Beer sales plummet in on-trade

Andrew, I agree with you 100%. In just 3 years running my pub the price of my beer has risen by an average of 30p a pint, but my margins have shrunk by an average of 5%. My accountant is constantly telling me I need to raise the price of my beers still further in order to keep my head above water but I'm already struggling to attract people in to my small village local because my beer, whilst similarly priced to many of the other village pubs near me, is bordering on price-prohibitive for many of my customers. People are staying for shorter periods of time and spending less and yet the cost of my outgoings continues to increase. I suspect Helen probably hasn't visited back to see what comments have been left in repost to hers.

we've had price rises ,lease changes ,supermarkets for years but still the trade was coping then came the smoking ban IT IS THE MAIN CAUSE OF THE DISASTERS TAKING PLACE,and until that ill thought out law is changed all the other reasons for the depression will disappear when pubs will no longer exist meanwhile the anti smoking brigade are having a laugh at the sight of us all blaming everything bar the ban for our troubles

Despite several well worded responses, I note that there is no reply from Helen - I wonder which pubco she works for?

The tenants who signed these lease agreements did not realise that because the supply tie forecloses the whole market place and the tenants effectively operate under a restrictive set up, the pubcos have been able to use their dominant position to exert control over various suppliers. Royalty payments and kick-backs are common place and have all taken away from the tenants bottom line. These legal yet immoral income streams that were hidden from the tenants, have all helped fluff up the pubco profits. Now Helen, this was never pointed out to me when I signed my lease agreement

Helen, you are correct that no-one forced the tenants to sign their lease agreements but let me ask you one question; Does this still justify the immoral acts of the pubcos? Maybe these new tenants with bright and shiny new lease agreements were not party to all the facts before they signed up. Forget the erosion of controllable costs by duty hikes and artificial barrel price, when the pubcos have been able to value their pubs and increase rents based on the future trading or an alternative use, none of which are specifically definable or can be calculated, the tenants who signed these leases never stood a chance. By over valuing the trading ability of a pub the pubcos created unsustainable rents levels. It was always going to end in misery, 18 months I would say, but it never stopped the roller coaster ride of the pubco monster because they always had some other eager lamb to invest their life savings into their precious freeholds. The pubcos have manipulated the market place by appearing to give barrelage discount to their tenants yet in reality GP’s have fallen by 6 or 7% in the last five years. The very process in which our industry has been able value the strength of a negotiated deal, the barrelage discount, is a con. What is the easiest way to give a pub 80 per barrel discount yet not lose profit? Yes that’s right, artificially inflate the price of a barrel. I get £42 a barrel discount yet in real terms I’m about £40 a barrel worse off over the last five years.

There's a comment about people 'signing leases'. Well as we know it smoking is banned and often one cannot even stand outside to have a smoke let alone take a drink out. Why do people not admit, yes it's great to have the odour of sweat but that smoke was good air freshner! I'm sure most leasees signed up never for a moment believing their trade would be more than controlled by council officials and government who want the best of both worlds. Maybe, just maybe when the business rates calculated on income materialise those same councils will remembers not to cry wolf as their own income demishes? Just one view anyhow. Michael

This is a culmination of a number of factors: firstly, the smoking ban, however I know most people have adapted although pubs with no outside area have suffered. But the main cause is the astronomical cost of a pint in a pub - with the main culprits being the taxman, greedy breweries and excessive overheads. It is clear in Cheltenham where I live that many more pubs will follow those which have already closed and that those that are left will probably be managed pubs belonging to chains rather than leaseholds. In fact the traditional pub will go the same way as the local grocer/butcher/fishmonger has: into history while the pubs that still exist will belong to mega-chains.

Helen, You have a point, but have forgotten that many of these tenancy or lease agreements were entered in to well before the Smoking Ban and Credit Crunch. Nobody believed that the Smoking Ban would have the effect that it has had. Most people were expecting the Government to allow publicans to choose between being a Smoking or a Non-Smoking pub. The blanket ban was not anticipated by many. I have heard the ban described as a "Great leveller". It is, but it has forced the level down substantially. The Credit Crunch has had an even greater effect, but even fewer people predicted that. The massive rise in oil prices has had a major effect on the profitability of public houses. Electricty prices alone are rocketting. I know several publicans who are doing what you suggest but who are struggling to survive. Government intervention is required if we are not to see a terminal decline in the traditional British pub.

Why is there always some smart a**e who says "you knew what you were signing when you took on the lease"??? We did not anticipate the fourfold increase in Sky subscriptions, the doubling of our rateable value, fuel prices going up by at least 22%, the 30% rent increase after 3 years and the continued hike in beer prices. When we started in January 2002 Stella was £2.50 per pint and our overall draught beer margin arouind 48%. It is now held down to £3.25 per pint and our overall beer margin averages less than 46%. The smoking ban has had a significant negative effect ,but despite all this we still keep going. We are doing everythng right but are nevertehless struggling to break even. Please don't tell me we are stupid to have signed an agreement blindly - if I could foresee the future to this extent I would have retired many years ago!

Beer sales are down, yes, Cask Alesales down? In so far as my brewery is concerned no they are not, we are showing significant growth. Truth is National and Regional brewers sales are down but the small brewing sector is showing strong growth and we are busy. There is success and failure and I think that we resourced small brewers who make quality products will see there market grow.

Well there you are! Off Trade we all know is the Supermarkets and pubs get the blame for increased drinking in the UK. What a load of rubbish, and they and the government are putting publicans out of work.

Yes it's tough out there and I have every sympathy for publicans at this difficult time. However, no-one forced anyone to sign a tenacy or lease agreement - these agreements were entered into with full knowledge of the facts one would hope. It's a case of survival of the fittest; operators who listen to their customers, understand the local market and adapt to suit will be the ones who survive. I appreciate that some of these adaptations can be costly to implement. However, a smile, a warm welcome and farewell don't cost anything and usually result in repeat business. Likewise for a clean car-park/outside area. We need to pull together and focus on what can be changed - not what can't.

For leased and tenanted pubs the fall of 10% in beer volumes will coincide with similar falls of other drinks. Given that most pubs are run on a shoestring and the tenants profit after rent was between 8% and 10% of turnover over the last couple of years it is now obvious that the average pub has little or no profit for the tenants to exist, and yet most of the Pubcos will still be looking for their annual RPI rent increase where they can get it.

I fully concur with what Mr Corbett says about high rents and extortionate beer prices from the pubcos and breweries. It is almost impossible to make a net profit on beer sales, yet my well-known london brewery does not care in the slightest if their tenants go out of business. I reckon they believe that there will always be another mug to take up the lease and lose another fortune.

It is so blatant - it is all down to price - and to point the finger purely at the Treasury is naive at best. In recent years the brewers have cleverly slipped in around 5p per pint increases in February, just before the Chancellor adds another penny in March and thus takes the blame. Add to that the huge margin that the pubco's take from their large tied estates and the end price for beer in many pubs leaves a bitter taste in the customers mouths - before drinking a drop! This years absurdly insensitive 4p per pint budget increase, compunded with the highly tactical (and possibly strategic) discounting of beer at the supermarkets has led to the biggest disparity in prices in living memory. No wonder sales are down!

Yes Mr Hayward, all pubs are struggling. Beer sales are certainly down in the on-trade but let me remind you that they have been declining year on year for the last ten years. Cask ale sales are down over 50% in this period. With all associated costs on the tied tenant and free of tie tied tenants balance sheet being comparable, rents are the same across the whole pub sector, yet tied tenants are paying more than twice as much for their beer, tell me which pubs are struggling the most? You don’t have to be a rocket scientist do you Mr Hayard?