Dec 9, 2014 9:07 AM
UK pub chain, Heineken clash over beer cost
The Associated Press
DUBLIN (AP) One of the United Kingdom's biggest pub chains has dropped Heineken products from its 926 properties in a confrontation over the Dutch brewer's demand to sell products at higher prices in the Republic of Ireland.
The episode underscores anti-competitive practices in Ireland, where entrenched publicans and the country's dominant brewers, Heineken and Diageo, are hoping to prevent Wetherspoon's from gaining a significant presence that could force competitors to cut the average retail price of a pint nearly in half.
Wetherspoon's said Tuesday it has stopped selling Heineken-made products in retaliation for the brewer's refusal to supply the Forty Foot, a Wetherspoon's-owned pub being opened this month following a 4 million euro ($5 million) refurbishment. If their 35-year business relationship remains severed, industry analysts estimated it would cost Heineken 60 million British pounds ($95 million) in lost annual trade.
At stake is the cost of a pint in Ireland and, more widely, economic revival in a country with more than 6,000 pubs for 4.6 million people, many of whom now drink at home rather than pay high pub prices.
The Wetherspoon's chain, known in Britain for its market-leading cheap prices for food and drink, has spent years hoping to crack the potentially lucrative Irish market. Publicans backed by social media-driven protests have sought to portray it as a foreign invader likely to erode the quality and character of Irish pubs.
Undaunted, Wetherspoon's this year unveiled plans to open 30 pubs, buying failed Republic of Ireland businesses in prominent locations and giving them expensive makeovers. Its first reborn pub, the Three Tuns in the posh Dublin suburb of Blackrock, opened in July to rave customer reviews and unabashed glee at prices starting at 2.50 euros ($3.10) per pint, prices not seen in Ireland in decades.
Diageo, the British parent of Dublin brewing behemoth Guinness, refused to play ball in a market that typically charges 5 euros or more per pint today. The Three Tuns shrugged its shoulders and stocked Ireland's two other home-produced stouts instead, Murphy's and Beamish. Both are produced in Cork by Heineken, which also produces the eponymously named lager that is Ireland's most popular beer.
But as Wetherspoon's prepared to open the Forty Foot this month, it said Heineken threatened to withhold its brands unless the British company raised its Irish prices by how much, neither side was prepared to say Tuesday. Wetherspoon's refused and said it stopped taking Heineken deliveries everywhere.
Heineken officials in Dublin and London declined to comment beyond saying they hoped to resolve the dispute with Wetherspoon's quickly.
Wetherspoon's chairman, Tim Martin, called Heineken's price-rise demands "unreasonable and difficult to understand." He said his company's profit was rising annually, despite charging some of the lowest prices in the industry, and would rather dump Heineken in favor of Ireland's increasingly vibrant microbrew scene.