UK PUB GIANT JD Wetherspoon’s planned march on Ireland could be stalled after Heineken refused to supply its beers to the company’s latest venue in Dún Laoghaire.
The dispute, which led to Wetherspoon pulling the Dutch brewer’s products from all 926 of its venues, appeared to stem from the pub chain significantly undercutting rivals with cheap pints.
Wetherspoon had been charging €2.95 for pints of Heineken at its first Irish pub, The Three Tun Tavern in Blackrock.
The row leaves Wetherspoon’s without a major brand of Irish stout after losing Heineken brand Murphy’s only 6 days before the scheduled opening of its next venue, The Forty Foot Pub in Dún Laoghaire.
The pub chain has already resigned itself to trading without Diageo-supplied beers after claiming the brewer was charging a premium to supply Guinness in Ireland compared to UK prices.
Goodbody analyst Simon Matthews told TheJournal.ie that Wetherspoon’s dispute with Heineken highlighted the problems the pub company faced in making its strategy work in Ireland.
The would be effectively without an Irish stout, which is likely to be an issue for many Irish drinkers,” he said.
“Losing Heineken’s brands would be quite significant as, along with the eponymous lager, they would also lose Fosters which is their ‘known-value product’ in Blackrock at €2.50 a pint.”
Heineken is the best-selling brand of lager in Ireland.
Price cuts to lure punters
Matthews said Wetherspoon had been charging significantly higher prices per pint when they first opened in Blackrock, but they had been forced to undercut rivals to boost their patronage.
“The reason they’re at €3 a pint is because they weren’t getting the required footfall in that establishment,” he said.
I hope that Heineken UK are able to smooth out this dispute because it is in both parties’ interests – but whether the relationship continues in Ireland remains to be seen.”
Wetherspoon opened the Blackrock outlet under its banner in June and has flagged plans to open 30 pubs in Republic over the next 3 years, although its chairman Tim Martin previously said the company’s decisions would depend on how the first venues performed.
In July he told DailyEdge.ie, TheJournal.ie’s sister site, that prices were too high in Ireland and a lack of competition among suppliers was hurting the business.
Suppliers have got to start doing a lot more, and perhaps having another supplier or two in the market might help … I’m trying to be very diplomatic here,” he said at the time.
The chain’s first pub outside Dublin, the venue once known as the Newport Café in Cork, was also due to open soon, and it has spent about €10 million buying and developing 5 sites. It also recently bought the former Light Nightclub in Blachardstown and it planned to sink €3 million into the venue for the pub conversion.
No guarantees
In a statement yesterday, Martin said Heineken had recently asked for a personal guarantee for the first time in 35 years, despite Wetherspoon making a record profit of about £80 million (€101 million) in 2013.
“The refusal to supply Heineken lager and Murphy’s just before the opening of our new pub in Dun Laoghaire, which represents an investment by us of nearly €4 million, is unacceptable and hard to understand,” he said.
Heineken said it was looking for a quick resolution and it was “unfortunate that commercial issues in Ireland” had derailed the companies’ long-standing relationship.
To embed this post, copy the code below on your site
have your say