OPINION: Battling boozers face harder times

Back in 1990 th e brewers dominated the UK beer industry and supermarkets and pubs were mere bit players. Then came the beer orders issued by Thatcher's trade and industry minister Lord (David) Young, after an investigation by the then competition authority the Monopolies Commission.

Anthony Hilton
Anthony Hilton

Its purpose was to limit the number of pubs a single brewer could own, and stop one brewer dominating a neighbourhood. It turned out to be the single most disastrous intervention ever... probably.

The Monopolies Commission has a record of getting things hopelessly wrong, but this one took the biscuit. Today the balance of power has changed completely. The supermarkets are the dominant force, but there are also new pub companies that are almost as big. The top five pub companies account for 68 per cent of pub turnover and have more pricing power than brewers ever had.

The next five pub companies account for 14 per cent of the market. There are now four big international beer groups - Molson Coors, InBev, Carlsberg and Heineken (following its takeover of Scottish & Newcastle) - controlling three-quarters of the market. But due to their big customers, the supermarkets and pubs, they do not make any money in the UK.

Some 25 per cent of the pubs in this country are still free houses but only have nine per cent of the market between them. These are tough times for pubs with a downturn in spending coming on top of the smoking ban.

They have no chance of competing on price with the big companies and their numbers are set to plummet as this squeeze bites. Some 8,000 of the 60,000 pubs Britain had in 2004 are expected to have closed by 2009.

Just this week, Punch Taverns has had talks with Mitchells & Butlers, about a possible merger of two of the top five outlets. The PR machines of both bidder and target are conversing, and no doubt a deal will be done that joins the companies and inflates the egos of the executives who stay and the wallets of those who depart.

But there is no PR campaign on behalf of the consumer, or indeed the public interest. There is no lobby to reflect the fact that a large slice of the population might prefer small independent pubs. That debate does not take place.

Anthony Hilton is City commentator on London's Evening Standard

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