E-Malt.com News article: UK: The last quarter is expected to be 'the worst part of bad year' on beer sales

The number of pints served in Britain's pubs and bars in the run-up to the busy festive period declined by almost 10% as chilly smokers, no longer allowed a cigarette inside a pub, cut short their drinking time or stayed at home, The Guardian posted on .

In the first winter since the UK-wide ban on smoking in public places was imposed in July, pub beer consumption for November fell 9.7% against the same period in 2006, according to industry figures.

Pub bosses expected the ban to hit hardest in winter but the November decline is by far the steepest since the restrictions were extended from Scotland into Wales and England last year. UK beer sales in August, the second month of the nationwide ban, were down just 2.5%.

The November figures followed falls of 8.2% and 7.7% for September and October respectively and appeared to hit every type of beer. "All categories fell - there was nowhere to hide," said Mark Brumby, an analyst at Blue Oar Securities. "Premium ale was down 6.9%, standard ale 9.6%, standard lager 10.4%, premium lager 8.3% and stout 10.6%."

He suggested that smaller, tenanted pubs and free houses were likely to be among the most exposed to the exodus of smoking customers. Many larger managed pub groups have taken steps to increase their food offering, appealing to people previously put off by the smoky atmosphere.

Mitchells & Butlers, the largest managed group, which includes the Harvester, Toby Carvery and O'Neill's chains, claims to sell more turkey than Tesco and JD Wetherspoon sells more than 250,000 breakfasts and more Lavazza coffee than any other retailer.

Some industry insiders expect double-digit declines for December and January. Rob Hayward, chief executive of the British Beer & Pub Association, said it was too early to make such a call, but there was no reason to expect a recovery in beer sales. "I think the general sense in the industry is that the last quarter of 2007 was the worst part of a bad year."

Summer weather has always had an impact on trading, with long, warm evenings boosting trade for beer gardens. Now the industry's winter fortunes are also vulnerable to the elements. Scottish & Newcastle, Britain's biggest domestic brewer, has estimated the smoking ban will mean an 8% decline in beer sales volumes.

Pub beer sales have been in almost uniform decline on a monthly basis for about three years, hit by changing lifestyles and aggressive discounting on multi-pack "slabs" at supermarkets. The trend has been accelerated by the smoking ban.

One senior industry figure, who asked not to be named, said on-trade sales - about 55% of overall sales by volume - were likely to fall behind the take-home trade this year for the first time in living memory.

John Hutson, chief executive of Wetherspoon, said he was nevertheless optimistic about the long-term impact of the smoking ban. "The big picture is that we are just going to find new customers. Don't forget there are more than 75% of people out there who don't smoke."

Most of the major pub operators are expected to give trading updates at the end of the month. Many have seen substantial share price falls in the past six months, though this has largely reflected a reappraisal of their property asset values rather than their trading performances.


04 January, 2008