Book Review: Government Intervention in the Brewing Industry

Worthington E Keg Beer

Government Intervention in the Brewing Industry (cover)Soon­er or lat­er in our jour­ney through British brew­ing in the last half cen­tu­ry, we knew we were going to have to look into that most thrilling of top­ics: the effects of gov­ern­ment leg­is­la­tion on the indus­try. This book, orig­i­nal­ly pub­lished under the title Inter­ven­tion in the Mod­ern UK Brew­ing Indus­try in 2011, was rec­om­mend­ed to us by sev­er­al peo­ple as some­thing of a defin­i­tive account.

The first point to note is that it is writ­ten by peo­ple asso­ci­at­ed with the big brew­ers: two of the writ­ers, John Spicer and Simon Ward, worked for Whit­bread; Chris Thur­man was a long­stand­ing employ­ee of the Brew­ers’ Soci­ety (dom­i­nat­ed by the Big Six); and John Wal­ters was a stock­bro­ker ‘spe­cial­is­ing in the drinks and pubs indus­tries’. This has obvi­ous advan­tages, and dis­ad­van­tages: their impres­sive inside knowl­edge of the process­es, papers and com­mit­tees is pos­si­bly off­set by more than a few unsub­tle attempts to direct the read­er to con­clude that the ‘unin­tend­ed con­se­quences’ of the Beer Orders were A Bad Thing, and some­times with­out con­vinc­ing­ly demon­strat­ing cause-and-effect.

We don’t want to under­state the good points. This is an extreme­ly read­able book con­sid­er­ing the poten­tial­ly dry sub­ject mat­ter. It makes exten­sive use of pri­ma­ry sources and is well-ref­er­enced, and yet still has a dri­ving nar­ra­tive, with good use made of recap­ping and sum­maries to struc­ture the sto­ry and keep the read­er afloat. The book man­ages to sum­marise the 1989 Sup­ply of Beer report (three years in the writ­ing; takes about the same to read) in a few effi­cient pages. There are lots of sol­id facts and tables of sta­tis­tics. It is indeed, author­i­ta­tive, and lives up to its aim of demon­strat­ing wider lessons about the unin­tend­ed con­se­quences of gov­ern­ment inter­ven­tion.

A suc­cinct his­to­ry of enquiries since the mid-six­ties makes the point that both Labour and Con­ser­v­a­tive gov­ern­ments kept com­ing back to the ques­tion of the beer tie, usu­al­ly in the con­text of dis­cus­sions about pric­ing (these were the days when prices for vir­tu­al­ly every­thing were set by Gov­ern­ment boards, and brew­ers had to apply to put prices up).  But we don’t feel the authors real­ly explain why suc­ces­sive gov­ern­ments were increas­ing­ly obsessed with the issue. Could it be that they were reflect­ing a groundswell of pop­u­lar opin­ion that some­thing was wrong with the indus­try? Telling­ly, the Cam­paign for Real Ale does­n’t get a men­tion until the sto­ry reach­es 1985, and, even then, it is as if they appeared from nowhere. SIBA isn’t men­tioned until the post-Beer Orders analy­sis and in the brief dis­cus­sion of pro­gres­sive beer duty.

There is a ten­sion in the pre-Beer Orders part of the book between, on the one hand, the ten­den­cy to down­play accu­sa­tions that the big brew­ers act­ed as a car­tel, and, on the oth­er, the depic­tion of a unit­ed front of brew­ers bat­tling a suc­ces­sion of pesky inter­fer­ing gov­ern­ments. This is a his­to­ry that is cen­tred on the big brew­ers as rep­re­sent­ed by the Brew­ers’ Soci­ety, at least in the main part of the book.

These may be churl­ish crit­i­cisms, giv­en the back­ground of the writ­ers, and that their aim was to look at gov­ern­ment inter­ven­tion, not con­sumer or pro­duc­er rev­o­lu­tion. To us, the the rights and wrongs of the Monop­o­lies and Merg­ers Com­mis­sion (MMC) report is an inter­est­ing debate, but the ques­tion we’re real­ly inter­est­ed in is why was there (ini­tial­ly at least) such pop­u­lar and offi­cial sup­port for its con­clu­sions. How had things got to a stage where absolute­ly no one had a good word to say for house­hold names such as Wat­ney’s and Whit­bread?

The book has giv­en us a very fresh per­spec­tive on the his­to­ry, and empha­sised areas that can be lost in some ver­sions of the his­to­ry. For exam­ple, the role of Guin­ness (a major play­er but with­out a tied pub Estate) in lob­by­ing for reform, and in under­min­ing the Brew­ers’ Soci­ety dur­ing nego­ti­a­tions with the Depart­ment for Trade & Indus­try (DTI) pri­or to the Beer Orders being passed. There are plen­ty of oth­er nuggets that may pro­vide food for future blog posts, such as the ongo­ing debate on lager pric­ing and whether it does cost more to pro­duce.

Some of the details in Gov­ern­ment Inter­ven­tion have prompt­ed a fair bit of dis­cus­sion in Boak and Bai­ley Tow­ers. Why, for exam­ple, did some big region­als such as Vaux give up on brew­ing, while oth­ers, such as Greene King, stuck at it? Inci­den­tal­ly, the book does­n’t make the case that the Beer Orders has­tened the demise of Vaux, and in fact points out that the for­mer Chief Exec­u­tive of Bod­ding­tons said that the com­pa­ny had decid­ed to aban­don brew­ing before the MMC report.

The book’s final analy­sis of the impacts of the Beer Orders is nuanced, and explores var­i­ous angles, but does ulti­mate­ly tend to the con­clu­sion that harm­ful trends in the indus­try dur­ing the last twen­ty years (decline in num­bers of pubs, increas­es in the price of beer) are due to the Beer Orders.

Now, hav­ing read their not-entire­ly objec­tive analy­sis, we’d love to speak to the authors as actors in the dra­ma.

We bought the recent­ly print­ed paper­back (print-on-demand?) edi­tion at a very rea­son­able £18 from Ama­zon. The 2011 hard­back will set you back some­thing like £65. Some of it is avail­able to pre­view at Google Books.

20 thoughts on “Book Review: Government Intervention in the Brewing Industry”

  1. Maybe a sub­ject that deserves its own post, but I would say the sur­vival or not of fam­i­ly brew­ers is large­ly down to

    (a) whether the fam­i­ly pro­duced suit­able heirs, and
    (b) whether the fam­i­ly actu­al­ly remained inter­est­ed in con­tin­u­ing in the brew­ing busi­ness

    He’s not appeared in recent years, but ear­ly Keg Buster car­toons some­times fea­tured Tar­quin Crudg­ing­ton whose main inter­ests were squan­der­ing his inher­i­tance on fast cars, fast women and slow hors­es.

    It could be argued now that run­ning a fam­i­ly brew­ery is, in a nar­row eco­nom­ic sense, an irra­tional activ­i­ty – you have to actu­al­ly want to do it.

  2. I have a copy of this book for review (com­ing soon). It does firm­ly point you in one direc­tion and its weak­ness is in the lack of “why” though pos­si­bly in my view, the con­clu­sions are cor­rect.

    1. I have still to read the book (I was sent a copy but have been too busy), so this is prob­a­bly a pre­ma­ture con­clu­sion, but my own feel­ing about the MMC report and what the gov­ern­ment did next is that

      1) the tied estates were an entire­ly arti­fi­cial eco­nom­ic con­struct caused by the UK’s licens­ing restric­tions

      2) that arti­fi­cial­i­ty meant it would­n’t take much to bring the whole struc­ture crash­ing to the floor

      3) by tug­ging away at the big brew­ers’ tied estates, the gov­ern­ment did just that – made the whole struc­ture too unsta­ble to sur­vive

      4) It can be argued (and I will, soon) that even had the big brew­ers not been pushed into ulti­mate­ly aban­don­ing their tied estates, they would have done so any­way even­tu­al­ly: the Beer Orders mere­ly has­tened that process

      1. 5) while what hap­pened after the Beer Orders is a clas­sic exam­ple of the Law of Unin­tend­ed Con­se­quences in action, in fact it should have been entire­ly pre­dictabkle: indeed, as I’ve point­ed out here before, a man called Arthur Sel­don DID pre­dict it, in 1950.

        6) There­fore you can’t blame the Beer Orders per se for what hap­pened next. And you can’t say “gov­ern­ment inter­ven­tion did it.” Gov­ern­ment inter­ven­tion mere­ly shook what was already an unsta­ble tow­er of Jen­ga sticks.

  3. I was sent a review copy, though I haven’t had time to read all the way through it yet, I’ve already come across lots of use­ful mate­r­i­al.

    The role of Guin­ness in attack­ing the tie makes a lot of sense, look­ing back. But I was still sur­prised to learn of it.

    If I remem­ber right­ly, Vaux end­ed up with an asset-strip­ping chair­man, much like Mor­rel­l’s.

  4. Was that pho­to tak­en in some sort of muse­um? There’s a very unlike­ly com­bi­na­tion of beers: bot­tles of Ansells, All­sopps and Dou­ble Dia­mond and a Wor­thing­ton keg font. Unlike­ly you’d have found beers from three of the Big Six in a sin­gle pub.

  5. Mar­tyn – I think we’d agree most of those con­clu­sions; read­ing the book we did­n’t see what the Beer Orders prompt­ed that was­n’t already hap­pen­ing, and if there was a par­tic­u­lar flur­ry of cor­po­rate merg­ers and takeovers after­wards it was prob­a­bly due to the fact that such activ­i­ty had been on hold since the announce­ment of the review.

    Inter­est­ing point about licenc­ing though, because (as the book high­lights) licenc­ing was eased in Scot­land in the sev­en­ties. We don’t know enough about the licence trade in Scot­land – did it devel­op in a dif­fer­ent way after lib­er­al­i­sa­tion?

    1. I am old enough to have seen licens­ing laws in Scot­land first lib­er­alised with the argu­ment that it would stop us being such awful booz­ers, and then quite dras­ti­cal­ly tight­ened up again with the same argu­ment. “All-day open­ing” was a big thing in the media back then.

      1. Did it make any dif­fer­ence to the type /number of pubs? Was there an increase in new licenced premis­es?

  6. A slight qual­i­fi­er to what I just said about the Beer Orders not chang­ing things. I think it’s safe to con­clude pub­cos were entire­ly a cre­ation of the Beer Orders?

    1. In the late 80s there were already some pub­co-style oper­a­tions such as Bel­haven who were acquir­ing bot­tom-end pubs from the Big Six. While Bel­haven was a brew­ery it did­n’t real­ly aim to sell its own beers in its Eng­lish pubs. Indeed by that time Greenalls had closed their brew­ery and turned them­selves into a pub­co.

      With­out the Beer Orders it is like­ly that we still would have seen the inter­na­tion­al con­sol­i­da­tion of the brew­ing indus­try, but the prob­a­ble out­come would have been the Big Six sell­ing off their brew­eries while retain­ing the best of their tied estates. So they would have in effect become pub­cos, but with­out the debt moun­tain.

        1. Wether­spoons are dif­fer­ent from the con­ven­tion­al pub­co of the Punch and Enter­prise type, though, as they are entire­ly a man­aged house oper­a­tion.

    2. no I dont think it is sor­ry 🙂 though Id accept it may depend on how you define a pub­co, but I think we get so caught up with the big 6 and the sell­ing off their pubs aspect flood­ing the mar­ket, we dont notice so much that there were com­pa­nies in the 70s/80s buy­ing up brew­eries & tied pubs to get at the prop­er­ty linked through the pub estates and to also run those pubs through a pub­co tied mod­el.

  7. I think it like­ly that you can judge the suc­cess of the Beer Orders in that they achieved the exact oppo­site of what was intend­ed. There was lit­tle look to the future. The brew­eries thought they had a cun­ning way round it, but all it did was weak­en them entire­ly, result­ing in their takeover and demise and cause may­hem in the trade.

    The cus­tomer was meant to ben­e­fit in all sorts of ways, but none of them hap­pened. More when I get round to my review. (And I don’t entire­ly agree with Mar­tyn). For exam­ple there is much to agree and dis­agree with in these two state­ments alone.

    1)the tied estates were an entire­ly arti­fi­cial eco­nom­ic con­struct caused by the UK’s licens­ing restric­tions

    2) that arti­fi­cial­i­ty meant it wouldn’t take much to bring the whole struc­ture crash­ing to the floor

    1. I think 1) is pret­ty spot on. The emer­gence of tied estates at the end of the 19th cen­tu­ry coin­cid­ed with anoth­er form of gov­ern­ment inter­ven­tion: active­ly reduc­ing the num­ber of licensed premis­es. Had new licences remained rel­a­tive­ly easy to obtain, brew­eries would­n’t have need­ed to sink huge amounts of cash into buy­ing pubs. In real­i­ty, they weren’t buy­ing pubs, they were buy­ing licences.

  8. In real­i­ty, they weren’t buy­ing pubs, they were buy­ing licences.” True and it remained so for many a year. If licens­ing had been reformed, we might not have had the Beer Orders, but it was shelved and arguably was too late to have made a dif­fer­ence any­way. We have Scot­land as an exam­ple of this.

    On the oth­er hand, buy­ing pubs was always an easy way to expand. They could rea­son­ably have built new or con­vert­ed every time. There was, even then, only so many drinkers to go round.

  9. Above should of course have read “They could NOT rea­son­ably have built new or con­vert­ed every time.” Even if licens­es were unlim­it­ed.

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