Beer today, gone tomorrow: The state of the pub trade

Pubs are closing up and down the country. Why? Much of it is down to cheap supermarket booze, high rents and pub chains that have more in common with property companies than the traditional idea of what pubs are about. So, what does it all mean? Bagrat Shahbazian from Last Try Wines, the independent wine & beer merchants on Whitton Road, Twickenham, gives his opinion…

Sensible Drinking?
Twickenham’s Red Lion is now a busy and successful supermarket. There have been comments in this site about this ‘event’ but let us have a closer look at the licensed retail situation a bit closer…

A few months ago the government announced its plans for the pricing of alcohol. The intention is that it will be illegal to sell an alcoholic drink at below the combined cost of the applicable Duty and VAT elements. At first sight this appears to be a sound principle but, if you think about it, it has no direct relationship to the purchaser. The effect on pricing is absolutely minimal: very few supermarkets were selling alcohol at below that rate anyway and no pub could afford to do so. A 1 litre bottle of vodka would still cost under £11 and a 440ml can of lager just 38p. CAMRA Chief Executive Mike Banner commented: “CAMRA believes a floor price of 40p a unit would be required to prevent supermarkets selling alcohol at a loss. The government’s decision to set a floor price of only 21p a unit is a betrayal of its promise to ban the sale of alcohol at supermarkets at below cost and means supermarkets will continue to be able to sell alcohol as a loss leader”.

Opinions in the press are that the government is trying to stay on the safe side of EU competition law and that they did not wish to put any burden on industry. One report had it that the ‘Duty plus VAT’ definition was drawn up by the Wine and Spirits Association, who described it as a ‘pragmatic solution’, when health campaigners wanted production and distribution costs included as well. The increase in beer duty has gone through in the budget, despite an Early Day Motion supported by the industry asking for it to be suspended. Added to the recent VAT increase, this means that the tax on beer will have increased by 26% since 2008. With petrol prices spiraling, the trade prices increases are going to be high as well, with all the predictable consequences. Currently, a campaign for VAT reduction to 5% on bar and food sales in pubs is gaining momentum in the trade. Support for the measure is being led by the trade paper Morning Advertiser, the industry trade paper, and supporters include Society of Independent Brewers (SIBA), whose chief executive Julian Grocock points out that VAT was reduced to 5% for restaurant meals in France.

Closing Time?

Closed: The Ranch, Twickenham

All across Britain pubs are closing, but they are under particular pressure in London’s dearest bits. Pubs there are usually worth about ten or 12 times their annual earnings before tax. A smart London pub might earn £100,000 a year, making it worth a shade over £1m as a pub. But nowadays the houses that flank it may well be worth £3m, offering a quick fortune to anyone who can convert the pub to residential use. If pubs are important, then they should be recognized in planning law as important. The cold hard reality, despite the rhetoric from successive Governments about the importance of communities and to the nation, pubs have no protection in planning law at the moment and local communities have virtually no say over their future.

Wanted, profitable pubs are being closed up and down the country against the wished of the local community and the small business person, the landlord or landlady who run the pub. Currently a freestanding pub can be demolished or turned into various other things, a supermarket or bookies without the need to seek planning permission, which means without even giving the locals the chance to have a say. So please do write to your local MP and to the Bob Neill MP, the Community Pubs Minister, demanding that the Government look seriously at introducing a 6 month moratorium in the planning process that would involve a viability test and genuine community consultation, carried out by the local authority. This would give pubs real protection and communities a real say over them, and it wouldn’t cost the Government a penny.

Trendy vs Traditional

The Barmy Arms, Twickenham

Most pubs retain a peculiarly English blend of socialising and privacy, take Twickenham pubs like The White Swan, The Eel Pie and The Barmy Arms for example. Regulars prize maze-like or womb-like pubs, tiny rooms and dark corners; for hearths and fires, no matter what the season; for a sense of history in the layers of paper, clutter and paint; for an indefinable grubbiness and informality. In ‘trendy’ pubs people go to be seen, either for their clothes or the sleek cars they have left in the car park; but pubs, like homes, are not about fashion statements or public preening. By the same token, the building itself often has no importance. What matters is the atmosphere, that indefinable thing that no one can put a finger on, until some alteration kills it.

Big brewers and their pubcos, however, disagree. For them, the old lag nursing his pint all night is a disaster. What they want is “high-volume vertical drinking”, where the mostly young stand around high tables, down their poison and move to the next drinking hole, chatting but never settling. The idea isn’t new. The Victorian gin palace was for ‘perpendicular drinking’: a glass quickly downed at the bar, standing up, before the stumbling exit. The fantastic lighting and glasswork of the gin palace, like the glitter-balls and mirrors of some modern city bars, are nobody’s idea of home.

The 2007 smoking ban drove regulars onto chilly backless benches in hastily improvised beer gardens, or into the street, or simply home (1,409 pubs closed in 2007; 1,973, post-ban, in 2008). Around 24,000 pubs, roughly 40% of the total, are tied to giant ‘pubcos’, hooked to one particular brewer, and must buy their beer from them at premium prices. Pubs, selling pints for £3.50 must compete with sixpacks of beer in the supermarket, or cheap plonk at £3.50 a bottle; they must also pay a swingeing government duty on beer, now ten times as high as Germany’s.

Use Them or Lose Them
No single magic formula will save pubs. At present, the strongest current in their favour is the passion they still provoke. Britons are not similarly passionate about restaurants, cafés or shops. Pubs are needed, even when every social and economic indicator is running hard against them.

Luke Prior, the landlord of The Rifleman pub near Twickenham green says: “Pubs must have local support to survive. It is very competitive where we are, there are no shortage of pubs. We certainly have to be at the top of our game whether it comes to service, real ale, wine or food. Even though margins are super-tight particularly as we are tied to a big pubco, we really can’t afford to compromise on the service we give to our customers”.

Looking at the top end of the market, one landlord comes to mind: Grosvenor (prop. the Duke of Westminster and family), whose Mayfair and Belgravia estates have not lost a single pub in five years. Grosvenor does not grant freeholds on commercial properties. The estate is swift to buy leases back if a pub is struggling, and to find new operators. Fuller, Smith & Turner, a London-based brewer, runs two of Belgravia’s best pubs. Simon Emeny, its head of pub operations, praises the ‘long-term’ view taken by Grosvenor, but insists his ventures in Belgravia stand on their own two feet as retail businesses. The grandest neighbourhoods will support pubs if you get them right, he says. That means good food and wine, as well as good beer. If there are fewer pubs, he says, “that is capitalism at work. Those who are in the business for the long term will prosper.”

Somewhere in the back of all our minds is that worrying remark by Hilaire Belloc, a Frenchman: “When you have lost your inns, drown your empty selves, for you will have lost the last of England.”

Bagrat Shahbazian
Sales Manager, Last Try Wines of Twickenham
97 Whitton Road, TW1 1BZ
Web: www.lasttrywines.co.uk
Twitter: @lasttrywines

Prefer wine? Then see Bagrat’s item on twickerati about the wine trade here.

6 Comments

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6 responses to “Beer today, gone tomorrow: The state of the pub trade

  1. Gareth Roberts

    I’m not altogether sure about the assertion that pubs aren’t protected under planning law. One of the first cases I was asked to give a decision regarding was the conversion of The Railway in Hampton Wick. The application was to approve a change of use from pub to residential accommodation. As a committee we gave very serious consideration as to whether the change of use should be acceptable and we were particularly mindful of the withdrawal of such an important community building; this was one of the main reasons we gave for refusing the application and it was a view shared by the Planning Inspector when the decision was appealed.

    Of course that would be all much more relevant if the pub was still open and serving beer which…..erm….it ain’t.

    • Quite obviously a major function of the planning system is to allocate land uses and this includes ensuring land is made available for community uses such as schools, open spaces, clinics, local shops, and even pubs etc. This results in differing values, and therefore interferes in the market. It is surely legitimate to amend the ‘use class’ bandings to support the overall land use objectives and address problems arising (as was the case with A5 Fast Food outlets). Perhaps revise pubs’ A4 use class and have them reclassified on their own?

  2. Telemachus

    Great article.

  3. Rob Dawson

    that was a nostalgic treat Baggers

  4. nemesis

    So, just a cursory mention of the smoking ban. Thats 22% of the population that are now unwelcome in these hostelries. They dont want me – I’ll not go.