Tied house
Encyclopedia
In the UK
a tied house is a public house that is required to buy at least some of its beer
from a particular brewery
. This is in contrast to a free house, which is able to choose the beers it stocks freely.
However, this sometimes could victimize consumers, 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 CAMRA
, especially when the brewer forced poor beer onto the market owing to the lack of competition from better breweries. Some or all drinks were then supplied by the brewery, including spirits and soft drinks, quite often at an uncompetitive price relative to those paid by free houses. From 1989-2003, tied pubs in the UK were legally permitted to stock at least one guest beer
from another brewery to give greater choice to drinkers.
alcoholic beverage regulatory regime, tied houses are generally illegal in the United States
. 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:
In recent years, several major distillers have been successful in securing very specific exceptions to California's strict tied-house laws.
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 it's income from the retail beer sales.
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
a tied house is a public house that is required to buy at least some of its beer
Beer
Beer is the world's most widely consumed andprobably oldest alcoholic beverage; it is the third most popular drink overall, after water and tea. It is produced by the brewing and fermentation of sugars, mainly derived from malted cereal grains, most commonly malted barley and malted wheat...
from a particular brewery
Brewery
A brewery is a dedicated building for the making of beer, though beer can be made at home, and has been for much of beer's history. A company which makes beer is called either a brewery or a brewing company....
. This is in contrast to a free house, which is able to choose the beers it stocks freely.
Definition of "tied"
The pub itself may be owned by the brewery in question, with the publican renting the pub from the brewery. This is termed a tenancy. Alternatively, the brewery may appoint a salaried manager to run the pub it owns, and this form of tie can sometimes be termed a managed house. 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 return. 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 production.However, this sometimes could victimize consumers, 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
Monopoly
A monopoly exists when a specific person or enterprise is the only supplier of a particular commodity...
opposed by CAMRA
Campaign for Real Ale
The Campaign for Real Ale is an independent voluntary consumer organisation based in St Albans, England, whose main aims are promoting real ale, real cider and the traditional British pub...
, especially when the brewer forced poor beer onto the market owing to the lack of competition from better breweries. Some or all drinks were then supplied by the brewery, including spirits and soft drinks, quite often at an uncompetitive price relative to those paid by free houses. From 1989-2003, tied pubs in the UK were legally permitted to stock at least one guest beer
Guest beer
In 1989, licensing legislation passed by Margaret Thatcher's Conservative government made it possible for a tied pub to stock at least one guest beer from a different brewery....
from another brewery to give greater choice to drinkers.
In the United States
Under the current post-ProhibitionProhibition in the United States
Prohibition in the United States was a national ban on the sale, manufacture, and transportation of alcohol, in place from 1920 to 1933. The ban was mandated by the Eighteenth Amendment to the Constitution, and the Volstead Act set down the rules for enforcing the ban, as well as defining which...
alcoholic beverage regulatory regime, tied houses are generally illegal in the United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
. Tied-house restrictions have been construed as forbidding virtually any form of vertical integration
Vertical integration
In microeconomics and management, the term vertical integration describes a style of management control. Vertically integrated companies in a supply chain are united through a common owner. Usually each member of the supply chain produces a different product or service, and the products combine to...
in the alcoholic beverage industry. As the Supreme Court of California
Supreme Court of California
The Supreme Court of California is the highest state court in California. It is headquartered in San Francisco and regularly holds sessions in Los Angeles and Sacramento. Its decisions are binding on all other California state courts.-Composition:...
explained in a landmark 1971 decision:
In recent years, several major distillers have been successful in securing very specific exceptions to California's strict tied-house laws.
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 it's income from the retail beer sales.