The much-loved British pub industry continues to find itself in the midst of significant change. Pub closures surprisingly picked up pace in 2013, largely due to the continuing efforts of companies such as Enterprise and Punch Taverns to streamline their estates of tenanted/leased pubs. The managed and independent segments are performing far more encouragingly and the market is also seeing more sales of pubs being retained as pubs instead of being converted for other uses.

Change is also occurring in terms of how pubs are generating sales. While some people bemoan the evolution of many pubs into more all-round, family-friendly venues, this has been necessary. Indeed, many of the ones which have tended to cling too much to the past are among the thousands that have called last orders for good. With alcohol volume sales continuing to fall, food is now an important segment of the pub landscape and one which landlords should not undervalue.

Weather continues to play a significant role in the fortunes of the industry. A wet start to the year has made way for a warmer than average spring, but the news that summer looks set to potentially break meteorological records for hot temperatures will have landlords keeping their fingers crossed. The concurrent football World Cup could mean that the industry enjoys a significant shot in the arm in the coming months.

Definition

This report examines the market for pub visiting, with the primary focus on drinking in pubs/bars. A separate Mintel report, Pub Catering – UK, May 2014 looks at the role of food in pubs in more detail. The market size refers to total pub revenues, and includes food, alcohol, soft drink and other sales such as from snacks and vending machines.

All pubs (public houses) and bars have on-trade licences to serve alcoholic drink for consumption on the premises. These licences may also be granted to other outlets, such as hotels or cinemas, but a pub has at least some traditional characteristics that differentiate it from other bars.

Most pubs trace their heritage to close links, or ‘ties’, to a local brewery. The brewery traditionally owned the freehold, or a long lease, on the property and then either sublet it to a tenant (tenanted pubs) or installed its own landlord to run it (the managed estate). The managed/tenanted distinction still pertains to many ‘estates’ (owned groups) of pubs, but tenancies have often been replaced by more modern, long-term leases (leased pubs).

A ‘pubco’ (pub company) is independent from the control of a brewer, although it may negotiate long-term supply contracts with a single brewer and thus maintain close links with the brewing industry. Leased/tenanted pubcos make most of their money from supplying beer and other drinks to their tenants at wholesale prices. A free house has no contract to a specific pubco or brewer, and is run as an entirely independent business.

‘Wet sales’ refers to the proportion of a pub’s turnover from drinks (sometimes confined to alcohol), while ‘dry sales’ refers to food turnover.

Crown copyright material is reproduced with the permission of the Controller of HMSO and the Queen’s Printer for Scotland.

Market sizes at constant 2013 prices are devised using Mintel’s catering deflator. Value figures throughout this report are at retail selling prices (rsp) unless otherwise stated.

Abbreviations

ABV Alcohol By Volume
ACV Asset of Community Value
BBN Best Bar None
BIDs Business Improvement Districts
CAMRA Campaign for Real Ale
CIP Cumulative Impact Policies
CRB Community Right to Bid
EBITDA Earnings before interest, taxes, depreciation, and amortization
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