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Published by: Mintel International Group Ltd.
Published: Sep. 1, 2008 - 121 Pages
Table of Contents
- Issues in the Market
- Main issues
- Definition
- Abbreviations
- Market in Brief
- Market set to dip as ban and economy bite
- Cost pressures increase
- Increased emphasis on value
- Operators forced to look to new revenue streams
- Leased/tenanted pub operators dominate industry
- Managed sector holds its own
- Consolidation process continues apace
- Entertainment is the key
- Internal Market Environment
- Key points
- Fewer people drinking in pubs…
- Figure 1: Pub/bar visiting for a drink or a meal in the last 12 months, 2003-07
- Figure 2: Frequency of visiting pubs/bars for a drink only, 2003-07
- …and declining beer sales
- Figure 3: Volume sales of beer, by channel, 2003-08
- Figure 4: Distribution of beer sales, by volume, by channel, 2003-08
- Attitudes towards drinking and going out
- Figure 5: Agreement with selected lifestyle statements regarding drinking, 2003-07
- The ties that bind?
- Rising cost base ratchets up pressure
- Figure 6: Trends in retail prices for selected items, 2003-08
- Drink-related disorder
- The REIT stuff?
- Broader Market Environment
- Key points
- Disposable income and spending take a knock from the credit crunch
- Figure 7: Trends in personal disposable income and consumer expenditure, 2003-13
- Consumer confidence hit but shows slight signs of recovery
- Figure 8: GfK NOP Consumer Confidence Index, August 2007-August 2008
- Demographic issues for the pub trade
- Figure 9: Forecast adult population trends, by socio-economic group, 2003-13
- Pre-/no family lifestage growth underpins market but opportunities elsewhere
- Figure 10: Forecast adult population trends, by lifestage, 2003-13
- Growing youth population will boost market
- Figure 11: Trends in the age structure of the UK population, by gender, 2003-13
- Growth in flexible working
- Figure 12: Working status of adults aged 18+, 2003-07
- Less time on chores = more time for leisure?
- Figure 13: Amount of time spent on household chores on an average working day, 2003-07
- Campaigns Affecting Pubs
- Key points
- Fair Pint
- Proud of Pubs
- The Pub is the Hub
- Best Bar None
- Challenge 21
- Legislation Affecting Pubs
- Key points
- Licensing Act - kill or cure?
- Cost or benefit: opinions differ
- Apocalyptic predictions prove unfounded
- Mixed impact
- The smoking ban
- All smoke no fire?
- Budget duty increases pile on the pressure - and more to come
- Minimum wage burden increases
- Statutory holiday pay and other benefits
- Alcohol Disorder Zones (ADZs): making pubs pay the price?
- One rule for one industry?
- Competitive Context
- Key points
- Priority attached to eating and drinking out drops
- Figure 14: Expenditure priorities, 2007 and 2008
- Distinctions between different types of outlet becoming ever more blurred
- Figure 15: Forecast of the UK market for eating out, 2003-13
- Figure 16: Market size of sectors competing with pubs, 2003-08
- Competition intensifies from home drinking
- Figure 17: Volume sales of alcoholic beverages, by distribution channel, 2002-07
- Strengths and Weaknesses in the Market
- Strengths
- Choice
- It’s all about experience
- Role in the community
- Unique atmosphere
- Popular choice for value meals
- Weaknesses
- Increased competition from other out-of-home venues
- Increased competition from supermarkets
- Consumer confidence
- Pressure on margins
- Saturated market
- Market Size and Forecasts
- Key points
- Closures and consolidation
- Figure 18: Total pub outlets, 2003-08
- Deteriorating trading conditions
- Figure 19: UK pub industry market size trends, 2003-13
- Tough trading conditions prevail
- Only the strong will survive
- Factors used in the forecast
- Segment Performance
- Key points
- Steady shift away from wet revenues
- Figure 20: UK pub industry turnover, by sector, 2003-08
- Is food the answer to the industry’s prayers?
- Soft drinks buck the market
- Other revenue increases in importance
- Hot beverages boost
- Machine revenues hit by smoking ban
- Cigarette vending under threat but other opportunities exist?
- Market Share
- Key points
- Mitchells & Butlers leads on sales
- Figure 21: Leading pub operators in the UK, by turnover, 2007
- Punch and Enterprise dominate outlet numbers
- Figure 22: Leading pub operators in the UK, by outlet numbers, 2008
- Companies and Products
- Key points
- Major players
- Figure 23: Leading operators and brands in the pub market, 2008
- Admiral Taverns Ltd
- Financial performance
- Figure 24: Key financial indicators for Admiral Taverns Ltd, 2007
- New developments
- Enterprise Inns plc
- Financial performance
- Figure 25: Key financial indicators for Enterprise Inns, 2003-08
- Figure 26: Enterprise Inns turnover, by sector, 2006 and 2007
- Responding to smoking ban threat
- Licensee profits up
- REIT conversion on hold as market weakens
- Greene King plc
- Figure 27: Greene King plc pub estate profile, 2008
- Financial performance
- Figure 28: Key financial indicators for Greene King plc, 2004-08
- Figure 29: Greene King plc revenue, by division, 2007 and 2008
- Managed business more than holds its own
- Pub Partners improves profitability
- Belhaven booms
- New developments
- JD Wetherspoon plc
- Coming to a high street near you
- Financial performance
- Figure 30: Key financial indicators for JD Wetherspoon plc, 2004-08
- Bar and machine takings down in wake of ban
- Food is the star
- Capex investment continues
- Cause for optimism?
- New developments
- Marston’s plc
- An acquisitive player
- Active in both managed and tenanted/leased sectors
- Financial performance
- Figure 31: Key financial indicators for Marston’s plc, 2003-08*
- Figure 32: Marston’s plc turnover, by division, 2006 and 2007
- Pub retailing drives company sales growth
- Food contribution grows
- Wines and spirits up but machine take down
- Future finances looking strong
- Mitchells & Butlers plc
- Whitbread deals increase emphasis on food-led sector
- A bias towards residential pubs
- Financial performance
- Figure 33: Key financial indicators for Mitchells & Butlers plc, 2003-08
- Figure 34: Mitchells & Butlers plc revenue, by division, 2006 and 2007
- Food-led operations lead growth
- A well-balanced estate
- Sales mix changes significantly
- Value food does the business
- Review backs strategy
- Grounds for optimism
- Punch Taverns plc
- Financial performance
- Figure 35: Key financial indicators for Punch Taverns plc, 2003-08
- Figure 36: Punch Taverns plc revenue, by segment, 2006 and 2007
- An evenly balanced business
- More compact managed estate increases average weekly sales
- The REIT choice?
- Recent developments
- Scottish & Newcastle Pub Enterprises
- Figure 37: Key financial indicators for Scottish & Newcastle Pub Enterprises (Management) Ltd, 2005-06
- Whitbread plc
- Financial performance
- Figure 38: Whitbread Plc segmental analysis, 2007/08
- Figure 39: Key financial indicators for Whitbread’s pub restaurant operations, 2007 and 2008
- Recent developments
- Other operators
- Cains Beer Company
- Food & Drink Group
- Regent Inns
- Town & City Pub Company/Bay Restaurants
- Brand Communication and Promotion
- Key points
- Managed pub operators lead the way
- Figure 55: Expenditure on advertising, by selected brewers and pubcos, 2003-07
- Figure 56: Expenditure on advertising, by selected brewers and pubcos, 2007/08
- Dual role for websites
- Putting on events
- Drink suppliers’ own marketing efforts
- Bacardi
- Budweiser
- Carlsberg
- Corona
- Foster’s
- Miller Genuine Draft
- Smirnoff
- WKD
- How Often Do People Visit Pubs?
- Key points
- How often do people eat and drink in pubs?
- Figure 57: Frequency of visiting a pub to drink and eat in, 2006 and 2008
- Who are pub drinkers?
- What Attracts People To Pubs?
- Key points
- Figure 58: Enticements for visiting pubs, 2006 and 2008
- Entertainment rocks
- Less scope now for better catering?
- Sport: men love it but big turn-off for women
- Old favourites continue to draw people in
- Appeal of table service wanes with weaker economy
- Machines - not a reason to visit in themselves
- Entertainment and sport popular among heaviest pub-goers
- Figure 59: Most popular enticements for visiting pubs, by frequency of drinking in a pub, April 2008
- Games and specialist offerings also popular among frequent visitors
- Figure 60: Next most popular enticements for visiting pubs, by frequency of drinking in a pub, April 2008
- Entertainment, sport and theme nights go together
- Figure 61: Most popular enticements for visiting pubs, by enticements for visiting pubs, April 2008
- Games complement entertainment sport and themes
- Figure 62: Next most popular enticements for visiting pubs, by enticements for visiting pubs, April 2008
- What Factors Are Influencing Consumer Behaviour Relating To Pub Visiting?
- Key points
- Figure 70: Consumer behaviour towards pubs, April 2008
- Is the smoking ban positive for industry?
- Credit crunch bites
- Creatures of habit
- ‘Regulars’ feeling left out in the cold
- Figure 71: Consumer behaviour towards pubs, by frequency of drinking in a pub, April 2008
- Changing nature of pubs
- Figure 72: Consumer behaviour towards pubs, by enticements for visiting a pub, April 2008
- Tempting discouraged consumers back
- Figure 73: Consumer behaviour towards pubs, by attitudes towards pubs, April 2008
- Smoke ban smokescreen?
- Figure 74: Consumer behaviour towards pubs, by consumer behaviour towards pubs, April 2008
- Appendix: How Often to People Visit Pubs?
- Figure 77: Frequency of visiting a pub to drink in, by detailed demographics, April 2008
- Appendix: What Attracts People to Pubs?
- Most popular enticements for visiting a pub, by detailed demographics
- Figure 78: Most popular enticements for visiting a pub, by detailed demographics, April 2008
- Next most popular enticements for visiting a pub, by detailed demographics
- Figure 79: Next most popular enticements for visiting a pub, by detailed demographics, April 2008
- Appendix - What Factors are Influencing Consumer Behaviour Relating to Pub Visiting?
- Figure 82: Consumer behaviour towards pubs, by detailed demographics, April 2008
AbstractThe pub industry is experiencing a challenging period of declining demand and rising costs. This is having a damaging effect on a sector that was already reeling from the effects of increased competition. Even the best-respected managed businesses have to work hard to tread water, while many tenanted and leased pubs, particularly those that are wet-led, are struggling to survive. However, it is also true to say that the market is oversupplied in terms of numbers of outlets and a prolonged period of closures may well serve to bring about a long-overdue realignment that will actually be to the benefit of the pub businesses that remain.
In response to declining demand, many pubs have substantially increased and enhanced their food offers, as well as the range of alcoholic drinks they sell other than beer, plus increased their focus on soft drinks and hot beverages. However, a visit to the pub is not just about product, it is about atmosphere and research for this report has shown the demand for traditional and local pubs - the very venues that are experiencing the most rapid rate of closures. As such, although consumers say they want these venues, in reality they are not being used enough to be viable business models.
Going forward therefore there is likely to be, or at least needs to be, a re-injection of the traditional pub character and personality in modern-day public houses so that consumers’ demands of quality are balanced by their desire for personable venues. Small steps are already being made in this direction which also look to counteract other long-term trends within the market: for example, some within the trade are trying to re-establish the idea of calling into the pub for a pint on the way home from work to unwind as a way of keeping consumers’ frequency of visiting up even if they don’t have the time or money to stay for too long.
This report assesses the current status of the industry and considers the hypothesis: “Has the smoking ban attracted new customers or alienated pub regulars? Or is the credit crunch a much more pressing concern?”
Main report themes:
- How are pubs compensating for lost revenue from smokers?
- How is government legislation impacting on the industry?
- Is the tied tenancy a sound and fair business model for the 21st Century?
- How can pubs encourage people onto their premises and out of their homes?
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