This is actually the second time that CAMRA has successfully lobbied to break the beer tie. They first did it in the 1980s when Thatcher forced breweries to sell off thousands of pubs. The unintended, but predictable, consequence was that thousands of pubs were bought up by property management companies.
These companies (pubcos) soon became the new villains in CAMRA mythology and last year they were cut down to size when the government (or, more precisely, the opposition plus the Lib Dems) broke the modern beer tie by banning pubcos from making it a contractual obligation for tenants to buy alcohol from them at a higher-than-market rate. This is known as the Market Rent Only option and tenants of large pubcos now have a legal right to it.
Pubcos that cannot make enough money without the beer tie will increase the rent, but the government has decided to regulate pub rents as well. Therefore, the likely outcome of the 'Save Our Pubs' campaign is that pubcos will sell off a large part of their estate.
CAMRA more or less openly wants them to sell their pubs because it believes that thousands of ruddy-faced publicans are ready to run them as independent concerns. This is a fantasy. There is not enough capital in the independent sector and you would have to be brave or foolhardy to buy a pub in Britain after successive governments have systematically shafted the industry. It is more likely that they will be sold off as shops and dwellings.
In other words, CAMRA's campaign will achieve the exact opposite of its stated aim of saving pubs.
I said all this last year and it did not go down well with CAMRA and their fellow travellers, who accused me of being in the pocket of the pubcos (and other such baseless non-arguments), but time is beginning to tell...
Punch Taverns has confirmed it has agreed to sell a package of 158 non-core pubs to NewRiver Retail, the UK REIT that specialises in the food and value sector, for £53.5m.
Why is Punch Taverns selling off these boozers? One tenant, Carol Ross, spoke to the Morning Advertiser yesterday...
The Roscoe Head in Liverpool has been in Carol Ross’ family for 30 years, 20 of which has seen her in charge winning a number of awards. Speaking to the PMA after receiving the news by post that her pub would be sold to New River Retail, she said she was “gobsmacked and upset” and now fears her pub was at risk of being redeveloped into a retail outlet.
Ross said she had been trying to buy the pub’s freehold, and had informed Punch she wished to opt for Market Rent Only (MRO) next year.
“From next year I have to be offered Market Rent Only, and I told them I would be taking it, that’s why they’re selling my pub - because I won’t be making them as much money. NewRiver Retail will own less [sic] pubs [under 500], so they won’t have to offer it,” she speculated.
According to the article, Ross's pub is a successful business so perhaps NewRiver Retail will keep it as a going concern, but their track record isn't great...
NewRiver Retail acquired 202 pubs from Marston’s for £90m in 2013, with the group announcing last month that good progress had been made in converting a number to convenience stores.
Oh dear. Who could possibly have seen this coming?
Now CAMRA has been reduced to 'urging' pubcos to 'consider other options for sale, including offering pubs to community groups or licensees themselves, before selling to property companies'. I doubt pubcos are in any mood to take business advice from an economically illiterate pressure group that openly hates them. They will do whatever makes financial sense in a market that has been horrendously distorted by CAMRA and other useful idiots.
Be careful what you wish for.
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