Pubs expect December sales to be as much as 90% lower than last year, costing the industry £650m and fuelling concern that vast parts of the sector will disappear for good.
December is typically the most lucrative month of the year for the UK’s ailing pub sector, accounting for as much as a quarter of annual profit, thanks to Christmas parties and New Year’s Eve festivities.
However, the British Beer and Pub Association (BBPA) said its forecasts showed pubs would sell 270m fewer pints than usual over the period, with only one in five of the UK’s 47,200 pubs expected to be open.
“I’d be stunned if sales across the industry were any better than 10% or 20% as good as last year,” said Chris Jowsey, the chief executive of Admiral Taverns, which has 1,000 pubs across the UK.
“It’s not unusual for lots of pubs to make anywhere up to 25% of their profit in December. For a lot of smaller pubs it’s really important because it carries you through the lean months of January and February, so it’s a bit of a disaster.”
This week’s expected revision of the tier system, which could result in London being moved from tier 2 to the stricter tier 3, could force hundreds more pubs to close, weighing even more heavily on an industry already hit by prolonged restrictions in areas such as Greater Manchester.
“The last two weeks of Christmas are absolutely critical, so whatever decisions are made will have a profound effect on trade across the UK,” Jowsey said.
“I’ve got very few pubs in London and it’s the one time I’ve been grateful not to have a pub in central London.”
Paul Garner, the landlord of the Yorkshire Grey pub in London’s Holborn, said he had decided to close over Christmas even if the capital is not moved into tier 3.
The pub, which relies heavily on office workers, racked up sales of £123,000 last December but expects to make only 17% of that this month.
“It’s a struggle throughout the year, so we always rely on Christmas,” Garner said.
“Christmas parties, when it’s on the company’s credit card, people do enjoy themselves and companies want to reward them with champagne rather than a lime and soda.
“We haven’t had the December which we need historically to pull us through.”
Takings at drinks-focused pub chains were down almost 90% in November, according to the Coffer Peach Business Tracker, which monitors sales at 60 big chains.
The period included a full nation lockdown in England, while December’s tier system does allow pubs in tier 2 areas to open. But a tough year-on-year comparison with the normally lucrative Christmas period means some pub industry figures are predicting a similar sales slump this month.
According to figures from the BBPA, December takings across the industry reached £740m in 2019, meaning a dip in sale of between 80% and 90% would result in pubs losing between £592m and £666m.
The BBPA warned of a permanent effect earlier this year, predicting that a quarter of the UK’s 47,200 pubs could vanish at a cost of 300,000 jobs.
“These stark numbers show that this Christmas could be the last for many of our pubs,” said the BBPA chief executive, Emma McClarkin, on Monday.
Jowsey echoed the concern. “I think we’ll lose up to 10,000 pubs if this goes through to the spring,” he said.
“Pubs across the UK will be closed because licensees give up on the trade and try to get employment elsewhere. A lot of those pubs won’t reopen and will be converted into housing or whatever else.
“Communities will lose their last remaining social amenity, which is an absolute disgrace. The big businesses will probably survive but the small ones don’t have the investment to fall back on.”
Of Admiral’s 1,000 pubs, only 140 are open and trading, despite the fact that 375 are in tier 2 areas where venues are not forced to close.
This is because tier 2 rules mean alcohol can only be served with a “substantial meal” and Admiral’s pubs are predominantly “wet-led”, meaning they rely on alcohol sales and do not serve much food, if at all.
Most of the company’s pubs are eligible for monthly grants of up to £1,334 but Jowsey said this was not enough to support wet-led pubs, which have nothing to gain from the temporary VAT cut on food and did not benefit from the eat out to help out scheme in August.
“That’s to pay for the fixed costs and to feed themselves and their families,” he said.
“That’s simply not enough. If I had a magic wand, I’d ask for an increase in cash grants to £3,000 per month. If you look at France and western Europe, they’re supporting their industry far better than the UK.
“The next best thing would be to reduce VAT on drinks as well as food.”
Trade bodies and industry figures have criticised the government for focusing on hospitality when they claim Covid-19 protocols mean pubs, bars and restaurants are safe environments.
“We don’t want to rely on handouts, we want to be able to trade out of it and we genuinely believe we can do this in a safe way,” Jowsey said.
“You can save both lives and the economy. If we can’t have that, then proper compensation needs to be paid.”
Brewers warn on no-deal Brexit
Some of the UK’s top breweries have warned they will be hit by a double whammy if Britain leaves the EU without a deal, on top of the effects of the coronavirus.
Bermondsey-based Anspach & Hobday, which derives just under 10% of revenues from EU exports, said any imposition of tariffs would be “disastrous” but also pointed to other difficulties.
Beer sold in the EU must be labelled with an address within the trading bloc. The brewery’s co-founder Jack Hobday said it was impossible to prepare for this without knowing the outcome of trade talks.
“I think it’s going to be carnage if it’s no deal and I can’t see how many breweries can be properly prepared for this, given that some of the changes that would occur can’t be remedied immediately,” Hobday said.
“You’ve got printed stock you would have to relabel or you just can’t export.
“But to relabel in expectation of no deal [that doesn’t then happen] would be to throw money down the drain.
“It presents more of a problem than for multinational brewers who might have a sister office in the EU. It would be a real shame if the small independent brewers are penalised because they don’t have the resources.”
The low-alcohol specialist Big Drop Brewing, based in Ipswich, is a contract brewer, meaning it uses other people’s breweries to make beers with alcohol volume of less than 0.5%.
Its chief executive, Rob Fink, said he would be hit with tariffs of almost 10% if there is no deal, forcing him to move production for the EU market, which makes up 20% of sales volume, out of the UK.
“[No deal] makes it uneconomical to brew beer in the UK and ship it to the EU. If that does happen, our contingency plan is to move the manufacture of beer for Europe to Europe. We’ve set up a Dutch subsidiary and we’d shift production and sale.
“We’re eagerly awaiting the outcome of the next few days. If there’s not a deal, we’ll press the button with the shift of manufacture to the EU.”
— to www.theguardian.com
