In the United Kingdom, a tied house is a public house required to buy at least some of its beer from a particular brewery or pub company That is in contrast to a free house, which is able to choose the beers it stocks freely
A report for the UK government described the tied pub system as "one of the most inter‐woven industrial relationships you can identify in the UK, with multiple streams of payments running in both directions, from the pub tenant to the pubco and vice versa, generally negotiated on a pub‐by‐pub basis"1
- 1 Free and tied houses
- 2 Outside the United Kingdom
- 21 Canada
- 22 United States
- 3 References
- 4 Further reading
Free and tied housesedit
The pub itself may be owned by the brewery or pub company in question, with the publican renting the pub from the brewery or pub company, termed a tenancy Alternatively, the brewery may appoint a salaried manager while retaining ownership of the pub; that arrangement is a "managed house"2 Finally, a publican may finance the purchase of a pub with soft loans usually a mortgage from a brewer and be required to buy his beer from it in returncitation needed The traditional advantage of tied houses for breweries was the steadiness of demand they gave them; a tied house would not change its beer supplier suddenly so the brewer had a consistent market for its beer productioncitation needed
However, the arrangement was sometimes disadvantageous to consumers, such as when a regional brewer tied nearly every pub in an area so that it became very hard to drink anything but its beer This was a form of monopoly opposed by the Campaign for Real Ale, especially when the brewer forced poor beer onto the market from the lack of competition from better breweriescitation needed Some or all drinks were then supplied by the brewery, including third party spirits and soft drinks, quite often at an uncompetitive price relative to those paid by free housescitation needed From 1989 to 2003, some tied pubs in the UK were legally permitted to stock at least one guest beer from another brewery to give greater choice to drinkers3
Outside the United Kingdomedit
In Canada, alcohol laws are the domain of the provinces Tied houses were eventually banned in all provinces in the aftermath of the repeal of total alcohol prohibition In the 1980s the concept of the Brew Pub or Microbrewery was introduced to Canada beginning in the Province of British Columbia Through the 1980s and 1990s this concept expanded to other provinces but was not a return to fully tied houses in the traditional sense4 Very few alcohol producers or distributors survived prohibition, creating a concentrated market ripe for abuses For example, in British Columbia in 1952 there were “no licensed restaurants or private liquor stores and only about 600 bars and clubs” compared to “over 9000 licensed establishments, including 5,600 restaurants” in 20115 A proposal to loosen the restrictions was put forward by the government of BC in 2010, in response to these changes, but regulation to implement the law was still under debate in 20126
In the late 19th and early 20th centuries, saloons both Western and in the eastern cities in the United States were often tied houses, with breweries having exclusive contracts with drinking establishments and often helping prospective saloon keepers get their start in business7 Competition between saloons was fierce, especially as many areas had several saloons, each tied to a different brewery; the breweries often ran aggressive marketing campaigns through their tied houses to increase demand and increase their market share7 This system ended with the enactment of nationwide Prohibition in the United States in 1919
Although Prohibition was repealed in 1933, alcohol remained heavily regulated in the United States, with the Twenty-first Amendment to the United States Constitution granting the states broad power to regulate the alcoholic beverage industry Thus under the post-Prohibition alcoholic beverage regulatory regime in effect today, tied houses are generally illegal in the US Tied-house restrictions have been construed as forbidding virtually any form of vertical integration in the alcoholic beverage industry As the Supreme Court of California explained in a landmark 1971 decision:
|“||Following repeal of the Eighteenth Amendment, the vast majority of states, including California, enacted alcoholic beverage control laws These statutes sought to forestall the generation of such evils and excesses as intemperance and disorderly marketing conditions that had plagued the public and the alcoholic beverage industry prior to prohibition By enacting prohibitions against "tied-house" arrangements, state legislatures aimed to prevent two particular dangers: the ability and potentiality of large firms to dominate local markets through vertical and horizontal integration and the excessive sales of alcoholic beverages produced by the overly aggressive marketing techniques of larger alcoholic beverage concerns The principal method utilized by state legislatures to avoid these antisocial developments was the establishment of a triple-tiered distribution and licensing scheme Manufacturing interests were to be separated from wholesale interests; wholesale interests were to be segregated from retail interests In short, business endeavors engaged in the production, handling, and final sale of alcoholic beverages were to be kept 'distinct and apart' In the era when most tied-house statutes were enacted, state legislatures confronted an inability on the part of small retailers to cope with pressures exerted by larger manufacturing or wholesale interests Consequently, most of the statutes enacted during this period 1930–1940 manifested a legislative policy of controlling large wholesalers; the statutes were drafted in sufficiently broad terms, moreover, to insure the accomplishment of the primary objective of the establishment of a triple-tiered system All levels of the alcoholic beverage industry were to remain segregated; firms operating at one level of distribution were to remain free from involvement in, or influence over, any other level8||”|
In recent years, several major distillers have been successful in securing very specific exceptions to California's strict tied-house laws9
There have also been some arrangements between breweries and non profit venues The brewery partner donates beer at wholesale to the non profit obtaining an exclusive high-profile account The non profit receives a major portion of its income from the retail beer sales
- ^ "Modelling the impact of proposed policies on pubs and the pub sector" PDF wwwgovuk London Economics December 2013
- ^ "Pub companies, pub tenants & pub closures" PDF wwwparliamentuk House of Commons Library
- ^ Slade 1998, pp 565
- ^ "History of Bushwakker Brew Pub, chapter 3" Saskatchewan regulations provide that a restaurant or pub may brew its own beer if its total annual production does not exceed a proscribed limit Alberta regulations say that every brewery may operate one restaurant and no more dead link
- ^ "Legislation & Policy - Province of British Columbia" wwwaggovbcca Archived from the original PDF on 15 November 2015 Retrieved 31 March 2017
- ^ Paddy Treavor May 29, 2012 "Tied House Laws Revisited – Middle Ground May Be the Way to Go" VanEast Beer Blog
- ^ a b Burns, Ken; Novick, Lynn 2 October 2011 "A Nation of Drunkards" Prohibition Episode 1 PBS
- ^ California Beer Wholesalers Ass'n v Alcoholic Beverage Control App Bd, 5 Cal 3d 402, 407–408 1971
- ^ Dispatches from the Wine Law Wars, speech by James Seff at Stanford University, 9/28/10
Slade, ME 1998, "Beer and the Tie: Did Divestiture of Brewer-Owned Public Houses Lead to Higher Beer Prices", The Economic Journal, 448 108: 565–602, doi:101111/1468-029700305
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