July 2009

Is the Price Right?

The idea that supermarket prices are killing pubs does not stand up to analysis

“THEY’RE SELLING Carlsberg at 30p a bottle at the supermarket down the road,” an aggrieved licensee complained to me. “How can I hope to compete with that?” You can understand her concern, and of course she can’t come close to competing on price terms, but in reality she doesn’t have to.

Throughout my drinking career, alcohol in the off-trade has been cheaper than that bought in pubs. The gap may have widened a bit over the years, but it has always been there. A licensee has to pay business rates, utility bills and staff wages, none of which you include when thinking how much the can or bottle you’ve just got out of the fridge has cost. The overheads a pub has to carry mean that it is always going to be dearer than just sitting at home, and surely all pubgoers realise that. A pub is far more than just an alcohol shop and in reality its main competition for people’s leisure spending is restaurants, cinemas, sports grounds and bowling alleys.

Nobody claims that restaurants are suffering because you can buy ready meals at Tesco for a third of the price of dishes on the menu, so the idea that pubs are suffering because cans of Stella are dirt-cheap doesn’t really stack up. People don’t sit down and make a calculated economic choice between going out to the pub and staying in with a few cans. If they want to go out, they will go out, and going to the pub should be as much about socialising as simply drinking alcohol. Many pub visits happen when people are out of the house anyway, at work, on holiday or shopping, so the option of drinking at home is not available to them. Obviously, if intoxication is the sole objective, the most cost-effective way of doing it is with cheap cider or spirits from the off-licence, but should pubs be targeting people who just want to get drunk anyway? On the other hand, cask beer, which is generally of moderate strength, is a unique selling point for pubs that cannot be replicated in the home.

Of course price can have an impact on the margins, maybe leading people to go out a little less often, or to tilt the balance a little from on to off-trade consumption. But relative price isn’t even the biggest single factor leading people to drink less in pubs. There are many other reasons leading people to drink more at home and less in pubs, such as the decline of heavy industry, the increasing popularity of wine and the tendency of employers to discourage lunchtime drinking by their employees. Lifestyles have changed and society has moved on. And the idea that raising the price of alcohol in the off-trade will do anything to encourage people to visit pubs is totally misplaced.

In Continental countries such as France and Germany, off-trade prices are considerably lower than ours, and the gap between on- and off-trade greater, but they do not have the same problems associated with off-trade consumption as we supposedly do, and in many cases have much more thriving bars. This suggests that the root causes are in social factors rather than simply price levels as such.

June 2009

Night Half-Life

Is Stockport’s night-time economy in need of revival and, if so, how?

A RECENT Friday night pub crawl around central Stockport found a couple of perfectly decent pubs very quiet, and the Underbanks eerily deserted at around 10 pm. Some pubs such as the Crown, Railway and Arden Arms do well, but overall Stockport very much lacks the vibrant “night-time economy” of many of the other major towns in Greater Manchester. There’s also a marked dearth of restaurants in the town centre over and above the usual fast food outlets. It seems as though, if people want a good night out, they head off to Manchester rather than remaining in the town.

So what could be done to make the town centre a bit more lively and welcoming in the evenings? One major factor must be the effective banning of traffic in the town centre streets. Pedestrianised streets may work during normal shopping hours, but in the evening they turn an area into a dead zone. If the dreaded rising bollards on Underbank were permanently retracted after 4 pm, and traffic was allowed along Princes Street after 6 pm, it could well make a big difference.

However, you have to be careful what you wish for, as it is highly likely that a revitalisation of night-time Stockport would mostly just lead to the spread of chain bars and takeaways. As an alternative, maybe what Stockport needs to do is to promote its unparalleled collection of high-quality traditional pubs rather than just trying to ape every other town centre in the region. “Stockport - the civilised night out” might not be too bad a slogan.

Punch Drunk

The recession has exposed the pub company business model as unsustainable

FOR A NUMBER of years, I’ve held the view that the giant pub companies were ultimately unsustainable. The key reason for this was that they had no unique selling proposition. It’s quite clear what differentiates a Robinson’s pub, or a Wetherspoon’s pub, from the competition, but what does a Punch pub have that an Enterprise Inns one doesn’t? They were far more driven by financial engineering than pub retailing.

Now, with the recession, the chickens are really coming home to roost, with Enterprise and especially Punch Taverns in an increasingly precarious financial position. Apparently Punch’s debts now exceed the total value of their property portfolio. In these circumstances, it’s not surprising that they’re engaged in a fire sale of their crown jewels to various family brewers. In the South-East, Fullers, Charles Wells and Adnams have benefited from this, and now in the North-West first Lees and now Robinson’s have bought tranches of pubs from Punch.

In the longer term, this is likely to lead to a major shift in the balance of power in the pub trade away from the pub companies as heirs of the former Big Six national brewers towards the family brewers, who were once derided as an anachronism. You have to wonder whether the heirs of defunct companies such as Home and Vaux might feel a twinge of regret about selling out. And how long can we expect the giant pub companies to survive in anything like their current form?