A month ago, although it seems far longer, I wrote: “I have had some thoughts on how the coronavirus crisis is likely to affect the pub and brewing industries, but I really don’t feel it appropriate to comment on this until there is at least some sign of light at the end of the tunnel.” However, now that there is at least talk of a progressive unwinding of the lockdown, I thought I would return to the subject. What follows is really just a series of speculative bullet points rather than fully-developed arguments.
- Obviously, with pubs having been closed for what looks like at least three months, it is likely to do significant damage to the pub trade, and indeed the wider tourism and hospitality industry. However, it remains to be seen to what extent people are going to flock back. As Tandleman has said, some will be back in the pubs like a rat up a drainpipe, while others will be much more cautious. Ironically, in view of the previous trend, wet-led pubs may recover more quickly than food-oriented ones. There may also be a problem with pubs initially having to operate under various restrictions such as limiting capacity.
- Some existing pubs probably won’t reopen, while many projected openings of new bars that are in the pipeline will be abandoned.
- It will encourage the long-term shift from on- to off-trade drinking. However, I suspect it won’t give a huge boost to mail-order beer because of the increased cost aspect. Some specialist off-licences that decided to close for the duration, even though not legally compelled to, may have cause to regret that choice. Customers will remember who did stay open.
- It is also likely to precipitate the long-heralded shakeout of the microbrewery sector, where many have been saying for some time that there is considerable oversupply. However, perhaps perversely, it may be the “hobby brewers”, who can shut down and reopen with little financial pain, who ride it out, while those a little bit bigger who relied on brewing to make a living may call it a day.
- Some substantial breweries that depend mostly on on-trade sales may not survive. All breweries apart from the very smallest will realise that there is a benefit to offering bottled and canned beer as another string to their bow, although achieving distribution is always going to be crucial.
- It will enforce a substantial financial retrenchment upon CAMRA, which is heavily dependent (some might say too dependent) on income from beer festivals. Given that they involve a lot of people crammed together in a small space, festivals may be one of the last things to return to full health.
- It will accelerate the decline of High Streets, which have been pretty much dead during the lockdown. Even before, they were increasingly becoming social spaces as opposed to just retail spaces.
- In contrast, it will strengthen the role of physical supermarkets as essential suppliers, especially given that there have often been long waits for home delivery slots.
- It will accelerate the move from cash to card payments, which I wrote about here.
- It will punish independent retailers in areas such as clothing, furniture and electrical goods at the expense of major supermarkets and homeware stores that were able to stay open selling a range of products.
I’ll also add the point I made on Tandleman’s blog, that it's easy to say that pubs don't really matter in the overall scheme of things, but they are only a subset of the wider tourism and hospitality industry, which is the third biggest sector of the economy. Until that can be restored to something approaching normality, we're still going to be in the economic doldrums. And it can't really function without what could be broadly described as “eat-in catering”.