Phil's Diary October 22, 2009

A decision that’s a bit OFT

So the Office of Fair Trading, after three months deliberation, has come to the conclusion that it doesn’t need to investigate the tie between pubcos and their tenants.

Should we be surprised? Probably not. But on the other hand the ruling doesn’t make an awful lot of sense.

Here’s Simon Williams, senior director of the OFT’s Goods group, explaining the decision: “Any strategy by a pub-owning company which compromises the competitive position of its tied pubs would not be sustainable, as this would result in a loss of sales.”

The first point to make is that this faith in market forces would seem to make the OFT redundant. Secondly, the pubcos are losing sales aren’t they? Or at least their tenants are losing sales. And the higher prices they have to charge must be a factor in that.

Former Punch tenant Tracy Bird, who recently bought her pub the Newman Arms from the pubco, has since been able to do a supply deal with Fuller’s and drop her beer prices by 20 per cent. A pint of Carling has gone from £3.20 to £2.70.

In fact anyone who visits pubs and can tell a leased or tenanted pub from a managed house or freehouse knows that beer in the tenanted pub is more expensive. But the OFT reckons the tie has no detrimental effect on consumers. Perhaps these people just don’t go in pubs.

The banker and the binge drinker

Went a YWCA conference yesterday on young women and binge drinking. Yes, that’s the Young Women’s Christian Association, although they don’t seem to call themselves that any more. Not sure whether that’s because they’re no longer Christians or because it doesn’t sound hip enough. I suspect the latter.

Anyway, it was the usual sort of stuff for the most part. The same old stats showing civilisation on the brink of collapse and the new chairman of industry watchdog The Portman Group, a certain Seymour Fortescue, utterly failing to challenge the problem-inflating.

Checking out Fortescue’s CV (he has no drinks trade experience) it seems he has come from being chief executive of a body called the Banking Code Standards Board. I’m saying nothing.

Actually, I don’t think it’s his fault. It’s The Portman Group that has gone along with all the new temperance assumptions and agenda-setting since it got its head bitten off for producing some contrary drinks industry-sponsored research in its early days.

Surprisingly it was the YWCA that came up with the most thought-provoking part of the morning, a survey, carried out by young women themselves, into why young women drink to excess.)

It confirms some other recent research which suggests adolescents drink because they can’t cope with the pressures and troubles of life, especially in deprived circumstances where they’re getting no support from the people around them.

Some of the examples were quite shocking. The most tragic being the young woman who drank “to feel that no-one can hurt you any more”.

That’s a terrible reason for drinking but taking away the drink isn’t going to solve the problem. Nor is bumping up the price of alcohol. As one of the young women on the panel put it: “They’ll just steal more from their parents”.

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