set altogether, preserved mainly in the North East and North West, Wales and the West country; places the Normans had least control.



Filed under Content, Signal

5 responses to “Ties That Bind I

  1. leftoutside

    I understand that companies like Carling, Fosters etc all have huge marketing departments but surely there is a point where beers that taste nice will win.

    A tipping point. Where Crap Beer x Good Advertising begins to lose out to Good Beer x almost no Advertising.

    There must be a level at which the Good Beer’s quality will overcome the Bad Beer’s marketing budget, or will Good Beer have to come down to their level and “market” itself?

    • johnqpublican

      That would in theory be true; except for the tie.

      When landlords can be forced to sell poor beer without alternatives (which is the whole point of the tie) and when large-corporate owners are able to dominate the pubs in a given area (walk around central Cambridge some time and look at the ties displayed; or at how many of the pubs in Holloway have a cannon above their pub sign) : when this situation pertains for over two decades without significant challenge you can completely pervert a market. Initially there was also price competition: craft-brewed beer used to cost more than industrially-brewed. This is much less the case now.

      Follow that self-reinforcing anti-competitive cycle through, to the point that 5 corporate owners and 8 badges account for 91% of the beer consumed in Britain. Peruse this set against over 600 breweries and several thousand badges in the independent market: competition is alive and well there, and the customer benefits immensely from it. Good tasting beer does compete well but only when taste is one of the criteria for competition. The mainstream market is locked down by the tie: it’s intrinsically anti-competitive. The total dominance of the consolidated corporate breweries and their tied pubs during the 70s and 80s radically altered the perceptions of the market [1]: I’ve had people turn down the (British-brewed) lager I serve on grounds of “too much flavour”.

      An entire generation of British drinkers were taught that what beer tastes like is wanking in a canoe [2]. Reversing that is hard; it is all the harder when the tie persists, but makes even less sense in its modern form, as the post that’s publishing in about 15 minutes discusses.

      Regarding your last line: CAMRA is as much a large-scale marketing project as a consumer campaign. The Great British Beer Festival at Earl’s Court is huge: the success of CAMRA in reviving the independent brewing tradition can be seen by how many Uni-age girls show up at beer festivals these days. Magners (again, a huge marketing budget backed by an international corporate) made the social splash but the re-growth of the real cider industry has benefitted as much as the commercial ciders have, because real cider tastes better…

      [1] Bill Gates did something similar with the professional computer market. We figured out stable OS architectures that were genuine multi-user environments, had excellent modularity (and security!) and didn’t need turning off every day (or, really, ever) in the 70s. He couldn’t make Windows that stable, so he instead spent a lot of money re-engineering the expectations of the market so that people thought regular crashes were normal for PCs.

      [2] Fucking near water, only less so.

  2. Pingback: Selected Reading 19/07/09 « Left Outside

  3. PennyRed

    I know we’ve talked about this, but this post and the one above are brilliant. May I tweet them? L.x