Heineken offers help to stem pub closures

By TERRY MURDEN
Published on 15/11/2012 00:00

HEINEKEN has unveiled a package of financial support for those wanting to become publicans and to help halt the rise in pub closures.

The Dutch group, which acquired the UK businesses of Scottish & Newcastle four years ago, will offer more beneficial terms that will ease the cost of setting up and running a pub.

Heineken acquired 918 pubs from Royal Bank of Scotland in December last year and together with those it already owned it now has 1,350 across the UK, including 156 in Scotland. It also owns the Caledonian Brewery in Edinburgh.

But the rate of pub closures is among the factors prompting the company to help remove investment and risk concerns.

According to the Campaign for Real Ale, there were 450 pub closures in the six months between March and September, or 18 every week, an increase of six since the spring.

The campaign group blames the closures on high beer prices caused by the government’s “beer duty escalator”, the recession and cheap alcohol sold in supermarkets. The escalator, introduced in 2008, automatically increases the tax paid on beer by 2 per cent above inflation every year.

Heineken has created a three-year agreement offering a low-cost entry starting at £10,000, including deposit, and the option for a publican to terminate the agreement with three months notice without penalty or reason at any time.

The company will also offer a first-year package of financial backing to encourage entrepreneurs to take on pubs which, though not currently trading to their full potential, are considered to have the potential to significantly increase business.

The package helps with cash flow by paying for significant overheads such as rates, giving publicans time to establish themselves and build up custom. The agreement also rewards good performance with cash bonuses of up to £5,000.

The initiatives follow the integration of the Scottish & Newcastle Pub company into Edinburgh-based Heineken UK’s on-trade operations rebranded as Star Pubs & Bars with immediate effect.

Lawson Mountstevens, UK sales managing director for on trade, said: “Heineken is passionately committed to the future of the great British pub and we have big ambitions in terms of investing in pubs.”

“Due to the economic downturn, business confidence is low.We wanted to take some concrete steps to address this in the pub industry, by reducing the financial risk and length of commitment that are concerning many talented individuals who would like their own pub.”

Star Pubs & Bars leases pubs to independent business people to run as their own on agreements ranging from three to 20 years.