Pub Visiting - UK - May 2013
“With closures slowing, the now-streamlined pub industry is better placed to take control of its own fortunes and focus on its strengths rather than looking for people to blame for its recent problems.”
– Chris Wisson, Senior Drinks Analyst
Some questions answered in this report include:
- What impact will the 2013 budget changes have on pubs?
- Could pub closures be a blessing in disguise?
- How can pubs improve their use to the community?
- How can the leased/tenanted market improve its performance?
Pubs continue to be a central feature of the leisure industry in the UK, with three in five adults visiting them for a drink in 2013. However, the industry remains in transition and pubs are under pressure from a plethora of factors. The uncertainty surrounding legislative changes such as minimum pricing, pubco-tenant ownership guidelines and tax escalators continue to cloud the outlook in the market.
However, with few signs of notable economic improvements, it is likely that the pub industry faces at least a few more years of tough trading. The now-streamlined industry should be better equipped to thrive in the longer term, with the current total estate of around 50,000 pubs sufficient to serve the UK’s ageing population.
Price continues to be an important factor when determining which pubs people visit but this in fact falls behind other factors such as cleanliness and service when it comes to things which deter consumers from certain venues. As discretionary spending continues to be closely scrutinised, pubs are having to work harder to justify the consumer’s decision to visit them instead of drinking/eating at home. In this sense, much of the power lies with the landlords themselves and the overall fortunes of the pub industry in the short term will be driven by how many pubs are able to deliver a cost-effective and enjoyable experience for consumers.
This report examines the market for pub visiting, with the primary focus on drinking in pubs/bars. A separate Mintel report, Pub Catering – UK, May 2013 looks at the business of food in pubs in more detail.
All pubs (public houses) and bars have on-trade licences to serve alcoholic drink for consumption on the premises. These licences may also be granted to other outlets, such as hotels or cinemas, but a pub has at least some traditional characteristics that differentiate it from other bars.
Most pubs trace their heritage to close links, or ‘ties’, to a local brewery. The brewery traditionally owned the freehold, or a long lease, on the property and then either sublet it to a tenant (tenanted pubs) or installed its own landlord to run it (the managed estate). The managed/tenanted distinction still pertains to many ‘estates’ (owned groups) of pubs, but tenancies have often been replaced by more modern, long-term leases (leased pubs).
A ‘pubco’ (pub company) is independent from the control of a brewer, although it may negotiate long-term supply contracts with a single brewer and thus maintain close links with the brewing industry. Leased/tenanted pubcos make most of their money from supplying beer and other drinks to their tenants at wholesale prices.
‘Wet sales’ refers to the proportion of a pub’s turnover from drinks (sometimes confined to alcohol), while ‘dry sales’ refers to food turnover.
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