A tied house agreement is a type of agreement commonly made between a brewery or distillery and a bar or pub. This agreement is essentially a contract in which a bar agrees to exclusively sell the products of a particular brewery or distillery in exchange for certain benefits, such as discounted prices or financial support.
The term “tied house” refers to the idea that the bar or pub is “tied” to a particular supplier, as they are contractually obligated to only sell the products of that supplier. This can be beneficial for both parties involved in the agreement. For the brewery or distillery, it ensures a steady stream of sales and helps to build brand recognition. For the bar or pub, it can provide financial incentives and help to establish a loyal customer base.
However, tied house agreements are not without controversy. In some cases, they have been criticized for limiting consumer choice and stifling competition. For example, if a bar is tied to one particular brewery or distillery, it may be difficult for them to offer a wide variety of products to their customers. This can be particularly problematic in areas where there are only a few bars or pubs, as it may be difficult for new or smaller breweries or distilleries to gain a foothold in the market.
Tied house agreements have been regulated in various ways in different countries. For example, in the United States, the Federal Alcohol Administration Act prohibits certain types of tied house agreements, while in the United Kingdom, tied house agreements are governed by various codes of practice and regulations.
Overall, tied house agreements can be a useful tool for both breweries or distilleries and bars or pubs, but they must be implemented responsibly and with consideration for the wider market and consumer choice. As with any business agreement, it is important to carefully consider the benefits and drawbacks before entering into a tied house agreement.