UK: Heineken to invest £50 mln this year in transforming 150 of its pubs

Heineken unveiled plans to spend a record amount on transforming dozens of its pubs in the UK as the Dutch brewer searches for growth opportunities in a mature market even as the prospect of Britain leaving the EU looms, the Financial Times reported on April 25.

The world’s second largest brewer said on April 25 it will spend £50 mln this year on 150 pubs, raising its investment in hundreds of its Star Pubs & Bars businesses over the past six years to about £200 mln.

Its 2019 investment will be the most the brewer has ever spent on UK pubs in one year as, according to a company spokesperson, it sees the “value in bigger, bolder” projects. The plans for this year will create 1,200 jobs for the industry and will generate better returns for licensees, the Dutch brewer said.

Fierce competition from start-up food delivery groups and rising costs have weighed on many food and drinks companies, while others have been forced to rethink their business strategies. The London-listed City Pub Group, which specialises in craft beers and coffee, is scooping up and refurbishing often derelict places in prime UK locations such as cathedral cities and market towns as it expands its business.

Heineken, the UK’s third-largest pub business, has chosen a similar approach with this investment. The refurbishments it announced on Thursday will “respect the heritage of the buildings, keep the soul of the pub, and give a fresh and welcoming look for its locals”, said David Forde, Heineken’s UK unit’s managing director.

The Amsterdam-based group on April 24 said the UK was one of the mature markets that contributed double-digit growth to its earnings, unlike at home where volume sales were flat in the first quarter.

Almost one in four pubs have closed in the UK since 2008, the government’s statistics agency said in November, bringing the total in the country to about 39,000. Analysis from the Office for National Statistics shows that small pubs are disappearing while big pub chains consolidate their businesses around bigger bars.

Nonetheless, the total turnover of pubs and bars has held up, remaining flat since 2008, once inflation has been taken into account, the statistics office said in its November report. “The remaining pubs and bars appear to have soaked up the custom from those pubs that have closed down,” the ONS report said.

Britain is scheduled to leave the EU at the latest on October 31. The date has been postponed twice this year. The UK voted to exit the bloc nearly three years ago.

25 April, 2019