Punch Taverns, the tenanted and leased pub company, is encouraging its Scottish lessees to look for alternative products to replace Tennent’s lager after brand owner C&C Group added 40p to the cost of pints. It’s believed that the hike could result in £3.50 for a pint in some city-centre pubs. Pub company and brewer Greene King, which owns pubs in Scotland under its Belhaven arm, have also expressed concern. A letter from Punch to more than 300 lessees said: “C&C has signalled its intention to levy these significant cost increases, which are far above what we had expected, with effect from 1 November 2011. “Unfortunately, extended negotiations have failed to reduce or delay these cost increases. However, in support of our partners, we plan to absorb the impact of these changes until the next Punch wholesale price review early next year. “At that time we will need to address the impact of these changes, which we will limit to whatever extent we can, but we expect the price for Tennents lager to increase substantially following the review. “To protect your profitability we strongly recommend that you act now and take the opportunity to revise and extend your draught lager portfolio before the Punch wholesale price review takes effect.” A Punch spokeswoman said: “We have taken the proactive step of highlighting a potential price increase which could impact on our licensees’ businesses and encouraged them to explore all the available options for their pubs’ product range.” A Belhaven spokesman said: “If implemented, price rises of the scale indicated would clearly have a severe impact on not only our customers, but the Scottish trade as a whole. We are currently in negotiations with C&C and will do everything we can to protect both our trade customers and consumers.” A separate letter seen by the Publican’s Morning Advertiser, sister title to M&C Report, from C&C Group demanded that Scottish licensees switch to direct supply from the brewery itself or a “recognised wholesale partner”, or face losing their dispensing equipment and possible legal action. It gave licensees seven days’ notice. Tennent Caledonian sales managing director John Gilligan said: “We are extremely disappointed that Punch Taverns has chosen to communicate with their publicans in this way. Tennent’s does not control the price that our customers charge their customers, nor over the bar. Our renegotiated deal with Punch Taverns should not result in a price increase of the magnitude being alleged and, in fact, it does not follow that there should be any price rise for publicans or consumers. “The renegotiations referred to involve less than 5% of Scotland’s 11,500 licensed premises and the vast majority of Scotland’s licensed premises are unaffected. We would like to reassure our customers and our drinkers that Scotland’s favourite pint will continue to be available in pubs across Scotland – and at significantly less than £3.50 a pint. “On the issue of the separate letter that was sent to less than 20 outlets regarding the use of Tennent’s dispense equipment, we reserve the right to take whatever steps necessary to preserve the quality of Tennent’s being served across the bar.”