Lonely tie fight for Courage: Brewer pitted against own trade body in dispute over 'archaic' system

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The Independent Online
COURAGE, the brewer which has agreed to dispose of its pubs in a pubs- for-breweries swap with Grand Metropolitan, is becoming increasingly isolated as it campaigns to end the tied-house system, which allows brewers to supply beer to pubs on an exclusive basis.

Courage currently has ties with nearly 6,000 pubs, but the exclusive beer supply agreements will be removed in two stages over the next four years, allowing rival brewers to supply them. The first stage, due in 1994, involves 1,500 Chef & Brewer pubs. The process will be repeated in 1998 for the 4,500 pubs run by Inntrepreneur, which Courage owns jointly with Grand Met.

When he announced his group's results yesterday, Sir Paul Nicholson, chairman of the Sunderland-based brewer Vaux Group, said that Courage would face big problems if it fails to get the tie system abolished. The Brewers Society, the industry's main trade body, of which Courage is a member, backs the tie.

A Courage spokesman said: 'There is no case to justify an archaic institution like the tied-house system. We did say as far back as 1985 that the erosion of the tie, which was happening, should be encouraged.

'However, we recognise there may be an argument for retention of the tie for regional brewers.'

Courage's position has shifted since it made submissions to the Monopolies and Mergers Commission for the 1986-89 investigation into the supply of beer. The MMC summarised Courage's submission as saying that there should be no change in the ability of brewing companies to own or control public houses subject to the tie being confined to beer alone.

The UK is exempt from EC legislation which bars brewers that produce more than 125,000 barrels of beer a year from owning more than 400 pubs.

Vaux has 986 pubs and produces about 500,000 barrels a year. Its pub estate was largely behind a 4.9 per cent rise in taxable profits, before exceptional disposal gains, to pounds 9.7m in the half-year to 20 March. Its Swallow hotels business was affected by pressure on room rates. The interim dividend is held at 3.25p.