Market Rent Option (MRO) and Small Brewers with further thoughts.
Having met a number of small and micro brewers over the last week, it staggers me how few know anything about the MRO and the longer term effect on their business.
Mainly because in their opinion it’s a Pub Co thing and their dealings with Pub Co’s are minimal, because of the restricted access for a variety of reasons to the Pub Co market.
Having explained that all tied/leased pubs that fall within the MRO range and take this option, will be allowed to buy their beers where ever they like, without any interference from the Pub Co’s owning their pubs, effectively giving them true freehouse status.
Over the next five years this opens up the micro and small brewery market enormously, the change in the market will hit the larger brewers because the market as such is finite, unless it creates a move back to drinking in pubs again.
Should this happen the supermarkets will expand their local small brewery stock and price even more aggressively, since they are looking constantly for ways of grabbing a larger market share.
The troubles that some supermarket companies are experiencing may make them limit the amount of different products that they sell, having realised that Aldi and Lidl have experienced a massive surge in market share with limited lines, the ways of these massive companies are not always obvious, so we will have to wait and see which way they move.
For the small brewer with good products and local distribution, the informed opinion is that it will give a massive boost to the locally brewed Real Ales and speciality bottled beers sector.
This may well start moves by large Pub Co’s to buy small brewers to claim that they are Brewers and not Property Companies, their legal eagles will be scouring the small print of the new legislation to find any weak point or legal issue to retain the status quo for as long as possible.
The one serious point that will help, both licensees and brewers will benefit from dealing directly with each other, assuming that all these brewers will give a months credit to the licensees, improving both their cash flows immediately.
The brewers by dealing direct will give single operator discounts where ever possible and not multiple operator discounts and in some cases extended credit terms dictated by some of the large companies.
It may be an aggressive market place initially, if the Market Rent Option should be taken up by many lessees, but like all things it will level off with the two key factors, quality and cost controlling the market.
The switch to the ability to buy where ever the licensee wishes, will be slow because most Pub Co’s will drag their heels.
Enterprise have already thrown all their toys out of the pram because of the possible fine print in the MRO (http://www.usenumberone.com/enterprise–thrown–toys-pram-market–rent-option-barrel-dregs/).
But if they endorsed the MRO and realised the potential that it presents to unite the industry and move forward, turning the industry into a career for life, rather than a short term disaster for thousands of naïve and honest people such as it has been.