The Elephant that slipped between the Craics

The Publican is flagging up an article in the The Irish Times from Monday which will send shudders through the British pub trade.

The pub trade is experiencing a “meltdown” with sales down by more than 14 per cent in the first seven months of the year, the Drinks Industry Group of Ireland claimed today.

And that includes the period of good weather. So what are the reasons for this?

The group said publicans were also facing ongoing “cost pressure” which was being generated by Government related costs such as commercial rates and regulation.

Of course we have to look at the bigger picture, wonder what these regulations are. Well apart from the home grown stuff there is of course a whole tranche of EU regulation such as the Working Time Directive and all sorts of Health and Saftey regulations that bedevil small businesses. But this problem is one that has been growing for a while it seems.

It said the weak economic environment and lower consumer demand were causing further problems for the sector, which says it has experienced a 25 per cent reduction in sales since 2000.

That is a terrifying drop in 10 years. What has happened, are the Irish becomeing the new Temperance Seven?

Well according to recent figures that is part of it,

Pubs have been closing at a rate of one a day, and 15,000 jobs have been lost over the last 18 months
1,500 pubs closed in the past five years
the 9.6% per capita decrease in 2009 is on top of a 7.7% decrease in 2008
By volume, consumption decreased 8.9% in 2009, and 5.9% in 2008
Foley predicts another 5% drop in volume for this year
Consumption is now 21% below its peak “during the drunken haze that was 2001,” when Ireland was at the height of its economic boom
2009 alcohol consumption levels are the lowest since 1996

However the figures for pub closures are significantly greater than the figures for drop in consumption. And hikes in prices might have had an impact,

because while the Irish are drinking less, the amount they are spending on their drinking is not declining at the same rate.

It is worth noting that in 2004 the drinks industry commissioned a study into the hopes and fears of the pub industry.

Respondents to the survey were invited to raise any current issues which they felt were very important to the licensed trade. Of the total responses, 15.9% identified no issue, while the remainder were spread over a number of issues.
The most common were the smoking ban (66.1%) and the right to refuse issue (14.5%). There were different issues identified by public houses, and by other licensed premises. 72.4% of pubs and 48.0% of other premises were concerned with the smoking ban. 27.9% of other premises and 11.7% of pubs had no issues.

Well, given that the smoking ban was introduced in 2004 it is not surprising that the trade was frit about the effects.

This is confirmed by the source document for the declining figures above,

Based on industry and market research information it is estimated that the volume decline in alcohol sales in bars was approximately 12% in 2009.

Whereas,

Excluding the impact of cross border off licence sales the off licence share of total alcohol consumption in 2009 was 49% compared to 47% in 2008.

UK spirit taxes in particular are significantly lower than in the Republic.

Nowhere, except in the the 2004 study is the spectre of the smoking ban raised, and then only by the publicans themselves. The industry tries to gloss by talking translucently of 'regulations' and describing the figures as broadly spread, when the smoking ban worried 61% and the next isssue was down at 14.5%.

So whither the British pub? The year on year impact of the Irish smoking ban is obvious, coupled with increased regulations, and pressure on prices the trade is in what looks like terminal decline. Of course Ireland introduced its ban before the UK, so the problem is bigger, and in part more diluted over time, but the impact is there for all to see.