OFT enquiry hits brewers' share prices

The Office of Fair Trading (OFT)probe into wholesale beer prices had a predictably negative effect on the share prices of the brewers.

Whitbread has been the hardest hit of the big brewers because a bigger share of its profits comes from beer sales to tied tenants.

Andrew Holland, analyst at Kleinwort Benson Securities, pointed out that the situation for regional brewers - particularly Vaux, Greene King and Marston's - was even worse.

Another victim of the OFT probe is Greenalls. Although not a brewery, a significant portion of its profits comes from selling beer, which is bought-in at a heavy discount, to its tied pub estate.

The best outcome is that the OFT does not refer the issue of beer pricing to the Monopolies and Mergers Commission.

If a referral takes place, the result could lead to a revolution in the pub industry as great as that caused by the 1989 MMC report into the supply of beer.

This saw thousands of pubs being put onto a depressed property market.