Why Blair is making commercial sense

On Tuesday night about 30 chairmen and chief executives from Britain's top 100 companies will sit down to break bread and chew the fat with Tony Blair and some of his colleagues from the Labour Party. It is the latest in a series of meetings which senior party figures have held with the business community over the last few months.

This is more than some pre-election prawn cocktail offensive. It is a genuine attempt to put in place a dialogue which will provide the foundation on which a working relationship can be built should Labour form the next government.

The key themes emerging from these meetings are intriguing. Leaving aside company and industry specific issues, such as the unpopular windfall tax, the questions of Europe and training are most vexing our captains of industry.

On Europe the question is not whether we should sign up for monetary union; it is much more will we still be in Europe at all? There is little doubt that while the business community is equivocal over EMU it is committed to membership of Europe. There are fears that Tory divisions over EMU may ultimately lead to pressure for complete withdrawal. That is a big worry for British business, which is far more international in outlook than British politicians.

Indeed, it is that international perspective which has ensured that the rapport between Blair and his business guests has been more than cordial. An outlook which looks always beyond the domestic market, because that is where the competition is, is bound to be more accommodating and interested than one which is shackled by national borders.

Hence the second theme which has emerged. There is great concern among industrialists about skill shortages and the deficiencies of the training and education infrastructure. This is not a new concern, but clearly the business community has found in Mr Blair a more sympathetic listener than the incumbents within whose gift it is to make improvements.

It is of course easier to listen than to act. The real test of the value of this dialogue between Blair and the businessmen is its durability if Labour is elected.

And one for yourself

Inntrepreneur's announcement on Friday of a new package of discounts, benefits and services for its pub tenants may appear, superficially, to be a cosmetic marketing exercise. In reality it is a quite profound move which could have dramatic repercussions for pub retailing.

In essence, the Inntrepreneur move undermines the horizontal tie which has crept in to replace the old discredited vertical tie. It was the break- up of the vertical tie that allowed the brewers to push their beer into their own pubs by the Monopolies and Mergers Commission, which was the catalyst for the radical restructuring of the brewing industry.

That restructuring has seen the emergence of powerful pub retailing groups and allowed the likes of Ushers of Trowbridge, which comes to market shortly, to carve a niche for themselves as regional brewers. The pub retailing market has become highly competitive.

Inntrepreneur's innovation changes the basis on which pub tenants operate at a stroke. Tenants in the Inntrepreneur stable will be given a new financial flexibility which will allow them to compete much more effectively with their local competitors. It is up to the tenants to decide how to allocate the discounts they will receive. There is a fair chance that most tenants will pass this on to customers by way of price reductions and investment in the premises. Lower prices and more pleasant pubs mean more customers.

The move must, therefore, be seen as an inspired marketing investment by Inntrepreneur. Not only does it allow its tenants to compete, it also allows Inntrepreneur to compete for tenants. There is always demand for good tenants and if the Inntrepreneur package is more attractive than those offered by other retailers it will begin to cream off the best of the talent.

In the face of such improvements other retailers will have to respond. The pressure will not come slowly from the market but immediately from their tenants who will be envious of the new deal which is being offered to Inntrepreneur tenants.

The losers will be those retailers, in whatever shape or form, who have tended to hog the profit margin they have made on beer sales for themselves. If their tenants are pleading for cheaper prices, who will take the hit? It is unlikely to be the tenants. Particularly vulnerable are those highly leveraged companies which need the cash from their beer margins to finance their debt burden. Whether Ushers will be affected remains to be seen but it is a question those considering an investment should ask.

Market backs the mouse

REPORTS of the demise of Euro Disney in the wake of the departure of chairman Philippe Bourguignon to salvage Club Mediterranee are, to coin a phrase, exaggerated. Anyone prepared to listen to Nigel Reed, well known Disneyland Paris doomster at Paribas Capital Markets, could hear him talking gleefully of the disaster for Euro Disney. Meanwhile, the markets were taking a rather more considered view. Euro Disney's shares remained unchanged at 110p.

The markets recognised that this was a story about Club Med rather than Euro Disney. Bourguignon, who did an excellent job reviving the fortunes of Disneyland Paris, is now being called on to perform a similar task at Club Med, which on Friday reported a 743m franc (pounds 83.4m) loss against an F168.6m profit a year earlier. Now that is disastrous.

Bourguignon leaves Euro Disney in good shape. His departure means elevation for Gilles Pelisson just a little sooner than had been anticipated. He was being groomed for the job, so the transition under this extremely well-respected and talented executive will be smooth.