JD Wetherspoon's high-profile bust-up with Heineken over the supply of beer to its new Forty Foot venue in Dún Laoghaire had been – excuse the pun – brewing.
The British chain had been selling Heineken for €2.95 a pint in its only other Irish pub, the Three Tun Tavern in Blackrock, for several months, significantly undercutting the market, much to the annoyance of the Dutch brewer.
Heineken Ireland is understood to have taken a dim view of its premium brand – the most popular draught beer in the country – being sold as a bargain basement lager.
It was also exercised by the likely market impact of a chain of pubs – Wetherspoon has plans to open 30 more in Ireland over the next two years – plying the same price-cutting policy.
For a company that’s used to getting its own way in a market dominated by small, independent publicans, who have no power to negotiate, something had to give.
Nonetheless, the company could hardly have predicted the damaging blowback on its UK business.
By turning off the tap on Heineken products, which include Foster's, Kronenbourg and Strongbow cider, across its 926 pubs, Wetherspoon has effectively vaporised £60 million (€76 million) in Heineken sales.
It’s likely that Heineken Ireland was acting without the input of Heineken UK.
Judging by the soft notes coming out of Heineken UK, the subsidiary is fighting a rear-guard action to repair the damage, which has a good chance of succeeding given what’s at stake.
Unfortunately, the badly needed injection of competition in the State’s bar trade may be killed off before it has begun.
Heineken Ireland’s claim that it was normal to seek a personal guarantee before supplying the Dún Laoghaire pub - the straw that broke the camel’s back - is rubbish, not least when you consider its relationship with Wetherspoon stretches back 35 years.
What’s most revealing about this assertion is that Heineken thinks it normal to demand personal guarantees before supplying its product.
Heineken Ireland made revenues last year of €477 million compared with the £1.6 billion (€2 billion) it generated in UK market – reflecting just how lucrative the Irish market is for the brand.
Where all this leaves Heineken Ireland and its supply arrangements with Wetherspoon is anyone’s guess?
