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WRITER, CONSULTANT AND BROADCASTER SPECIALISING IN BEER, PUBS AND CIDER. BEER WRITER OF THE YEAR 2009 AND 2012

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What's new?
More new events added in Bristol, London and Edinburgh over April and May
I had a big piece in the Guardian this week about why publicans are unhappy
Click here to hear me talking about craft beer on this week's radio 4 Food Programme!
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Thursday, 4 February 2010

Is the worst over for pubs?


After last week's report that beer sales are not quite as shit as they have been, there's similar cautious optimism this week for pubs - while not exactly something to shout from the rooftops, there are two bits of news suggesting that things have at least stopped getting even worse.

First, The Publican reported yesterday on claims from Merrill Lynch that pub performance is improving. The city broker chained that pubs face a brighter outlook in 2010, “with trade recovering, debt at manageable levels, regulatory concerns back to historical levels and property values having bottomed out”.

They were looking mainly at the big PubCos of course, and claimed in that the tenanted sector in particular was improving, with the underlying performance trend improving and top-end pubs showing “greater resilience”.

Today, this was followed by new data compiled for the British Beer and Pub Association by CGA Strategy, showing that the rate of pub closures slowed in the second half of 2009. We've spent six months quoting the horrible figure of 52 pub closures a week - that has now slipped back to 39 a week. Hardly great news - before we got up to 52 this was shocking - but after 52, it doesn't seem quite as bad, and suggests that some of the factors killing pubs have done their worst.

A total of 2365 pubs closed in 2009, with the loss of 24,000 jobs. There are now 52,500 pubs in Britain – well down on the 58,600 pubs operating when the Licensing Act came into force in 2005. In addition to the loss of these vital community hubs, the Government is set to lose over £250 million in tax revenues this year, if the current closure level continues.

Food for thought for PubCo haters - in the second half of 2009 the rate of closure of free houses was far higher than tenanted or leased pubs - from July to December 575 free houses closed compared to 320 tenanted and 117 managed pubs.

The data also shows that pubs serving food led pubs continued to do better than those that don't - just 130 of the pubs that closed were food led, with 883 drink-led.

It convinces me that while the trade is absolutely right to point fingers are factors such as supermarket pricing and in particular Thunderbirds Boy and his moronic tax rises, the recession has clearly been a particular bane to pubs, and now it's easing, so is the pub's plight.

The industry is by no means out of the woods and could still do with a helping hand from government rather than yet more punishment, but the pub is not going to die. Many (though I'll admit, not all) of those who behave in an entrepreneurial way and continue to offer people something relevant will survive, and many are prospering.

I'll be talking about this on Five Live's drive time show later today.

16 comments:

Chris B said...

I'm not in the UK so will catch up with the report on Drive on the i-player. Any chance you could let me know approximately what time you're on so that I don't have to plough through all 3 hours of the programme?

Cheers from Germany,

Chris.

Pete Brown said...

Don't have a definite time but am told it'll be in the first hour.

Cooking Lager said...

I'm not too sure you can blame the recession for the woes of the pub industry or claim the 0.1% growth as credit for the woes getting less worse (it’s not got better). I think you can claim the seasonality of Xmas as giving it a temporary boost, in the same way that you can expect the 0.1% growth as a blip rather than the start of any recovery. The next economic figures will likely show another contraction.

In previous recessions pubs have been fairly resilient. You cannot discount the smoking ban as a factor in the woes of the pub industry as pubs are fairly inhospitable gaffs for the future patients of the cancer ward. Most public spaces were moving to smoking restrictions or had established them prior to a ban due to public demand. That demand never existed for pubs.

It’s no surprise that those pubs that are cheap restaurants are faring better as they attract a different clientele. As for supermarket prices, I think people confuse cause and effect. There is a long term trend for drinking at home and supermarkets recognise this and recognise that special offers drive footfall. The supermarket offers are a result of a trend away from pubs that would not alter even with price fixing. The same trend exists for churches, social clubs and many other types of outfit.

You are right to say the pub industry will not die, but it is slow to adapt to changing customer tastes and expectations. Restaurants close and reopen regularly with a different name and style of food. Many failing pubs remain run down male drinking establishments that blame their woes on others rather than recognise that people want smart urban bars and pubs that are clean and female friendly.

Curmudgeon said...

Maybe I'm a glass half empty merchant, but it has to be said that a reduction in the rate of decline is a long way short of a recovery. And, while undoubtedly this shake-out will end at some point, we will be left with pubs occupying a much smaller space in the national psyche than they used to.

Gavin Appleby said...

Ahh The Railway in Driffield, used to be a fantastic pub until it closed. Its now been flattened and turned into new build terraced houses that look awful!

DaveA said...

Hi Pete I got your blog off of The Publican and I am on the Executive of Freedom2Choose the smoker's right's group. The World Health Organization is behind the tobacco bans worldwide with its Worldwide Tobacco Framework. 168 of the 194 sovereign countries have signed up to it in 2003 and its aims are:

"The WHO FCTC was developed in response to the globalization of the tobacco epidemic and is an evidence-based treaty that reaffirms the right of all people to the highest standard of health."

This has been cut and pasted into an alcohol framework.

"WHO gets nod to tackle harmful use of alcohol 2008

"GENEVA (Reuters) - The World Health Organization (WHO) is set to draw up a global strategy to tackle youth binge drinking and other forms of harmful alcohol consumption blamed for 2.3 million deaths a year, officials said on Thursday"

"The harmful use of alcohol causes serious public health problems," said Dr. Ala Alwan, WHO assistant director-general for non-communicable diseases and mental health.

The health ministers said the WHO strategy to reduce harmful use of alcohol should be "based on all available evidence and existing best practices...taking into account different national, religious and cultural contexts."

The blueprint, to be presented in two years, should include a set of recommended national measures for states. These could cover guidance on the marketing, pricing, and distribution of alcoholic drinks and public awareness campaigns.

In 2003, WHO clinched the first global public health treaty which targeted tobacco through stronger warnings on cigarette packages and limits on advertising and sponsorship. A year later it declared war on poor diets blamed for rising obesity.

Alcohol causes 2.3 million premature deaths worldwide each year, accounting for 3.7 percent of global mortality, WHO says. Harmful drinking is also linked to traffic accidents, suicides, crime, violence, unemployment and absenteeism."

http://www.canada.com/topics/bod...d0- f3a28b88c344

Curmudgeon said...

Cookie,

Pubs depend much more on regular repeat business than restaurants, so it can be commercial suicide to completely change the style and format - as we have seen with a lot of establishments that have chased the yoof market and fallen flat on their face.

Stono said...

an interesting piece, if a bit disjointed over the whole show (the technical gremlins were definitely at work) so Im not sure if I caught all of it or not.

but its a shame they couldnt find a "happy" pub-co tenant to balance the debate a bit more, as dipping into your savings to pay the bills or being forced to buy beer and wine off some Delboy character with a van and selling it cash only so you can pay the staff, doesnt paint a very positive image.

fwiw the pubs that have struggled and shut down the most recently in my neck of the woods have been pub-co tied ones, and the happier and more successful pub landlords are the going it alone types.

but Im not sure the pub-co tie was the prime cause of failure, most of the pubs that closed were pretty awful pubs, run badly, with a high churn in staff,and no interest in building the business, though often in prime or good locations, or youd think at least.

so its definitely a more complex issue than pubco=bad, and would have been nice if they could have spent more time on it

CarsmileSteve said...

On the bright side I hear the Walkabout in Angel has shut!

Certainly in central London the only pubs shutting (at least since the m&b massive sell off) are truly dreadful ones, is that a bad thing?

Journalists should do the most basic research before mouthing off said...

Hope you didn't called Merrills a "broker" on air. It's an investment bank you plonker.

Pete Brown said...

Re Merrills - shit, that'll teach me to copy something from a printed publication in good faith!

Check your facts said...

If you'd ever had a proper job - you know, the kind that pays the mortgage and keeps the wife happy - you'd have heard of one of the most important investment banks in the world.

You comment a lot on the pub scene. Ever owned or run one?

You comment a lot on politicians and government. Ever been involved in that at all, or known anyone who has?

Eddie said...

Those figures come from the BBPA, who are the pubco's. What do they say about the failure rate of tenants? There's a boozer I know that had 6 tenants in three years. All of them (well meaning) complete idiots who think that being a pub regular qualifies them to run a business. The pub co is more than happy to relieve them of their life's savings and serve notice on them 6 months later.

The pub is still 'open' and wouldn't appear on the BBPA stats.

Anecdotal, yes, but you get my point.

Pete Brown said...

Of course I've heard of Merrill bloody Lynch - they're an investment bank with a brokerage business, an analytical arm (which is the part that was perhaps most relevant here) and many more divisions - to call them a broker is neither technically incorrect (though maybe wrong in this context) nor an indication that I haven't heard of them.

And if you'd done YOUR research properly you'd know I have indeed had a 'proper' job for many years, much of which included consulting to financial bodies including one of Merrill Lynch's main competitors.

Your assertion that we need to have done something before we're allowed to write about it is a strange one - you may want to live in a world where the only people allowed to write about politics are ex-politicians and the only people allowed to comment on banking practices are former bankers etc, but I certainly don't.

Now go and have a lie down - you clearly need one.

StringersBeer said...

Sorry to be so tardy...
It seems there were 576 closures among free houses (22 a week), but 735 tenanted/managed pubs were transferred into free house ownership (from July to December 2009). Doesn't that mean that there were 6 free house openings per week overall but 17 tenanted/managed closures? i.e. a net gain of free houses and a continuing loss of the other kind.

Or have I got it wrong?

Heidi said...

Great blog!!!Lol,we enjoyed every moment that we spent in our favorite pub..We drink beers,wine and other drinks!!!And sad to say our favorite pub now was already close because of the economic crisis..

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