Independent Pubs - UK - July 2009

Table of Contents

• Issues in the Market
• Main issues
• Definition
• Abbreviations
• Market in Brief
• Independents suffer... but not as much as some
  • Figure 1: Trends in indexed sales of total pub market and independent pub market, 2004-09
• Outlet numbers resume gentle decline
• Economy and rising overheads key concerns for independents
• Business model ensures independents can compete on price
• Keeping a point of differentiation is key to survival
• Masters of their own destiny enjoy being in control
• Internal Market Environment
• Key points
• Ownership structure of pub industry set to shift?
  • Figure 2: Structure of the pub industry, by ownership type, 2004 and 2008
  • Figure 3: Leading pub operators, by total outlet numbers, September 2008
• Independents well placed to weather storm of pub closures
  • Figure 4: Net pub closures in the UK, 2005-08
• Changing alcohol consumption patterns force pubs to shift focus
  • Figure 5: Trends in the pattern of beer consumption, 2004-09
  • Figure 6: Trends in beer sales, by channel, 2004-09
• Cheap supermarket alcohol impacts on pubs in several ways
  • Figure 7: Trends in prices of on- and off-trade alcohol versus all items and food, 2004-09
  • Figure 8: Average price paid for a pint of draught lager in UK, 1990-2008
  • Figure 9: Trends in real ale and lager prices in pubs, 2008 and 2009
• Alcohol duty increases hit independents where it hurts
  • Figure 10: Trends in combined excise duty receipts for different types of alcoholic drink, 2001/02-2008/09
  • Figure 11: Recent trends in alcohol duties, 2004-09
• Cost pressures
• Utilities worries sap independent publicans' energy levels
  • Figure 12: Trends in the price of gas and electricity* for non-domestic customers, 2004-09
• Staff costs move inexorably upwards
• Costlier food eats into profit margins
  • Figure 13: Trends in the price of food, 2004-09
• Sky dishes out further pain for licensees
• Business rates
• Smoking ban impact no worse for independents than others
• Relaxation of opening hours gives greater flexibility
  • Figure 14: 24-hour licences, 2007 and 2008
• Broader Market Environment
• Key points
• Home is where the heart is?
  • Figure 15: Agreement with lifestyle statements, 2004-08
• Consumers are more family-focused
  • Figure 16: Leisure habits, 2004-08
• Onset of recession changes consumer attitudes towards spending
  • Figure 17: Attitudes towards money and personal finance, 2004-08
• Disposable incomes and spending under pressure
  • Figure 18: Trends in personal disposable income and consumer expenditure, 2004-14
• Adapting to changing demographics
  • Figure 19: Structure of the UK 18+ population, by age, 2004-14
• Growth in affluent groups set to help independents
  • Figure 20: Changes in socio-economic group among the UK 18+ population, 2004-09 and 2009-14
• Competitive Context
• Key points
• A pub market under threat from many angles...
  • Figure 21: UK pub industry market size trends, 2004-09
• ... but still popular with consumers
• Strengths aand Weaknesses in the Market
• Strengths
• Buying/sourcing flexibility
• Wide range of beers
• Freedom on promotions
• No rent to pay to leaseholder
• Stock speciality/locally-sourced products
• Weaknesses
• Cannot get discounts of larger multiple rivals
• Responsible for finding and sourcing product
• Core product in decline
• Declining distribution channel
• What are the Plus Points of Being Independent?
• Key points
• How important is freedom from the tie?
• Swings and roundabouts
• Job roles
• What Are Independent Pub Operators' Most Pressing Concerns?
• Key points
• The economic downturn
• Operational concerns
• Alcohol duties
• Business rates
• Food inflation
• Staff costs
• Sky TV
• Utilities
• How do Independent Pubs View Competition from Supermarkets?
• Key points
• Competition from the off-trade
• Binge drinking
• In- versus out-of-home drinking
• Vive la difference!
• How do Independent Pubs View Competition from Other Types of Pub?
• Key points
• Competition from managed pub groups
• Price positions
• Independent Pubs and Food
• Key points
• Wet-led woes...
• ... while food can fortify sales
  • Figure 22: Pub catering market, 2003-13
• Consumers more aware of importance of provenance and healthy eating
• Balancing consumer intentions and consumer' s actual purchasing habits
• Menu flexibility
• Tapping into the breakfast catering trend?
• How Have they Responded to Recessionary Pressures?
• Key points
• Price-led promotions
• Events and theme nights
• Trading on community spirit
• Marketing budgets and advertising campaigns
• Growing role of internet marketing
• How Has Consumer Behaviour Changed in the Past Year?
• Key points
• Has the type of consumers coming into independent pubs changed recently?
• The impact of recessionary forces
• Lunchtime trade suffering the most
• Evening trade is holding up better but consumer habits are changing
• Discretionary expenditure being curbed
• The winners...
• ... and losers
• Drink Local!
• Independent Pubs and Customer Relations
• Key point
• Traditional CRM techniques
• Increasing role of the internet
• Other Issues
• Key points
• How has the smoking ban impacted on independent pubs?
• To what extent are independents looking to diversify?
• How much support do independents receive from outside organisations?
• Market Size and Forecast
• Key points
• Independent sector withstands pressures better than most
  • Figure 23: UK independent pub market, key statistics, 2004-14
• Present market performance
• Future market performance
• What do People Visit Pubs For and How Often?
• Key points
• Pub visiting turns down in 2008
  • Figure 24: Pub visiting trends, 2004-08
• Drink and a meal visitors defined by affluence
• Drinkers tend to be younger and male...
• ... while diners are more likely to be female and third agers
• Visiting frequency falls off, particularly for evening trade
  • Figure 25: Pub visiting trends, by frequency, 2004-08
• Daytime drinkers skewed towards men, older and less affluent
• Evening drinkers biased towards younger singles
• Daytime diners polarised
• Evening diners also skewed to younger singles
• Appendix -- Broader Market Environment
• Lifestyle statements, by detailed demographics
  • Figure 29: Lifestyle statements, by detailed demographics, 2008
• Devotion of time to leisure activities (excluding television), by detailed demographics
  • Figure 30: Devotion of time to leisure activities (excluding television), by detailed demographics, 2008
• Leisure habits, by detailed demographics
  • Figure 31: Leisure habits, by detailed demographics, 2008
• Attitudes towards money and personal finance, by detailed demographics
  • Figure 32: Attitudes towards money and personal finance, by detailed demographics, 2008
• Appendix -- What do People Visit Pubs For and How Often?
• Pub visiting trends, by detailed demographics
  • Figure 33: Pub visiting trends, by detailed demographics, 2008
• Daytime drinking frequency, by detailed demographics
  • Figure 34: Daytime drinking frequency, by detailed demographics, 2008
• Evening drinking frequency, by detailed demographics
  • Figure 35: Evening drinking frequency, by detailed demographics, 2008
• Daytime pub meal frequency, by detailed demographics
  • Figure 36: Daytime pub meal frequency, by detailed demographics, 2008
• Evening pub meal frequency, by detailed demographics
  • Figure 37: Evening pub meal frequency, by detailed demographics, 2008