Beer Orders failed to shake off cartel

The blocking of the Bass bid for Carlsberg-Tetley in effect marks the end of the consolidation at the top of the brewing industry which has taken place since the controversial Beer Orders of 1989. Under that piece of legislation, the national brewers were given three years between 1989 and 1992 to sell 11,000 pubs from their tied estates which gave them a guaranteed market for their beers.

Intended to break up the big brewers' cosy cartel and reduce the extent of ties between the brewers and their retail chains, the legislation has had decidedly mixed results. In brewing, far from weakening the grip of the main brewers on the market, it has strengthened it.

Since 1989, the number of national brewers has fallen from six to four while their combined share of the UK beer market has remained barely unchanged. In 1989 it was 82 per cent. The MMC report states that last year it was 78 per cent.

The key changes have included Grand Metropolitan's brewing for pubs swap deal with Courage, and Scottish & Newcastle's subsequent pounds 425m takeover of Courage in 1995 to create a new leading force in brewing. Several other brewers have either been taken over, or have given up brewing altogether to concentrate on running pubs. The brewing interests of Boddington's were acquired by Whitbread. Greenalls closed its brewing operations, while Eldridge Pope recently sold its brewery to a management buy-out.

Following yesterday's blocking move by the DTI, Scottish & Newcastle will still be Britain's biggest brewer, with 30 per cent of the market, followed by Bass with 24 per cent, Whitbread with 14 per cent and Carlsberg Tetley with 10 per cent.

Perhaps the acid test of the Beer Orders is what has happened to the price of a pint. According to Campaign for Real Ale (Camra), prices have consistently risen ahead of inflation since 1989, with real ale, lager and nitrokeg beers all similarly affected.

In pubs the changes have been similarly dramatic, though more to the benefit of the consumer. The average British pub now serves 16 beers, including draft and bottled beers. This is almost three times the number available before the Beer Orders.

The big brewers' grip on the pub market has been severely weakened. According to the MMC report on the Carlsberg-Tetley deal, more than half of all pubs were owned by brewers in 1992. Today, it estimates that figure to be around one-third.

Instead, the last five years have seen the meteoric rise of the independent pub companies which have benefited from the enforced pub sell-off by the majors. The beneficiaries have included JD Wetherspoon, Regent Inns, Grosvenor Inns and Enterprise Inns. Others such as Pubmaster, are being groomed for flotation.

The increasing power of these groups and the cap on the number of pubs a brewer can control, has helped give consumers a wider choice of drinks brands.

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