Friday, 26 February 2021

A slow crawl to freedom

The contents of the Prime Minister’s announcement last Monday of the roadmap to unlocking were widely leaked in advance, so none of the contents came as a great surprise. Sometimes, these pronouncements contain some aspect that was rather better than had been trailed, but this was not to be this time, and so the hospitality trade is faced with a painful and glacially slow crawl back to full reopening in four months’ time. Not surprisingly, my Twitter followers weren’t at all impressed. Lord knows who the 8.7% were who responded “too fast”. However, we are where we are, and the pub trade have to make the best of a bad job rather than crying into their beer. The first milestone is on 12 April, no less than seven weeks away from the announcement, when outdoor opening, including off-sales, will be permitted. It is hard to understand why off-sales weren’t allowed earlier, as they continued during the two previous lockdowns. That is still a long wait, and unless significantly more support is forthcoming in next week’s Budget no doubt many more pub operators will give up the ghost. Speaking personally, the thing I’m most looking forward to is a haircut, as I’m increasingly resembling a member of an early 70s prog-rock band!

Towards the end of Lockdown #1, the possibility of outdoor-only opening was mooted, and I wrote here about the issues it raised, an obvious one being the notorious fickleness of the British weather. The Morning Advertiser reports than only 40% of pubs will be able to take advantage, and Sacha Lord, the Greater Manchester night-time economy adviser, makes the point that it represents a kind of class distinction, as urban boozers are much less likely to have extensive beer gardens than dining pubs in leafy suburbs and villages.

This stage will require pubs to operate table service – it certainly won’t just be a case of serving people pints for perpendicular drinking in the street. This makes swift, responsive service a challenge even indoors, and if you’re in the far reaches of an extensive beer garden you may have a long wait for a refill. And customers will still need to go inside to use the toilets, unless pubs install a battery of portaloos in the garden.

The government have indicated that “outdoors” will be defined in the same way as under the smoking regulations, so a covered area with two out of four sides open will be judged acceptable. So we can expect a rush on suppliers of marquees, umbrellas and temporary shelters. Inevitably this will lead to demands for even further restrictions on smokers, ignoring the fact that for thirteen years they were forced to drink outside at times when nobody else wanted to.

The fickleness of the weather will also pose a challenge for selling cask beer, as it will make the level of trade far more variable than normal. A few days of cold, wet weather may leave you with several largely unsold casks, while a heatwave could clear you out. Having said this, if pubs are in a position to make good use of outdoor facilities, as many are, it does present them with an opportunity that they should make the best use of. And a sunny weekend could prove a goldmine.

Then, on 17 May, pubs will allowed to open indoors, but it is important to remember that this will effectively be under last year’s Tier 1 restrictions, with social distancing, table service and mandatory masks. As I wrote at the time, this results in a regimented, cheerless experience that largely destroys the pleasure of the swift, casual pint. A dining pub can cope without too much problem, but many smaller wet-led pubs reported that the atmosphere was totally gone, as was their profitability. When this came in last year, I largely stopped going to pubs, certainly not to make speculative visits, and I doubt I’ll be particularly keen to rush back in May.

We are told that all restrictions will be removed on 21 June, which fortunately is three days before my birthday. But, unless the requirement for masks on public transport is dropped at the same time, my celebratory pub crawl will definitely be confined to Stockport! This will mean that the pub trade has either been shut entirely, or operating under severe limitations, for a full fifteen months. However, this has been portrayed in some quarters as giving the green light to a kind of bacchanalia, so it’s not difficult to imagine the desiccated sociopaths of SAGE having kittens and decreeing that the Tier 1 restrictions need to continue throughout the summer. I’m not making a prediction, and I sincerely hope it doesn’t happen, but don’t say you haven’t been warned!

I have seen talk of this causing a “summer wave”, but surely, given that respiratory viruses always lose their effectiveness in warmer weather, and that by then a large majority of the adult population will have been vaccinated, this is very unlikely. If it does turn out that the impact of the virus has by then become trivial, and we are able to enjoy the second half of the year to the full, then we may look back on the preceding fifteen months as just a bad dream. A successful and prosperous reopening of the economy will erase a lot of bad memories. But only time will tell.

Tuesday, 23 February 2021

The Eternal Whipping Boy

I didn’t really see much point in blogging about yesterday’s announcement about the snail-like pace of reopening the country. It has all been said before. But I thought it would be worth drawing your attention to this brilliant blogpost by Scott Graham aka The Bar Biographer. Scott doesn’t blog often, but when he does he invariably hits the nail firmly on the head.

Amidst the mountains of speculation, one thing is pretty much agreed upon by all observers, pubs will be at the back of the queue for reopening. What is also widely acknowledged is that such a decision has no scientific basis. But that doesn’t matter to politicians, academics, journalists, social media commentators and all the other influencers, large and small. That the licensed trade and night-time economy occupy the lowest rung is more about worthiness than rates of transmission.
He also skewers the narrow-minded, Puritanical attitude of the Scottish government:
Pubs in Scotland will face an even less palatable menu, with Nicola Sturgeon set to look at the schedule set out by Boris Johnson and mirror most of it, particularly its sequencing, but add on five or six weeks for Scotland. That’s because the SNP has an unwritten motto, as do a chunk of the population, “never knowingly less righteous (i.e. authoritarian) than the next country”.
And his conclusion is spot –on. Yes, one day, we will get our pubs back in some form. But they will be hugely diminished from what they were before lockdowns.
Yes, eventually the pubs and social clubs will re-emerge in the UK, maybe even nightclubs and casinos. But the landscape will have changed dramatically, independent operators even more an endangered species, chains such as Wetherspoons ever more dominant. It didn’t have to be this way, but it is the inevitable outcome of the UK establishment once again casting the licensed trade as the whipping boy.

Saturday, 20 February 2021

A swift half century

Next month will see the 50th anniversary of the Campaign for Real Ale, which was started by four young English journalists in Kruger’s Bar in Dunquin in County Kerry, Ireland. Drinks writer Laura Hadland, who tweets as @Morrighani, has been commissioned to write an anniversary history, which is to be released to coincide with the actual date. It is promised to be “warts and all” but it remains to be seen whether that extends beyond a few mildly embarrassing anecdotes to a deeper examination of its objectives and achievements. I’ve pre-ordered a copy, but obviously it hasn’t arrived yet.

Since then, it has enjoyed great success as an organisation, reaching a record membership figure of over 190,000 before the Covid crisis deprived it of the opportunity of recruiting at beer festivals. It was described in the late 1970s as “the most successful consumer organisation in Europe”. However, if you look at the wider picture, during CAMRA’s lifetime both the share of real ale in the overall British beer market, and its absolute sales, have shown a dramatic decline, as has the number of pubs in the country. Obviously those trends are due to wider factors largely outside its control or influence, but at least on those terms its record cannot be judged as a successful one.

At the outset, CAMRA’s mission was very clear, and could be expressed as “to encourage pubs to sell beers in established British styles (overwhelmingly Mild and Bitter) in cask-conditioned rather than pressurised (keg, tank or top-pressure) form.” Yes, it was accompanied by assorted baggage in people’s minds about defending tradition and standing up to corporate power, which gave it an appeal across the political spectrum, but it was pretty unequivocal.

However, over the ensuring fifty years there has been a steady accretion of other objectives which have served to blur the organisations’s original single-minded purpose.

These include, amongst others:

  • Encourage pubs and bars to stock real ale

  • Promote traditional British beer styles

  • Encourage new breweries and innovative beer styles

  • Support the appreciation and preservation of traditional pubs

  • Lobby for the pub trade in general

  • Stand up for the wider interests of drinkers

  • Challenge the corporate power of breweries, pubcos and supermarkets

  • Organise beer festivals and social events

  • Offer a discount scheme for pubs and beer festivals

  • Doing all the above for cider and perry as well as beer
All of these are entirely legitimate areas of interest, even if they don’t necessarily float everyone’s boat, and it has often been said that CAMRA is a broad church from which people can pick and choose the aspects that interest them. However, it leaves its objectives as a campaigning organisation distinctly blurred. Who can say, beyond a vague “supporting pubs and beer”, what CAMRA actually stands for now? Some of them even have the potential to work against each other. I have come across some people within its ranks with whom I struggle to identify any areas of common interest at all.

A few years ago, CAMRA underwent a “Revitalisation” process which was supposed to make it more fit for the 21st century and free it from the narrow-minded dogmatism that had often characterised it in the past. However, it’s hard to see what difference it has actually made, and in some ways it seems to have only served to extend that dogmatism into new areas. Does anyone outside CAMRA actually care less whether keykeg beers are “keg-conditioned” or not? And CAMRA’s stance as a generalised campaigning organisation representing all beer drinkers, pubs and brewers is undermined if it refuses to give house room to the beers that most people drink.

Many members still remain blind to the existential threat to all that they hold dear posed by the public health lobby, and much prefer to direct their ire at evil pubcos and supermarkets. It is a massive pivot from assuming your main enemy is business to realising it is government, and one many have no intention of making. Indeed, while it may claim to be promoting something that is “fun”, CAMRA members often taken a very puritanical view towards anything outside their narrow definition. They are often very much anti-smoking, anti-“junk food”, anti-popular culture and anti-gambling, and signally fail to join up the dots. As I quoted in this blogpost,

... if you do a sociological analysis on the IanB Scale, a scale of Puritanism which I invented several seconds ago, CAMRA are a heavily puritan social formation. Puritans come in a number of guises, and can, on the surface seem to be promoting something notionally libertine, such as imbibing an intoxicant. Nudists are another example of a puritan formation that you have to look more closely at to see it. Try bumming a fag in a nudist camp and see the reaction you get.
Back in 2005, before the days of blogs, I wrote an assessment of CAMRA’s achievements to date.
In conclusion, if we take the view that CAMRA has not managed to curb the power of the major breweries, increase the amount of real ale sold in Britain, or stem the tide of pub closures, then it must be judged a failure. Many of the campaigns it has mounted on wider issues have been damp squibs, or have spectacularly backfired. But, to my mind, its lasting achievement has been to greatly raise the profile of beer in the UK, and to encourage the creation a network of producers, outlets and consumers where beer is appreciated in a way that was scarcely imaginable in 1971. Real ale undeniably has to an extent become a niche product, but it occupies a large and thriving niche. And it is the positive promotion of real ale – in all its forms – and the establishments that sell it, that should form the core of its activities in the future. If that means CAMRA drawing in its horns a little, then that would be no bad thing.
And perhaps that message of sticking to the knitting is one it would do well to heed today.

Tuesday, 9 February 2021

Going viral

Very little in our daily lives has escaped the reach of Covid over the past year, not least in the sphere of beer and pubs. What follows is a collection of miscellaneous musings on the topic that extend beyond the usual subject matter of this blog.

  • The pandemic, or rather the government response to it, has divided families and sundered friendships in a way reminiscent of Leave vs Remain, although perhaps even more bitterly as it is something that is closer to home. There’s a certain amount of overlap, although far from an exact match.

  • It has provided a golden opportunity for authoritarians and puritans of all stripes to advance their hobby-horses knowing that they will receive little kickback. The Burden of Proof fallacy has been working overtime.

    A: We're going to impose Measure X to reduce the spread of Covid.
    B: I'm not sure Measure X is very effective.
    A: So you want to KILL PEOPLE, you monster!

  • There has been a disturbing amount of suppression of views that dissent from the official narrative, with people losing newspaper columns and TV slots and having their social media accounts suspended or deleted.

  • Some people in public life have executed a screeching U-turn and recanted from their previous scepticism. One of the worst examples has been Christopher Snowdon, previously the scourge of the public health establishment on alcohol, tobacco and food policy. In the middle of last year, he was staunchly defending the Swedish approach, but abruptly came round to full-blooded support of the current lockdown. He has compounded this by engaging in mockery of those who disagree with him, completely failing to appreciate the inherent irony.

  • People across all manner of sectors have displayed an unedifying dog-in-the-manger attitude, demanding to know why Business X is allowed to open when they’re not. Sadly, the pub trade and those claiming to support them have been particularly guilty of this.

  • To assert that there is a choice between protecting the economy and protecting lives is to draw a false dichotomy. A healthy economy is an essential foundation for a healthy society.

  • Business failures, economic destruction and a mental health crisis are not caused by Covid, they are caused by lockdowns. Covid is a fact of life, lockdowns are a policy choice. One does not inevitably stem from the other.

  • The police really haven’t covered themselves in glory - arresting people for singing and throwing snowballs, making up the law as they went along on mask exemptions, travel to exercise and what shops were allowed to sell, carrying out heavy-handed and unwarranted raids on pubs on the say-so of one malicious curtain-twitcher, and applying blatant double standards to public protests depending on the cause being promoted.

  • The mask law has encouraged self-righteous, judgmental individuals to feel that they have a right to bully and harass disabled and vulnerable people in public places. It’s all too easy to say “he doesn’t look very disabled”, but of course many of the conditions that entitle people to an exemption aren’t immediately obvious. Anyone tempted to have a go should heed the words of the DHSC:

    And hopefully any person who took it upon themselves to challenge this lady would feel rightly proud of themselves.

  • I don’t doubt that Chris Whitty, Patrick Vallance and Jonathan Van-Tam are able and eminent scientists who are genuinely motivated to do good, but they are only experts in their particular field and seem blinkered to any wider considerations.

    I am reminded of the quotations by C.S. Lewis that “Of all tyrannies, a tyranny sincerely exercised for the good of its victims may be the most oppressive.”, and of F.A. Hayek that "There could hardly be a more unbearable - and more irrational - world than one in which the most eminent specialists in each field were allowed to proceed unchecked with the realisation of their ideals."

    It would be a hollow victory to succeed in eliminating Covid while being surrounded by the smoking ruins of a destroyed economy. And, frankly, the policies enacted over the past year seem to have done a much better job of achieving economic destruction. Maybe an economist should be included on SAGE to provide a wider perspective.

    Neil Ferguson, on the other hand, is a contemptible hypocrite with a long track record of failure in forecasting who shouldn’t be allowed anywhere near influencing government policy.

  • Some people, with the benefit of hindsight, have argued that things would have been better if we had locked down earlier and harder. However, looking at the situation across the world, there is no correlation between the severity of lockdowns and the success in tackling Covid. Some of the countries with the strictest lockdowns, such as Peru, Argentina and Spain, have had some of the highest death rates. It seems that, in some people’s minds, lockdowns are rather like socialism, that they would work this time if only they were done properly.

  • Lockdowns have been described as middle class people staying at home on full pay making Zoom calls while working-class people bring them stuff – or lose their jobs. There is a clear correlation between the level of social deprivation in an area and the proportion of inhabitants unable to do their jobs from home.

    Media discussions on lockdown seem to be monopolised by people who have suffered no financial penalty. Maybe every panel should have to include at least one person who has been furloughed or lost their job.

  • The past few days have seen a sharp decline in daily case figures and some more positive mood music about the lifting of restrictions. However, there is unlikely to any more clarity about the road forward until the Prime Minister makes an announcement a week on Monday. In the meantime there is a welter of speculation in the media, most of which presumably originates from anonymous government sources, but only serves to spread anger and alarm amongst the population.

  • And I continue to believe that those claiming that most restrictions will be gone by the middle of the year are being hopelessly optimistic. I hope I’m wrong, but I’m not making plans for any holidays further away than Argate.

Saturday, 6 February 2021

Through the looking glass

Many people have been complaining about the unreasonableness of the rule that, before the lockdown, only allowed pubs and restaurants to serve alcohol if it was accompanied by a “substantial meal”. It’s reported today that the government have recognised the unfairness of this and are now proposing to create a level playing field by allowing them to reopen, but to ban them from selling alcohol at all.

Presumably at the same time they will also allow hairdressers to reopen without being able to cut hair, and gyms without anybody being allowed to exercise. We truly are plumbing the depths of insanity.

Anyway, this seems to be a suitable theme tune for today.

Friday, 5 February 2021

Fancy a pint?

This Spring will mark forty-five years since I first bought myself a pint in a pub at the age of sixteen. Since then, obviously many things have changed in pubs, not least that that simple act, once commonplace, would now be impossible. And one thing that strikes me is that people are far less likely just to “go out for a drink”.

Back then, pubs were more numerous, they were much busier, and were busier throughout a much higher proportion of their opening hours. And a mainstay of their trade was what I described – people, either singly, or in groups, whether of friends, family or work colleagues, meeting up not to watch sport or to eat a meal, but just to enjoy a drink and a chat. It was a valued third space that was neither home nor work, where you could let your hair down, lose your inhibitions a little, and speak more freely and openly. It was also noticeable how groups would talk between each other, not just amongst themselves. Diners don’t tend to do that. They would often be of mixed ages and, while men tended to outnumber women, would also often include both sexes.

Go to those pubs, now, and the scene will be very different. Many will have closed their doors forever, while others will now be closed at times when once they were busy. It’s easy to say that there’s no point in opening if there’s no trade on offer, but that becomes a self-fulfilling prophecy, and I’ve argued before that limited and erratic opening hours are a major deterrent to people visiting pubs in general. In 1976 you knew when the pubs would be open.

Where the pubs are still open, sometimes they will be so deserted as to make casual customers feel uncomfortable. There’s a big difference between a quiet pub and an empty one. Or such a high proportion of customers will be dining that anyone just wishing to have a drink will feel like the proverbial Piffy on a rock bun, and will also have no other drinkers to chat with. Or everyone will be watching the big match, thus stymieing conversation and turning the pub into a monoculture.

This trend is encapsulated by my description of how Sunday lunchtimes in my local pub changed over the years. In the mid-1980s, with only two hours’ drinking, no food, no children, no football and no piped music, it was busy verging on packed. Now, open all day, and with all of those things, it’s virtually empty. “The heaving, wet-only, smoky Sunday lunchtime session of the mid-80s has now given way to a sanitised, smoke-free environment virtually devoid of drinking customers thirty years later.”

Of course this pattern of drinking hasn’t vanished entirely, but it’s much diminished, and pubs are the less for it. Surely conversation lubricated by a drink or two is what pubs, at root, are all about. You often hear sentimental gush about pubs being cosy, convivial places at the heart of their communities, but the reality on the ground frequently bears little resemblance to this rose-tinted vision. The sight of a couple or group coming into a pub, getting drinks and just sitting down to talk can be so rare that it is worthy of note.

One of the places where this mode of pubgoing is still in evidence is in the much-maligned Sam Smith’s pubs where, of course, many contemporary distractions are absent.

Note that I talking here about suburban, small town and village pubs that people are likely to visit directly from their own homes. The customer dynamic in the centres of large towns and cities has always been different.

Friday, 29 January 2021

After the storm

As I said in my previous post, “It may seem a distant pipedream at present, but the day will eventually come when the pubs are allowed to open again.” Planning for the future may appear inappropriate when set against the very high daily death tolls recorded in recent days, but to retreat into panic and despair and refuse to look forward would be irresponsible. It should be remembered that, During World War 2, the Beveridge Report was published at the time of the battle of El Alamein, and the 1944 Education Act was being debated in Parliament while the D-Day landings were taking place.

Although it is still more than three weeks away, the Prime Minister has stated that some kind of roadmap for reopening the economy will be produced on February 22nd, and the past few days have seen encouraging reductions in the number of positive Covid tests and hospitalisations. Assuming the vaccines prove effective, this trend should accelerate in the coming weeks.

However, it would be naive to expect any rapid progress in the sphere of hospitality. Over the past year, it often seems to have been treated as a scapegoat even when there was no evidence it was a significant source of infection. The main differences between Tiers 1, 2 and 3 were in how hospitality was treated. The impression has been given that government is largely indifferent to hospitality and sees it as something essentially frivolous, despite the fact that of itself it is one of the largest economic sectors and oils the wheels of the entire economy.

Even though most of hospitality has been closed for longer than it has been open since March last year, the amount of financial support provided has been distinctly grudging. If the government decrees that you’re not allowed to trade, then by rights it should compensate you for the resulting loss of income. Having said that, the overall level of borrowing that has been incurred is comparable with that needed to fund a major war, and our children and grandchildren will have to bear the burden of repaying it for decades to come. If interest rates had been at historic norms rather than virtually zero, that amount of borrowing would have been impossible, although arguably that unpalatable fact would have concentrated minds.

Looking specifically at the pub sector, the prospects do not seem at all rosy. During the brief window of relatively normal trading over last summer, the vast majority of pubs locally did eventually reopen, the exceptions mainly being ones whose future looked uncertain even before the lockdown. However, I would expect many more that are currently closed never to actually open their doors again, either under their current management or completely.

Last summer, even though capacity was restricted, few pubs seemed to be anywhere near full, and it was clear that many customers were still reluctant to venture out due to continued fear of infection, although the closure of other activities often linked to pubgoing such as theatres and sports venues also had a part to play. Licensees had to walk a tightrope between ensuring that social distancing guidelines were followed and avoiding going over the top with pettifogging restrictions. Sadly, quite a few seemed to fall into the latter camp and turned their establishments into profoundly unwelcoming places. After a winter of further scaremongering from the government, these fears will only be intensified when pubs do eventually reopen, and will lead to continued subdued demand for a long time to come. Indeed, it may never return to being as strong as it once was.

The past year has shown that making predictions is a very risky business, and I’m certainly not going to go down that road. However, on past form, it’s very likely that pubs will be one of the last sectors to be allowed to reopen. It’s probable that, at least initially, the old Tier system will be resurrected. One press commentator suggested that a likely timescale would be for most areas to go into Tier 3 on 8 March (i.e. “non-essential” retail allowed to open), Tier 2 on 6 April and Tier 1 on 4 May. That would mean that wet-led pubs had been closed for a minimum of nine out of the previous thirteen months.

There must then be a serious risk that the government would leave pubs in Tier 1 for a prolonged period. They could claim that the pubs had reopened, while ignoring the fact that they were still operating under such severe restrictions that both their ability to trade profitably and their appeal to customers had been seriously undermined. Tier 1 would be, for many pubs, a kind of living death.

Last October, I wrote about how the restrictions introduced in late September had meant the death of the swift pint. After they came in, I largely stopped going, whereas in the period from the beginning of July I had been doing so quite enthusiastically. This is echoed by this article in the Morning Advertiser in which a licensee argues that having to continue to operate under severe restrictions undermines the whole point of the pub:

As a wet-led pub, my stock-in-trade is the “pub experience”. I provide a haven for single people, people unwinding after work and people out to socialise.

The very nature of a wet-led pub is the socialising and the atmosphere. Any level of restriction has a massive impact on the experience and by opening with restrictions we are effectively destroying our own long-term prospects...

...People’s most recent memories of the pub is as a soulless place.

A pub should be a carefree place where people go to relax and enjoy themselves, not somewhere you’re being repeatedly questioned and hassled by both the staff and other customers. Going to the pub is a discretionary leisure activity; people aren’t compelled to do it, and and if they become sonewhere that is perceived as unwelcoming then people just won’t bother.

Back in December, I asked my Twitter followers to what extent they expected these restrictions to be lifted by the end of 2021.

There was a wide spread of responses, which were slightly skewed towards the more positive end of the spectrum. However, only 28.5% thought the restrictions would be completely gone, and 44.7% thought that most or all would still be in place. That isn’t a prediction, and I sincerely hope these fears are unfounded, but it doesn’t bode well for the recovery of the pub trade.

The Wickingman has also set down some thoughts on the issues surrounding the reopening of pubs here.

Edit: There is a report today that the government are considering abandoning the Tier system and opting for a single system of restrictions across England. While in a sense that might seem “fairer”, it would delay reopening as all areas could only proceed at the speed of the slowest.

Sunday, 24 January 2021

Feeling the draught

It may seem a distant pipedream at present, but the day will eventually come when the pubs are allowed to open again. When it does arrive, the licensed trade will be in need of all the help it can muster to get back on its feet. One idea that has been suggested by CAMRA is to reduce the rate of duty on draught beer only.

This has a number of reasons to commend it. By definition, draught beer is only served on licensed premises (apart from the occasional person buying a cask or keg for a party) and so this would be very accurately targeted. It is clearly defined and virtually impossible to evade. Plus, unlike with reducing duty for all beer, or indeed all alcohol , sold in the off-trade, there would be no possibility of seepage into the off-trade. Even if someone buys a container of draught beer to take home, the pub still gets the benefit, and it can’t really be done on an industrial scale.

However, it’s important not to get carried away. It’s likely that most pubs would use it as an opportunity to rebuild their margins rather than passing it on directly to the customer. The exception, as usual, would probably be Wetherspoon’s.

And how much difference to consumer behaviour would it actually make? The duty plus VAT on duty paid on a pint of 4% beer is 52p. Even if that was halved, it would still only be a gain of 26p, which is well under 10% of the price of most pints. That’s really neither here nor there for most pubgoers and, as I wrote here, isn’t of itself going to tempt them to drink much more in pubs. “Responsible people who aren’t on the breadline, which is most of us, don’t go to the pub because the opportunity doesn’t arise, not because they can’t afford it.”

I’m also inherently suspicious of any attempts to use the tax system to discriminate between “desirable” and “undesirable” activities. For a start, they often have little effect, especially when going against the grain of people’s behaviour. Despite the 50% duty cut, there hasn’t been any upsurge in consumption of 2.8% ABV beers, because people just don’t want to drink them. And, although there aren’t really likely to be significant issues in this case, such policies also tend to lead to “tax break specials” to get around the spirit of the legislation, and have the potential to produce adverse unintended consequences.

Some CAMRA diehards will grumble that the majority of the benefit will accrue to the drinkers of Carling and Stella, not real ale. But the objective is to support pubs, not real ale as such, and it should not be forgotten that two out of every three pints drunk in pubs are lager, while only one in seven is cask beer. It is the lager drinkers who keep the pubs going.

Another question is how such a measure would interact with the existing systems of lower duty for very weak beers, and higher duty for very strong ones, and Small Brewers’ Relief. Plus the anti-drink lobby will be up in arms at any cut in alcohol duty, no matter how worthy the motivation.

Given the current state of the public finances, the likelihood must be that, in his Budget in March, the Chancellor decides to raise alcohol duties across the board. So, even though it may in theory have much to be said for it, don’t expect a cut in draught beer duty to figure on his agenda. And I doubt whether much, if any, draught beer will end up being sold in March anyway.

Friday, 15 January 2021

Vertical disintegration

Just before Christmas came the news that Brains Brewery of Cardiff had signed a 25-year deal with Marston’s to take over the running of their pubs, although they would retain the underlying ownership and continue to supply the pubs with beer. It was rather hard to know what to make of this, as it seemed to go against the usual trend of a company closing or selling off its brewery but continuing to operate its pubs, which typically account for the bulk of the profit.

Initially, it was met with guarded optimism, with CAMRA welcoming it as a means of preserving both the pubs and the brewery. However, it wasn’t long before it all started to unravel, and the announcement came that Brains were unlikely to reopen their new, state-of-the-art brewery, and that the beers could well end up being brewed in England. I’m sure Bedford or Wolverhampton could make a decent fist of them, but this would mean that a once-proud brewery company would be reduced a mere financial husk, with no direct involvement in either brewing or pub operation.

It should not be forgotten that, in the 1970s, Brains were one of the select band of breweries to offer real ale in every single pub they owned. Their flagship beer SA was one of the early standard-bearers of the real ale movement, although it is in a style that is no longer so fashionable. It is still one of my favourites, though, and one I will usually go for if I happen to see it on the bar.

However, they have suffered from the usual problems encountered by every brewery mainly dependent on the on-trade, which has halved over the last couple of decades. And in recent years they have seemed to lack a coherent strategy, introducing a range of craft beers that were well-received, but seemed to fall between two stools in the marketplace, and increasing their estate by expanding into England, only to sell all those pubs again early last year. Plus the lockdowns in Wales have been even longer and more restrictive than those in England, and Brains have now become the first major brewing casualty of the Covid crisis. Tandleman has also blogged very perceptively on the Brains story here.

No doubt this news will give the directors of the remaining family brewers pause for thought as to whether the vertically integrated model combining brewery and pubs is still relevant in today’s business landscape. Going back a couple of generations, this was the default in the industry. Breweries acquired pubs to sell their product, and the number of pubs they owned was a key factor in judging their success and status. Most production went through their own pubs, and most of what the pubs sold came from the owning brewery.

Up and down the country there was a patchwork quilt of independent breweries of various sizes, in general just producing variations on the theme of standard British beer styles. People would, in general, choose a pub based on its location, its atmosphere, where their friends went and what activities took place there rather than specifically which beer it sold. Obviously some beers were better regarded than others, but by the end of the 1960s the wave of big brewery takeovers had eliminated pretty much all of the total clunkers. Perhaps one of the last to go was Swales of Manchester, taken over by Boddingtons in 1970 with 38 pubs and rapidly closed down, whose beer was dismissed as “Swales’s Swill.” But I’m too young to remember it, and I may be unjustly denigrating them.

There were still about 100 independent family brewers remaining at the dawn of the CAMRA era. Some, such as Boddingtons and Young’s, had strong local followings, whereas others weren’t met with such enthusiasm. Locally, I don’t think people would have gone much out of their way to drink Burtonwood or Matthew Brown. But all of them had their own individual character, and there was something to be said for pretty much all of them. The only one that people seemed to struggle to find a good word about seemed to be Gibbs Mew of Salisbury. Often the main determinant of which pub to choose was whether or not they sold real ale – people would choose a real Oldham Brewery pub over a keg Thwaites one.

Over the years, the various pressures on the industry caused many of these companies to be taken over or leave brewing, with the result that less than half are still standing today. It must always be remembered that, with the one exception of Matthew Brown being taken over by Scottish & Newcastle in the late 1980s, all of these were agreed deals. The single biggest factor determining survival or extinction was the continued commitment of the owning family.

In the ensuing years, various changes occurred in the industry to undermine the viability of the integrated model. First was the rise of lager, which by the middle of the 1980s accounted for half of all beer sold in pubs. Many family brewers developed their own brands, some decent, some less so, but they never resonated with customers in the same way as their ales, and the lack of a well-known national brand on the bar was often a reason for drinkers to avoid their pubs.

Then there was the growth of the food trade. Some brewers had attractive suburban and rural pubs in their estates that were well-placed to capitalise on this, but it reduced the overall importance of ale in the sales mix. After the 1990 Beer Orders, there was a growing expectation of seeing a wider range of beers on the bar, whether rotating guest beers or national brands, making brewers’ own ranges look dull and uninspiring.

And the dramatic decline of total beer volumes in pubs, which halved between 1998 and 2019, put further pressure on the brewing side of the business. Typically, the family brewers sold a much higher proportion of their production in the on-trade than the industry as a whole. This trend has particularly affected wet-led pubs without food sales to fall back on, and this was exacerbated by the 2007 smoking ban. This type of pub was over-represented in the estates of many of the family brewers, such as those in the North-West.

The overall effect of these changes has been to greatly erode the synergy between the brewing and pub-operating sides of the business, and diminish the relative importance of brewing. As I’ve said in the past, many of these companies have come to look like a chain of smart dining pubs with an under-utilised ale brewery tacked on as an afterthought. Inevitably, this has caused some of them to question whether it makes sense to carry on this way in the future, and no doubt more will do the same.

But surely, if you are running an integrated business, it makes sense to make a virtue of it rather than seeing it as a problem. There are no magic answers, but several breweries have found ways to address this. For firms varying from Bathams to BrewDog, the fact that you can buy those particular beers in those pubs or bars is a major factor in defining their appeal.

Sam Smith’s beers may not be such a compelling attraction, but their overall offer is a highly distinctive one on the pub market, and they make a point of promoting the fact that as much as possible of what they sell is made in-house. That, incidentally, as also something that the supermarket chain Morrisons use in their publicity. And Holt’s of Manchester, while a lot less out on a limb than Sam’s, do brew their own range of lagers and stouts which are the standard beers in those categories in their pubs. If you own a brewery, you might as well try to make the best use of it.

Too many pubs now have beer ranges that are hard to distinguish from one another. Promoting the fact that Bloggs’ pubs are the best place to find Bloggs’ beers has the potential to create a unique selling proposition. It also must be noted that the integrated approach has been adopted by newer breweries such as Joule’s and Wye Valley who have built up significant tied estates that heavily feature their own beers. Clearly there is life in that model yet.

Sunday, 27 December 2020

Annus horribilis

Each December, I’ve usually produced a summary of the past year’s events as they’ve affected me. This is what I wrote last year. However, from the point of view of pubs and beer, for obvious reasons 2020 has been a uniquely depressing and frustrating year. It started well, with an excellent Proper Day Out in Burton-upon-Trent in March, which I reported on here and here. One of the Burton pubs, either the Devonshire Arms or the Coopers Tavern (left and centre), would qualify as my Best New Pub Visit of the year. I’ve also added a picture of the Elms with its distinctive Bass livery, which wasn’t far behind in terms of pub quality..

There was a small cloud on the horizon, as I remember joking about seeing a Chinese student at Sheffield station wearing a face mask. Little did we know that, just two weeks later, all the pubs in the country would be closed down. They remained shut in England for a further fifteen weeks, and in this area have been closed for the last eight weeks of the year, plus two weeks before that when we were in the then Tier 3, which meant pubs could only serve alcohol to customers who were eating a substantial meal.

I’ve tried not to allow the blog just to become a running commentary on the Covid crisis, but given the way it has dominated the news agenda and the profound effect it has had on the pub trade and my own personal experience it has obviously been impossible to ignore the subject.

Exhortations to use contactless payments led to increased concerns about the possible demise of cash, which is an essential bulwark of freedom from control and surveillance.

When the pubs finally did reopen, it unleashed a surprising wave of rancid snobbery directed at those who had dared to cross the threshold. It seemed that many “beer enthusiasts”, who may in the past have given lip-service ot the idea of supporting pubs, found they quite enjoyed staying at home during lockdown enjoying supplies of draft craft beer takeouts from their local micro bar, absolved of any need to actually go out and visit any pubs and mix with the dreaded hoi polloi.

The dramatic decline of commuting into city centres raised fears that this might mark a long-term shift to remote working, with an inevitable knock-on effect on all the ancillary businesses in those areas, not least pubs.

On the other hand, some pubs really didn’t help themselves with an over-zealous interpretation of the social distancing guidelines. It seems to have brought out the inner jobsworth in some licensees.

The hospitality trade, and pubs in particular, seemed to be unjustly singled out for blame in the spread of the virus, when all the evidence suggested that their role in fact was pretty insignificant.

The new restrictions imposed toward the end of September made that swift, spontaneous pint virtually impossible, and table service was impractical and labour-intensive for wet-led pubs.

And the requirement for pub customers to wear masks except when seated was utterly insane. Even if you accept the rationale behind masks, expecting people to be repeatedly putting them on and taking them off again goes completely against the recommendations for how they should be used. At least we weren’t like some US states, where diners and drinkers were told only to remove the mask when actually having a mouthful.

It was disappointing how many trade bodies and organisations supposedly representing drinkers were happy to demand more financial help for the industry but reluctant to question the fundamental basis of the restrictions, although they have become bolder over the past couple of months. And of course there isn’t a bottomless pit of money to dole out. An honourable exception was Essex licensee Adam Brooks who was prepared to question the rationale and essential unfairness of the lockdown restrictions, especially those in the second half of the year. I’d also give a mention to Kate Nicholls, Chief Executive of UK Hospitality, who has been a strong and outspoken voice for the industry.

In this area, the pubs have been entirely closed for 23 weeks of the year, plus a further two weeks at the end of October where we were placed in the old Tier 3 making them dining only. This, combined with the ongoing travel restrictions and continued closure of many tourist attractions, severely curbed my activities during the year.

During 2019, I visited a total of 207 different pubs, of which 111 were entirely new to me, the latter number boosted by four days out to towns that I had either never been drinking in before, or where I had only ever visited one pub. This year the comparable totals are 60 and 17, and most of those 17 were accounted for by the aforementioned trip to Burton and one very brief holiday in September. It is probably the lowest total of different pubs I have used in any calendar year since I turned 18.

I have only spent two nights away from home not in my own bed, which is the lowest number since infancy. I had to cancel two holidays and never got round to booking another. I have travelled less far certainly than since 2001, when circumstances conspired to prevent me having a proper holiday, although I did briefly venture across the Welsh border before they closed it. And I haven’t seen the sea at all. (I know I could easily have done so if I’d really wanted to, but I didn’t in the normal course of my travels).

The restrictions on pub visiting have also curtailed my encounters with pub cats, although I did manage to spot Felix in the Boar’s Head in Stockport, who I was told is now sixteen years old. I have been following the exploits of Artemis aka Arty of the Olde Cottage in Chester, who had turned up as a stray in the Autumn of 2019. We had planned a trip out to Chester in April which would have included calling in there, but obviously this had to be cancelled. He established himself as a firm favourite with the regulars, and was puzzled when they all abruptly disappeared. Earlier this month, he suffered some kind of injury when out exploring which necessitated an operation at the vets’ costing over £1000, although this was fortunately covered by insurance. So far he seems to be well on the mend, although still wandering round an empty pub.

Including this one, I have done 81 posts on the blog this year, compared with 93 last year, the difference being almost entirely accounted for by having had only one Proper Day Out to write up, as opposed to six.

Last year, I celebrated passing the 5,000 followers mark on Twitter. This year it has edged up further to just over 5,600, but I suspect it has now reached something of a plateau. On the other hand, Toady, who has been much more outspoken about the Covid crisis, has gone up from 3,000 to over 3,800.

I’ve recorded the highest number of posts on my Closed Pubs blog since the early days when finding new ones was like shooting fish in a barrel. For this I’m mainly indebted to Yorkshire resident Kyle Reed, who has sent me a substantial number of suggestions in West and South Yorkshire. I also spotted a fair number myself on trips out once the lockdown travel restrictions were lifted.

Tourist attractions were often very slow to reopen, but I did manage to visit one new National Trust property, Newark Park in Gloucestershire, a converted hunting lodge set in a spectacular position on a ridge of the south Cotswolds. However, even here you were only allowed to walk round the grounds. Returning from this trip, I called in to the Grape Vaults in Leominster, a pub of which I have fond memories, and was pleased to find it just as good as ever, which is often not the case. Here I had my only Ploughman’s Lunch of the year, which was also a pretty good one. This was undoubtedly, from a limited field, my Best Pub Revisit of the year.

It’s easy to imagine that lockdown would free up time to read all those books you never got round to, but in practice it doesn’t seem to work out that way, However, one book that made an impression on me was Ghostland by Edward Parnell, subtitled “In Search of a Haunted Country”, which I hadn't heard of before, but came up in a Twitter conversation. It's a fascinating and moving memoir of family tragedy woven into an in-depth analysis of British ghost stories and an evocation of British landscapes, with a fair bit of bird-watching thrown in. I'd strongly recommend it, although it helps if you're familiar with the likes of M. R. James and Alan Garner and have seen “The Wicker Man”.

Last year, I expressed satisfaction at the decisive result of the December General Election which finally opened the door for the UK to leave the European Union at the end of the following month. The transition period expires at the end of this month, and at the last minute we were able to conclude a trade agreement on Christmas Eve that will allow tariff-free trade to continue while restoring our status as a fully independent, sovereign nation. Amidst all the Covid-related gloom, this gives grounds for some optimism about the future.

As I said in one of the posts I linked to above, “It’s all very well saying that people should support pubs, but if the experience has been turned from something pleasurable to a grim rigmarole it becomes increasingly hard to see the attraction. And most ordinary people go to pubs because they enjoy it, not out of a sense of duty.” At present I can’t visit local pubs at all and, until the restrictions introduced in September are lifted, I really can’t look forward to much appetite for, or pleasure in, pubgoing during the coming year.

Despite the optimism surrounding the roll-out of vaccines, I expect I will still have a long wait before I am once again able to enter a pub unchallenged, walk up to the bar to order a drink, and choose to sit wherever, and with whom, I want. And I fear that much of the pub trade will never recover.

Friday, 18 December 2020

Join the club

The tier system in England as at 19 December 2020

Going back a couple of months to October, although it seems much longer ago, many people in the North were aggrieved that they seemed to be being singled out for much harsher treatment than the South in terms of Covid restrictions. Even two weeks ago when the second lockdown ended, London seemed to have been excluded from Tier 3 restrictions on very flimsy evidence.

This week, though, the boot was on the other foot, with London and large swathes of the South-East being plunged into Tier 3 at very short notice. However, tempting as it might be, it would be wrong to engage in Schadenfreude over this. “I’ve been stuffed, therefore you should be too” is not really going to help anyone.

Indeed this kind of dog-in-the-manger attitude has been a feature of the whole Covid crisis, with too many people apparently far keener to wish misery on others rather than protesting about their own predicament. A prime example of this is people in hospitality complaining about shops not being required to operate track and trace, something that would be completely inappropriate and impractical.

What is particularly infuriating about the latest round of restrictions is that the rise in infections clearly cannot be laid at the door or hospitality, as the sector was entirely closed during the lockdown that ended less than two weeks earlier. Yet closing or opening hospitality is the main difference between Tiers 2 and 3. It seems that, yet again, it is being used as a sacrificial lamb. The government’s approach is that of a one-club golfer and, what is more, a club that doesn’t even succeed in hitting the ball.

It is also completely unreasonable to impose closures on businesses with a mere twenty-four hours’ notice. This might be justifiable as a one-off action in a dire emergency, as was arguably the case back in March, but it is no way to treat business on an ongoing basis. Just think of all the food and drink that had been bought in for the busiest trading week of the year, and will now end up being thrown away.

It seems that people in government severely overestimate the extent to which lockdowns actually succeed in influencing the spread of infection. A seventeen-day “circuit-breaker” was imposed in Wales a couple of months ago, which was held out as an example that England should have followed. Yet Wales currently has the highest growth in cases in the whole of the UK, and is heading back into a fresh lockdown of indeterminate length immediately after Christmas. As Einstein is reputed to have said, but probably didn’t, “Insanity is doing the same thing over and over again and expecting a different result.”

On one level, the cartoon by Bob Moran above is pointing the finger at the willingness to impose restrictions on areas that are physically and culturally remote from the seat of government. But it is also highlighting the pre-Enlightenment view that Covid is a threat that has to be propitiated by human sacrifice.

Monday, 7 December 2020

Top of the heap

While writing my post last week about Stella Artois, I did a little research to find out where it stood in the league table of British beer sales. This came up with this very interesting report from the Morning Advertiser on the top selling drinks brands in 2019.

Stella is still well up there in the lager category, selling 717,000 hl in the year (equivalent to 437,000 barrels). But I’m sure I’ve read in the past that it was considerably closer to Carling, the market leader. It is now outsold by Peroni, which in many ways follows the “reassuringly expensive” model of Stella in the 1980s. It is sold at a premium price, at 5.1% it is that little bit stronger than the competition, and it isn’t sold on draught in Spoons or in slabs in Tesco. Look how the sales value of Peroni compares with that of Stella.

Carling, with sales of 2,940 million HL ( (1.793 million barrels) remains the market leader * by a wide margin, and accounts for one in fifteen of all pints sold in Britain. For it to be so consistently successful, it must be doing something right.

Moving into the cask category, the best-seller, Doom Bar, accounts for 237,000 hl, or only 8% of the volume of Carling. This somewhat exaggerates the market dominance of lager over cask, as cask has much more of a long tail of smaller brands that still do a worthwhile volume, but overall it’s still a 1:5 ratio. It’s interesting that, despite all the talk of the rise of pale beers, eight out of the ten best-sellers are traditional brown beers, and the two pales are ones that aren’t aggressively hoppy.

Of course, getting the distribution is a key factor here, and it’s well-known that Doom Bar gets into many pubs on the coat-tails of Carling. However, it’s patronising to suggest that people will drink any old swill that’s put in front of them, and the history of the British beer market is littered with examples of products that have fallen flat on their faces despite extensive launch publicity and distribution. Taylor’s Landlord has got into the Top Ten despite being a product of an independent family brewer, although sadly it is far too often sold too green and hasn’t had the chance for its distinctive flavour to develop properly.

The article makes no mention of keg ales and stouts, so we don’t know how Draught Guinness and John Smith’s Extra Smooth compare.

The figures also reveal of couple of interesting snippets about two sectors that receive far more attention than their market share merits. The biggest selling “craft” beer, BrewDog Punk IPA, only manages 66,000 hl, or 2.2% of the volume of Carling. And, apart from BrewDog, all of the top ten craft beers are owned by major brewers or firms they have heavily invested in. So much for the “craft beer revolution”.

And, looking at alcohol-free beers, the best-seller, Becks Blue, manages a mere 20,500 hl, or 0.7% of the annual sales of Carling. Yes, there is a place for alcohol-free beers, but all those predictions that it was going to account for 10% of the market within a few years look very misplaced. And, apart from Heineken 0.0%, nothing else manages more than 3,000 hl, which is about the output of a typical railway arch brewer.

* This prompted me to ask on Twitter when Carling became the best-selling beer in Britain. Apparently lager overtook ale in market share in 1986, so the consensus is that it was around then, or maybe a year or so earlier. But what did it replace – another lager like Carlsberg or Heineken, or an ale brand such as Double Diamond?

Wednesday, 2 December 2020

Making a meal of it

From today, while the pubs remain firmly shut in over 40% of England, including my local area, in just over half the country they will be allowed to reopen under “Tier 2” provided that they serve all customers with “substantial meals”. This obviously raises a question of definition, as I discussed here, and government ministers have been tying themselves up in knots over whether Cornish pasties and Scotch eggs qualify. It’s easy to say “you know one when you see one”, but if pubs run the risk of substantial fines for non-compliance, it’s important that they know exactly where they stand.

For what it’s worth, in the couple of weeks at the end of October when this rule applied in Greater Manchester under the then “Tier 3”, Wetherspoon’s were happy to continue serving ciabattas without any accompaniment of chips or salad, although to be fair they are quite substantial. They come within the “includes a drink” meal deals, so if you choose one of the more expensive drink options such as premium draught or bottled lagers, the effective cost of the food is reduced to little more than a quid.

Given this, inevitably some pubs within Tier 2 that do not normally serve meals will be considering whether it’s worth putting on some kind of food offer to allow them to open. However, it’s important to think this through properly. They need to remember, which may not be immediately obvious, that it’s not enough simply to make the food available; every single customer will need to order and eat a meal. While it is permissible to contract for meals to be provided by an external caterer, they still need to be ordered and paid for through the pub: it isn’t sufficient just to put a kebab van on the car park.

It they aren’t already, pubs will need to register with their local authority as a food business. And they will need to be very careful to ensure that their food offer is genuine, and not something simply provided as a front to allow customers to drink. Any thoughts of just handing around a few stale sandwiches that are then passed on to the next customer – as once occurred under some strange Scottish regulations in the past – need to be put aside. Inevitably, the occasional customer will order a meal and then not fancy eating it, but if nobody is eating it appears suspicious, and the licensing authorities are likely to take a very dim view.

If you run a wet-only pub, by definition your customers are not coming in for meals, so to expect every visitor to eat is a massive change in behaviour. People might be happy to do it one night a week, but they’re unlikely to want to do so on a regular basis even if they really like the pub. And there will be little attraction to the person who just drops in for a pint or two, possibly before or after eating at home. Therefore, while it may well be legally possible to reopen, requiring every customer to eat a meal may not attract much business or make financial sense. I would expect that, in practice, very few previously wet-only pubs will take advantage of the “substantial meal” rule to reopen in Tier 2.

Clearly any dining pub that previously did the vast majority of its business from serving meals anyway will be able to reopen and see little reduction in trade, and they also won’t find the table service requirement too much of a problem. And every Wetherspoon’s in Tier 2 areas will certainly open. But many other pubs that do a mixture of drink and food trade may well look at the numbers and decide it isn’t worth it. I know a couple near me that offer extensive menus, but also attract a lot of local drinkers in the evenings, decided not to open under the old pre-lockdown Tier 3, and I read yesterday that a popular village pub in Cheshire that does attract a significant destination food trade had concluded it wouldn’t be worth it either.

It’s very difficult to avoid the conclusion, as argued in this article, that the decision to allow people to eat meals in pubs, but not to just go for a drink, is motivated a strong element of snobbery as opposed to any kind of rational analysis.

Public schoolboys, middle-class professionals and most university academics will never understand on a personal level the critical importance of a pub to the community. They drink expensive wine at home and would never think to step inside a regular hostelry unless it had re-invented itself as some kind of ‘gastro pub’, complete with chef and pretentious menu...

...This is where the deeply divisive ‘substantial meal’ condition for Tier 2 comes from. It reveals a high degree of snobbery and outright condescension for anyone who might want to drop in to a pub for just a drink. Quite possibly that is because so many ordinary people simply cannot afford a ‘substantial meal’ out on a regular basis. But they are, like myself on occasion, often quite desperate for some friendly company in comfortable surroundings.

Monday, 30 November 2020

More beer watering

Amidst all the excitement surrounding news of lockdowns and tiers, Budweiser Brewing Group UK & Ireland (which seems to be the new name for the UK offshoot of AB InBev) slipped out the news that the strength of Stella Artois, Britain’s best-selling premium lager, had been reduced yet again, from 4.8% to 4.6%. They came out with the usual corporate guff to justify this move:
The AB InBev-owned brewer stated that the change was in line with its commitment to responsible drinking, addressing the consumer need for moderation by giving people greater choice in how they can moderate alcohol intake without having to sacrifice on the taste of their favourite beers.

Dorien Nijs, Brewmaster at the Stella Artois Brewery in Leuven, commented: “We know that taste and quality remain the number one priority for Stella Artois drinkers, and we also recognise an ongoing health and wellness trend through moderation. We are proud that we can now deliver the same Stella Artois taste people know and love, with an ABV of 4.6%.”

The brand highlighted that the 4.6% ABV bracket has been the fastest growing in premium beer in the UK, more than doubling in size over two years.

In other words, we have sneaked this move through when we hoped nobody would notice, so we can save some duty and appease the public health lobby.

Looking back through my blog archive, it’s a full twelve years since the strength of Stella was cut from the original 5.2% ABV to 5.0. (Some have suggested it was once even stronger than 5.2%, but I’ve seen no evidence for this.) It was then cut again to 4.8% a few years later. However, marketing people forget at their peril that, at the end of the day, people drink alcoholic drinks precisely because they contain alcohol. It’s all very well going on about “the taste”, but the key reason people choose premium lagers over Carling and Fosters is not because they taste better, but because they’re stronger.

As I wrote here, drinkers in general aren’t too bothered about small differences in alcoholic strength between products in the same broad category. But I wonder whether this will turn out to be a cut too far that is perceived as taking Stella out of the true premium segment. While Stella has also suffered from a debasement of the recipe from its 1980s “reassuringly expensive” heyday, it’s not hard to tell the difference between 5.2% and 4.6%. A few years ago, Wetherspoon’s strongly promoted the 4.6% Tuborg, but it never seemed to sell well and has now disappeared off their bars.

At least, looking them up on the Tesco website, it seems that Heineken, Kronenbourg and San Miguel are still all sold at 5.0% if you prefer something with the full premium lager strength. But for how long?

Saturday, 28 November 2020

Villains of the piece?

Tom Kerridge’s TV series on saving the British pub has turned the spotlight on the activities of the large tied pubcos. To many people, the pubcos are perceived as pantomime villains who are responsible for all the current woes of the industry. But where did they come from in the first place, and what can, or should, be done to rein them in?

Going back fifty years, a large majority of pubs in England and Wales were tied to breweries. Genuinely free houses tended in general to be smaller pubs in rural areas, and in large towns and cities were virtually unknown. This system had developed over the years as brewers sought to gain outlets for their products. The more pubs you owned, the stronger was your position in the market. This dominance was reinforced by post-war planning policies that ensured that any new licences issued were allocated to the major existing pub owners in a given area.

Even in the early days of CAMRA, many members were critical of the tie as restricting access to most of the pub market for the independent brewers’ real ales. However, it must be remembered that the existence of the tie saved cask beer as a mass-market product in this country. Some companies, such as Young’s, had a commitment in principle to maintaining brewing traditions, but others continued as they had before as they simply lacked the funds to upgrade brewing methods and cellar equipment. The same was true of many plants that had been acquired by the industry giants during the takeover spree of the 1960s, but were still well down the queue for investment.

At a time when traditional beer was desperately unfashionable, the likes of Hook Norton and Batemans would have vanished off the face of the earth if they had not been guaranteed an outlet for their products in their own pubs. Free trade licensees would simply have swept them off the bar in favour of flashy keg products supported by hefty advertising budgets. This is exactly what happened in Scotland, where the proportion of tied pubs was much less, and by the early 1970s cask beer had virtually disappeared.

During the 70s and 80s this dominance was slowly eroded. The big brewers were persuaded by the government to engage in some half-hearted pub swaps to reduce local monopolies. They also started to sell off lower-performing pubs, either to regional breweries or to what in retrospect were proto pub companies. Belhaven was a small Scottish brewer who built up a substantial estate of mostly bottom-end pubs in England that didn’t actually sell any of their beers. Small free-trade managed operators such as Wetherspoon’s started to get a foothold in the market. The rise of the off-trade made sales through pubs less critical, and the increasing market share of lager meant that pubs were increasingly selling draught brands that, while they may have been licensed by the brewers, were not so closely identified with them. The link between the name on the sign and the beer on the bar was being weakened.

Then came the notorious Beer Orders of 1989, which were intended to address what was identified as a “complex monopoly” in the beer market. At the time they were widely welcomed, not least by CAMRA, who were mesmerised by the prospect of every Big Six tenant getting the right to a guest cask ale. I wasn’t writing a magazine column at the time, let alone blogging, so nobody can go back and throw my words back in my face. However, I do wonder whether anyone seriously thought about what the likely consequence would be. They certainly turned out to be a classic case of “be careful what you wish for!”

One of the key outcomes of the Beer Orders was the restriction on the number of pubs that the Big Six brewers could continue to tie, which led most of them to conclude that they might as well get out of the pub business entirely. The response to this was the creation of pub companies, often led by former big brewery executives, who would take the unwanted pubs off their hands and maintain the tied house business model. But a major difference was that, while many of the old brewery tied houses were owned outright, the pub companies took on a huge amount of debt to acquire them. In a market in long-term decline, a debt burden can all too easily become a millstone around your neck, which was exacerbated by the pubcos spectacularly underestimating the negative impact of the 2007 smoking ban. More recently, we have seen a wave of takeovers, mergers and restructurings, but pubcos remain a major force in the market today.

There are plenty of things that they can be criticised for – attracting prospective tenants with unrealistic projections, providing them with minimal support, penalising success through extortionate rent increases and being all too eager to dispose of pubs for redevelopment. But many of their critics seem to ignore the fact that they are operating commercial businesses, not charities, and are doing so in a very challenging climate. Are their actions really any different in kind from those of the old Big Six national brewers? And it should not be forgotten that some of the family brewers, who are sometimes held up as examples of a more sympatheitc approach, have been pretty ruthless in disposing of surplus pubs from their estates.

This criticism sometimes turns into a distinctly obsessional insistence on blaming the pubcos for all the current woes of the pub industry, in the manner of the man who, being in possession of a hammer, sees every problem as a nail. But, as I have explained on this blog over the past thirteen years, the decline of pubs has been caused by a perfect storm of changing social attitudes and restrictive legislation that have combined to greatly reduce the range of occasions when people will contemplate a visit to pub, especially one that is not combined with dining. It’s a demand crisis, and the effect of the way the industry is structured is pretty incidental. If this analysis contained much truth, then surely pubs operating under different business models would be thriving as compared to those owned by pubcos, but that patently isn’t the case – the decline is across the board.

It is significant that the harshest critics of the pubcos never seem to be able to come up with any credible alternative structure for the industry. The Beer Orders have now been completely repealed but, apart from the takeover of half of Punch Taverns by Heineken offshoot Star Pubs and Bars, there has been little move to return to the old vertically integrated model. With two-thirds of pub beer sales now international lager brands, and food now often more important than drink, brewing and pub retailing are increasingly divergent businesses. Unless you are BrewDog or Sam Smith’s, it makes little sense to own a large chain of pubs mainly as outlets for your own production.

In many cases, as I wrote here, the dislike of pubcos seems to stem from a generalised animus towards private business per se. This inevitably leads to critics favouring community-based solutions. However, any community-owned pub by definition involves “dead capital” that isn’t expected to show a financial return, and there’s precious little of that around at present. And, while some may hark back to the long-gone days of the Carlisle State Management Scheme, do we really want the likes of Public Health England having any say in the way pubs are run?

The favoured option usually seems to be preventing non-brewing companies imposing any kind of product tie on leased pubs. However, an immediate objection to this is that it cuts away the core business of the pubcos and undermines freedom of contract. It is also fraught with unintended consequences. For a start, in many pubs owned by breweries, the share of sales accounted for by their own products is often very small. Indeed, I can think of one or two, now closed, where it was probably zero. Is 5 or 10% really that different from nothing – and couldn’t Punch set up their own small brewery to produce a cheap house lager to get round it?

And, as Martyn Cornell writes here, the likely outcome is that, far from opening up a brave new world of free houses, such a move would lead the pubcos to, entirely understandably, do whatever they could to retain such pubs within their control.

The call has been made for a mandatory free-of-tie option to be offered to pubco tenants. I can tell you what will happen if that is brought in: large numbers of the best currently tenanted/leased pubs will be turned into managed houses, and those pubs not suitable for a managed operation that look as if they will not bring in an adequate return to their pubco owner as free-of-tie operations will be sold to the highest bidder – likely to be Tesco, Sainsbury’s or Morrisons...

...There’s a good argument for saying that if it wasn’t for the pubco model and the support it provides licensees, even more pubs would have gone under in Britain than have so far.

That highest bidder now is just as likely to be Taylor Wimpey or Persimmon. There has also been a movement in recent years to replace conventional leases with franchise-type agreements such as EI’s Craft Union, where the licensee retains self-employed status, but the pubco exercises much greater control over stocking and the general way the business operates. These would only increase if the traditional type of leases were outlawed. To be successful, any kind of business arrangement has to offer something to both parties. Turning pub companies into mere property renters fails on that score, and that is also why they have been so resistant to the idea of the Market Rent Only option.

As Martyn hints, pubco leases provide a means of entry into the pub market for people wanting to run their own business that would not be available if they had to raise the capital to buy their own pub. Although no doubt they could often do these things better, the pubcso also provide business support, investment and a structured business framework. Running a pub as an independent free trader can be a daunting prospect that many people would struggle with. Over the years, while some of the very best pubs I’ve visited have been genuine free houses, so have some of the absolute worst, where the licensees had basically given up and were just going through the motions. There are many examples in other sectors where self-employed people run businesses under a corporate nameplate which exerts a large degree of influence on their operations.

While there is much to criticise about the actions of the pubcos, those calling for further statutory regulation of their activities need to be very careful what they wish for. In the wise words of Milton Friedman, "The government solution to a problem is usually as bad as the problem." And we should never forget the outcome of the Beer Orders, which were introduced with the best of intentions.