Slumping Beer Sales Hits Enterprise Inns

[Ash4781]

http://www.telegraph.co.uk/money/main.jhtm...bcnenter122.xml

Enterprise Inns, Britain's second biggest pub group, has highlighted the true scale of the challenges facing landlords across the UK after warning of double-digit declines in beer sales and the rising cost of helping out ailing tenants.

The company, which operates over 7,000 pubs, saw it share price slump 49¼ to 296½ after chief executive Ted Tuppen warned of "testing times" for the industry.

Enterprise said it had taken a £3.5m hit in the first half of the year after being forced to offer rent concessions and special discounts to landlords.

The pub group said the level of concessions had increased in the second half, blaming a decline in beer sales and "increased levels of assistance to licensees who are having to cope with difficult trading conditions".

"The first anniversary of the smoking ban in England has now passed and across the sector, whilst food sales are growing, on-trade beer sales continue to be subdued, with industry sources suggesting close to double digit volume declines in the period from April to June," Enterprise said.

"Consumer confidence is low and the rising costs of food, fuel, mortgage costs and taxes have put increasing pressures on disposable income and discretionary spend."

Evidence of the challenges facing landlords comes as figures from Nielsen suggest beer volumes in the on-trade fell 9pc in the first five months of 2008. The company said the trading environment was the worst since the 1930s.

Mr Tuppen said: "The majority of our licensees are coping well with the current consumer downturn. Where appropriate, we have the resources to help licensees who are experiencing short term trading difficulties, thereby demonstrating an essential strength of the leased and tenanted pub model."

The chief executive's backing of the tenanted business model comes after Blue Oar Securities analyst Mark Brumby last week warned that operators including Enterprise and Punch Taverns could take as much as a £60m hit on the cost of helping out ailing tenants. Mr Brumby said the average tenant's net profits could drop from £32,850 this year to £3,259 in 12 months' time on higher energy, staff and property costs.

Enterprise said stronger food sales, a "robust" business model, tenant support and the quality of its estate meant there had not yet been any "material deterioration in the key indicators of our licensees' financial health and sustainability".

Mr Tuppen also used the trading statement to hit out at the government for its treatment of the pub sector and call for curbs on the sale of cheap alcohol in the off-trade.

Branding the government's latest increase on alcohol duty as "ill-conceived", Enterprise said: "We would once again call into question the strategy of the major supermarkets, some of whom continue to use alcohol as a traffic builder, often selling multi packs at below cost.

In the absence of responsible retailing, we would expect the government to introduce sensible legislation to address this issue."

Enterprise said discussions with HM Revenue and Customs about converting to a tax-efficient real estate investment trust had progressed and it intended to seek the "necessary approvals" from shareholders, though no final decision has been made.

Rival pub groups saw their share prices pitch lower on the news. Punch fell 33¾ to 231½, while Mitchells & Butlers was down 19½ to 238¼.

1930's reference again

Are the rent concessions / beer discounts due to difficulties in re-assigning the lease?

[Correction]

I agree, we were in a very nice pub just on the outskirts of Northampton a week last sunday, nice day all day, it was absolutely deserted at 9.30 no one, absolutely no one in the garden. The car park was virtually empty. Ths is oh so different from a year ago.

[oracle]

Now really this doesn't stack up does it?

Think about it.In times of economic hardship,the amount of alcohol consumed goes UP,as people seek to drown their sorrows and escape from the reality of the school of hard knocks,(it also contributes to the divorce level increasing as more couples get frustrated and/or intoxicated similtaneously)

Of course if you see both the divorce stats,and probably domestic violence stats rising,one can safely assume that the alcohol consumption HAS gone up,it's just being consumed in larger quantities at home in front of the kids.

It's probably fair to say online gambling will be up there with them.

The smoking ban was merely a bit of kindling for the fire.The objective is to destroy the family unit.

[Its time to buy]

I think I still see people drinking in pubs - but perhaps they are only have the one drink, and making it last.

And with all this entertaining at home - people are going to be inviting people over. You have to show off all that magnolia and decking.

[Realistbear]

Simple Economics. Why pay almost 3 pounds for a pint in a pub when for about 3.99* you can buy a bottle of Tesco's Finest wine and enjoy same in your own home where you do not have to worry about the filth breathalyzing you?

Its just not good value anymore. Not good at all. No no no siree. Uh-uh.

________________

* when they have a good sale. Their recent 25% additonal saving for 6 bottles or more was fabulous value. I hardly ever go to pubs, poor value and a rip off. Especially having recently spent a couple of weeks in Spain where you can get on the San Miguel for very little outlay.

Edited July 22, 2008 by Realistbear

[keef]

Simple Economics. Why pay almost 3 pounds for a pint in a pub when for about 3.99* you can buy a bottle of Tesco's Finest wine and enjoy same in your own home where you do not have to worry about the filth breathalyzing you?

Yup, this does my head in. Back when I started boozing a can of lager from the corner shop was 90p & a pint in the pub was 90p too.

Twenty years on the can is cheaper yet the pint is four times more expensive. And pubs are becoming soulless dives to boot. Bah!

[interestrateripoff]

The pub killed by tax.

People just can't afford to go out anymore.

The govt will move next to kill home drinking by tax. This will fail as we'll all start drinking moonshine which the govt can't tax.

[papag]

I used to suppy to EI and they were for years in the main interested in pubs as property and the balance sheet value, they imo placed very little emphasis on the wet trade, now with the crunch they are moaning on about beer pricing and /falling property prices , as they say double whammy

[Tin Foil Hat]

The pub killed by tax.

People just can't afford to go out anymore.

The govt will move next to kill home drinking by tax. This will fail as we'll all start drinking moonshine which the govt can't tax.

I've done my first run of home brewed bitter, and it was very drinkable. Strangely (or not) it also gave me much less headache afterwards. After my week's holiday in August I am going to be doing another run.

TFH

[pepsi]

Happening a lot around me. Just because I've given up drinking for a few months!

Village Pubs close

TWO popular village pubs near Ripon have called time and closed their doors for good.

The Henry Jenkins in Kirkby Malzeard and the Galphay Inn both locked their doors on Sunday last week, with one landlord saying the British pub is 'dying'.

Karen Green, who has run the Galphay Inn for the past two years with her husband Simon, blamed the current economic climate.

She said: "We aren't making money. I put it down to people tightening their belts. It's got very bad over the last three months.

"We have had good reviews - people loved the atmosphere and the food. I can only think it's the times we are in. I think the British pub is dying.".

The business has been on the market since January but Mrs Green says she could no-longer afford to stay open so the pub shut its doors for good.

The closure means Galphay is now without a pub.

In Kirkby Malzeard, the owners of the Henry Jenkins have given no reason for the closure of the pub and were unable to be contacted.

Villagers say the closure is another valuable village amenity lost.

"We used to have a post office too," said resident Barbara O'Brien. "We used to have three pubs and now there's only one."

Husband Derek, added: "We used to go for meals and it was well patronised, but not lately."

David Greenwood, a former regular of the Henry Jenkins, added: "It's a real shame - it's becoming a ghost village. I remember years ago there was always something going on.

"It doesn't make sense because there are more people living here than there were 10 years ago, but things are being taken away."

Edited July 22, 2008 by pepsi

[oracle]

I've done my first run of home brewed bitter, and it was very drinkable. Strangely (or not) it also gave me much less headache afterwards. After my week's holiday in August I am going to be doing another run.

TFH

I have to agree,a good homebrew bitter is rather pleasant.

Partially for the fun of making it,I find homebrew lager a bit naff,but bitter and stout are quite palateable.

[Its time to buy]

Wilkinsons stock home brewing kits- not many places do it!

[bomberbrown]

I gave up smoking 14/08/2004 after being a regular smoker since the age of 11. (25 years)

The smoking ban (IMPO) was championed by this governement by all those f@#ers that wanted no public smoking for their own selfish reasons, not for the protection of bar employees etc.

Pubs should have been able to decide if they wanted to choose a pro/no smoking environment and Joe Public could simply vote with their patronage.

As an ex smoker and as someone with a mixture of smoking and non-smoking friends, this trade is in dire straits since 01/07/2007.

I can't even believe that it came to this.

[Its time to buy]

yeah and we live in a "democracy"

who gave the right for the goverment to effectively close down an entire industry which was profitable

why dont they just ban alcohol drinking in pubs because it can damage your liver FFS

Edited July 22, 2008 by notanewmember

[kingsgate]

The pub killed by tax.

People just can't afford to go out anymore.

The govt will move next to kill home drinking by tax. This will fail as we'll all start drinking moonshine which the govt can't tax.

The tax on alcohol is no more for pub sales than for supermarket sales.

If you want to find blame for the mad price increases on pub pints, I am afraid you will have to look elsewhere.

Like greedy pubcos.

[Its time to buy]

Well the good thing is perhaps these faceless Pub companies will go bust, and leave the way open for private landlords to buy freehold pubs at the bottom, and work on their own terms. Power to the people.

And those pesky private equity firms can stay away too.

Edited July 22, 2008 by notanewmember

[Moo]

Falling beer sales, smoking ban... Hmmm, I wonder what the connection is here then?

Let's see. Falling beer sales. Smoking ban. Falling beer sales. Smoking ban. Tricky, this.

*cough*

Okay, there's also the problem of turning what used to be actual pubs into "shit family friendly restaurants". I have a horrible feeling this a wonderful example of what happens when you use marketing focus groups. You ask people who aren't your customers why they're not, then alter your product to suit them ("we want to bring our kids, and for it to be basically not like a pub"). The non-customers become occasional customers, while the hardcore customers decide they can't stand their favourite haunt being turned into an arena for breast-feeding and rocket-and-goats-cheese* salad consumption and decide to stay at home.

* a.k.a. smegma.

[oracle]

I gave up smoking 14/08/2004 after being a regular smoker since the age of 11. (25 years)

The smoking ban (IMPO) was championed by this governement by all those f@#ers that wanted no public smoking for their own selfish reasons, not for the protection of bar employees etc.

Pubs should have been able to decide if they wanted to choose a pro/no smoking environment and Joe Public could simply vote with their patronage.

As an ex smoker and as someone with a mixture of smoking and non-smoking friends, this trade is in dire straits since 01/07/2007.

I can't even believe that it came to this.

You can't even say it was for their own selfish reasons.

If that was the case then the ban would be independent within the country.It isn't...it's pretty much EU wide,and the US/canada and also china...so it hasn't been decided upon locally,by accident.

it's obvious that the parliament is not conducting business on a representative basis,therefore is not fulfilling its duty under the relevant mandate given to it by the people upon election.

[uptherebels]

Alcohol should be illegal anyway.

[Byron]

I think that the smoking ban has actually done huge damage despite what the Govt and anti smoking control freaks say.

I used to play guitar in a pub with a group of friends, not as paid entertainers but just as customers enjoying ourselves. Naturally, this attracted the public and the pub profited.

As nearly all the musicians were smokers, they got fed up having to go out into the rain for a fag.

So we no longer go to the pub,

Neither does the audience.

[OnlyMe]

Smoker's revenge -they have left the pubs to all those that said they would go down to pub if smoking was banned - that promise probably lasted all of 10 days.

Funny thing is to see the big pub companies reeling - many were all for this - seems they understand nothing about their business and as has been said thought they were running pseudo property investment concerns.

Oh dear.

Edited July 22, 2008 by OnlyMe

[Its time to buy]

We are all going to live to 150. Problem is we are not allowed out of the house, nor will there be any jobs due to health and safety risks.

[oracle]

I think that the smoking ban has actually done huge damage despite what the Govt and anti smoking control freaks say.

I used to play guitar in a pub with a group of friends, not as paid entertainers but just as customers enjoying ourselves. Naturally, this attracted the public and the pub profited.

As nearly all the musicians were smokers, they got fed up having to go out into the rain for a fag.

So we no longer go to the pub,

Neither does the audience.

well as a musician,if the nazi's got hold of you,you could probably be done under the copyright laws if you were in a room of 3 or more people playing a cover version!!!

killjoys or what!

looks like safety in numbers works.......rave on chaps!!

time for a 20000 strong smoking/music playing all-nighter in front of the town hall.

Edited July 22, 2008 by oracle

[bomberbrown]

You can't even say it was for their own selfish reasons.

If that was the case then the ban would be independent within the country.It isn't...it's pretty much EU wide,and the US/canada and also china...so it hasn't been decided upon locally,by accident.

it's obvious that the parliament is not conducting business on a representative basis,therefore is not fulfilling its duty under the relevant mandate given to it by the people upon election.

As I understand it, yes I know that is the case. However, I wonder if any of those EU countries will be enforcing it as draconianly as they do in the UK?

So, you can get impaled on a bull's horn running down the street in Spain, but woe be tied you if you happen to light a cigarette in a Spanish bar? Mind boggles.

[19 year mortgage 8itch]

The Pub Cos on the rocks and the alcoholic beverage market flat?

Who's next?