U.K. pub shares fell after MPs vote to scrap ‘beer-tie’ rule

This article was last updated on April 16, 2022

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Shares in companies owning pubs have fallen sharply on Wednesday after MPs voted yesterday to scrap the historic ‘beer-tie’ rule enabling landlords to buy their beer on the open market.

Enterprise Inns – the nation’s largest operator with 5,500 pubs, have seen its share price being dropped by 15 per cent and rival Punch Taverns shed almost 17 per cent in afternoon deals.

Lawmakers in parliament’s lower House of Commons voted in favour of overhauling the 400-year-old “beer tie”, under which publicans purchase alcohol exclusively from their parent company in return for reduced rent.

About one third of Britain’s 50,000 pubs are subject to such agreements.

Enterprise and Punch, which own more than 9,000 UK pubs between them, have been largely affected by the commons vote. 

Lawmakers voted 284-259 in favour of an amendment to allow tenanted landlords to buy their beer on the open market.

Campaigners are of the view that the fresh move will lead to increased competition and affordability, as they argue that current rules force punters to pay more for drinks.

However, U.K. pub industry has warned that the new reform could spark fresh wave leading to hundreds of pub closures and thousands of job losses, while slashing investment in the sector.

Chief executive of Enterprise Inns, Simon Townsend has told: “This amendment, which was not supported by the government, threatens to have serious unintended consequences for publicans and the industry at large.”

Punch Taverns have added that the vote would have “significant adverse consequences for Britain’s community pubs”.

The British Beer and Pub Association (BBPA) have said the vote was “hugely damaging” while highlighting government research that indicated that “breaking the tie would be expected to result in between 700 and 1,400 more pubs closing with 3,700 to 7,000 job losses. Furthermore, we believe that the amendment would be likely to have the effect of reducing pub investment, reducing consumer choice and exposing tenants to higher fixed rents, reduced levels of support and greater risk of failure”.

But the Campaign for Real Ale (Camra) – which campaigns for traditional beer in Britain, have welcomed the vote and said the change would secure the future of pubs, helping them to stay open and ensure the cost of a pint remained affordable. It was also backed by the Federation of Small Businesses (FSB).

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