Scotland business

Publican fears over Punch takeover

Drinkers outside pub Image copyright Thinkstock

Scotland's publicans have stepped up their war of words with one of the world's big brewers over its plans to take over a large chain of British pubs.

Heineken is being strongly criticised by the Scottish Licensed Trade Association (SLTA) for its plans to buy Punch Taverns.

The sale would increase Heineken's ownership of pubs from 2% of the Scottish total to 6%. Although it would increase its market share of beer sales, the Netherlands-based brewer points to a much larger share for Tennent's owner C&C.

The SLTA's chief executive, Paul Waterson, claimed Heineken has "little regard for local relationships", alleging that its investments had been in "up-market, city centre" bars, and that it was not committed to supporting smaller, community-based pubs.

He also claimed Heineken, with brands including Amstel, Sol and Strongbow cider, would stifle drinkers' options on which brands of beers and other drinks were available.

Heineken already has 1,100 British pubs, including some it bought when it took over part of Scottish & Newcastle in 2008.

Last month, it won a brief bidding battle for the 3,300 pubs in the Punch Tavern chain in a joint £400m bid with real estate specialist Patron Capital private equity. They intend to divide up the portfolio.

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The Scottish publicans' association said tied pubs - those owned and leased by brewing firms - suffered from skewed investment and financial restrictions.

"Our greatest concern are the barriers that Heineken will put in place when it comes to other brewers," said Mr Waterson. "This will have a disastrous effect on consumer choice.

"Quoted as saying, 'no-one expects to buy Costa when in Starbucks', they will impose 85% of their own products in Punch pubs, at least, leaving little room for others," the SLTA boss claimed.

"That's hardly working with licensees to ensure they have the right drinks offer to suit the specific needs of each pub. The framework is clear, and it's restrictive, anti-competitive and will disadvantage our own home-grown producers."

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The comments follow an exchange between the brewing giant and the SLTA, following the announcement late last year of the Punch Taverns deal.

After the landlords expressed their initial "grave concerns," a response was published by the managing director of Heineken Star Pubs and Bars, Lawson Mountstevens.

He wrote: "Heineken has a long track record of working with entrepreneurial licensees who know that success comes from providing a consistently excellent experience for customers. In 2016, we committed a further £2 million of investment for our Scottish pubs, adding to the £5m we have spent over the last three years.

"The scale and scope of our refurbishments have helped to ensure that licensees can significantly improve their food offer, with new kitchens and flexible areas within pubs to cater for a wider range of events.

"With our pubs better equipped to meet changing consumer needs, they are also generating multiple income streams for our licensees."

The boss of the pub division continued his response: "Rather than 'de-stabilise our fragile industry', we hope to bring our passion, expertise and successful operating model to more Scottish pubs.

"When it comes to consumer choice, Heineken's market share in Scotland's pubs is less than half that of the largest producer, C&C Group. We have consistently said that we start with what is right for each pub, and we will work with licensees to ensure they have the right drinks offer to suit the specific needs of each pub."

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