How the Pub Chain Wetherspoon’s won Britain’s hearts and wallets
In Australia, pubs operate much as they all once did in the UK; relying on breweries to deliver beer to be poured out of taps locked up under contract with said breweries.
In October 2017, Sydney based Redoak Breweries launched an attempt to penetrate the market, offering cut priced kegs of beer for $120 (an estimated 50 per cent discount to the then going rate) to encourage publicans to free up taps coming off contract.
As an aside, Redoak has been reported as being a vocal activist against tap contracts. The brewery was also a leader in the formation of the Australian Real Craft Beer Association, and in opposition to the former Craft Beer Industry Association, now called the Independent Brewers Association.
The challenge for Redoak however is that bigger breweries provide a list price, and then offer beer tap infrastructure, refurbishments of venues, as well as rebates and incentives, and even complimentary event tickets and sponsorship deals. Clearly it makes establishing the real price of a keg of beer difficult, if not impossible. The Australian Competition and Consumer Commission however was unable to find anything unusual,handing down a decision that the beer industry in Australia is a fair and competitive market.
Walmart was once locked into similar arrangements but became fed up, deciding it would not be beholden to its supply chain.
Which brings us to the UK chain Wetherspoon’s.
In an article entitled How Wetherspoon’s conquered Britain, Esquire magazine notes: “Wetherspoon’s did everything it could to gain the upper hand in negotiations. At the time, pubs typically relied on breweries to deliver beer and provide dispensing equipment. Wetherspoon’s established its own distribution network, bought its own taps, and forced prices down. Nathan Wall, the company’s former operations director, told me: “It was taken straight out of Walmart: We will not be beholden to our supply chain.” He added: “There’s this urban myth that Wetherspoon’s sells close-dated beer. When I was at Wetherspoon’s we sold 12 million pints of beer a week. The logistics of finding 12 million pints of short-dated beer is just impossible. The reason they get their prices so low is absolutely, 100 percent down to volume and having their own distribution network.”
Business operators unhappy with the status quo in their own industry should continue to read the Wetherspoon’s story here.