How To Get It Completely Wrong ...

On Tuesday, I read in the Publican's Morning Advertiser, that Greene King was in support of minimum pricing (and my thoughts on that are well documented here and elsewhere) proving that dis-jointed thinking is not the sole reserve of the nuMPties in Westminster ... apart from the premise that minimum pricing won't be the magic bullet to cure all Society's alcohol related problems, it is just another 'stealth tax' that will deepen the problems of the brewing industry and the pub trade. What really got my goat, aside from the staggering naivety of this major player in the UK hospitality industry, was that they think that minimum pricing is a "supportive measure" for them, their colleagues in brewing, their customers in the pub trade and their own managed house business.

Yesterday, I read in that same august journal, that Adnams have a fairly peculiar view on the beer duty escalator, in that whilst they think the escalator is a bad thing, they also think that the £200,000 duty subsidy that micro-brewers receive is a bad thing too.

Call me a conspiracy nut if you like, but is this the beginnings of a concerted effort by national and regional brewers to squeeze the little guy out of the market? Imagine a couple of years down the line when not only is there an escalator for beer duty, but also one for minimum pricing and as a hard-pressed Chancellor looks at every more 'imaginative' ways to chase his holy grail (deficit reduction) that the subsidies to a still emerging sector of the brewing industry gets cut off at the knees by reducing, or even completely removing, the duty subsidy for micro-brewers.

For these small artisan brewers who have contributed so much to the increase in the cask and craft ale market (both on and off trade) and are widely recognised as being the saviour of a good proportion of the dwindling national estate of pubs, this will be the perfect storm. Reduced or zero duty subsidy will mean inevitable price rises at their, albeit tiny, factory gates or as will be more likely another unsustainable cost that they simply cannot absorb and go belly up.

Oh and don't imagine for a moment that the big pubcos or supermarkets will move an inch on their purchasing prices to help these minnows of the brewing world, they'll be more than happy to carry on gouging prices at their goods inwards gates. The former will simply pass the cost on and the latter will happily absorb the minute amount of extra duty that minimum pricing will add to their retail prices.

Give it a couple of years and the staggering exponential growth in local brewers producing interesting beers will falter and within a couple more we'll be back to the position we were in a few years ago where instead of over a thousand brewers in the country they'll be just a couple of hundred, churning out mass-produced and in some cases undrinkable muck. So much for the precious 'free market' and the choice it brings consumers.

So Greene King et al, get your act sorted, put aside commercial rivalry (between your super-sized companies and the tiny entrepreneurs in your industry) and use the considerable economic and political clout you have to tell this (and future) administrations that enough is enough and to stop screwing up brewing and the vital social institutions that they supply. Or it won't just be Quentin Letts on Radio 4 asking "What's the point of pubs?" it will be the very people who need them as one of the most socially cohesive businesses in the UK who are asking what's the point?

As the premise of the program is that more and more pubs are like restaurants anyway (and a jolly good listen it is too) many pub operators might begin to ask the same question themselves. Especially when you learn that Mitchell & Butlers are in the process of rolling out even more 'take-away' food operations in its bid to dominate out of home dining and, it would appear, the take-out market.  Which will see the demise of even more pubs as greater numbers 'squeezed' consumers resort to tucking into an M&B take-away "gourmet burger" and sup on that minimum priced can of lout, whilst watching that other great knackerer of the the pub industry (Sky) showing over-paid, mediocre prima-donna, 'professional' footballers take time out from their inane Tweets to dive at the ground ... talk about dystopian future.

No wonder that so many young adults (18-24 apparently) wouldn't consider a career in hospitality ... who would invest their time and energy in an industry that not only appears to be in terminal decline but also at war with itself? ... and I was feeling so good after the Olympics ...now if nurse would kindly bring me my medication and prevent my head from exploding ...

Bread and Bitter ... or time to use your loaf!

Have you noticed how many "The Campaign for …" there are? Just typing in those three words bring up over a billion results … for Oxford Thinking, to Protect Rural England, for Wool, for Drawing, for Learning, for Better Transport … the first half dozen in my search results. Of course we in the pub trade all know about CAMRA and CAMRGB but one which you may not have heard of given its inception was only 2008 is the Real Bread Campaign

Courtesy of The Real Bread Campaign

Beer is widely accepted to have been in existence for over 6,000 years with the Sumerians of Mesopotamia recording a recipe some 4,000 years ago. Anthropologists, however, will tell you that somewhere between ten and fifteen thousand years ago our nomadic, hunter/gatherer ancestors stopped wandering around and settled down to grow things … among the first was wheat, from which not only beer comes, but bread.

So much for the potted history, but what has this to do with pubs? Well if you subscribe to the view (as I do) that 'sustainability & localism' are not just a post-industrial fad then the Real Bread Campaign (RBC), with its myriad of traditional millers and artisan bakers could be just the USP to differentiate your pub from those around you.

Whilst the big boys march on, gobbling up ever more of the declining pub market place and consumers are squeezed out of our pubs by a rapacious Treasury one thing that is bucking the trend has been real / craft beer and the preponderance of high quality food in pubs today.

According to RBC the definition of Real Bread is:

"Real Bread is that made without the use of processing aids or any other artificial additives"

Sound familiar? In this definition is the key to a USP that not only ties into 'real beer', 'slow food' and 'green consumerism' but also has many health benefits. From this simple starting point the Campaign finds ways to make bread "better for us, better for our communities and better for the planet. " Ways RBC suggests this can be done, include:

• Bulk fermentation of at least four hours, preferably in the presence of sourdough bacteria
• Made using not only roller-milled white flour (* e.g. all flour is stone-ground, or all flour is over 80% extraction rate, or bread is made using at least 50% by weight of wholemeal flour).
• Made in one continuous process i.e. no part-baking or freezing of the dough
• Made using at least 20% (by weight) locally milled flour (using the FARMA guideline of 30 miles being ideal and up to 50 miles for larger cities/coastal/remote towns & villages)
• Has a salt content in line with FSA guidance - 1% or less of final product weight
• Product is certified organic (I assume as defined by The Soil Association definition)

But I still don't get the point, what has this to do with pubs? Think about it, locally sourced, hand made and better for you than the crap we usually by from supermarkets and commercial bakeries … what's not to like? The Flour Advisory Bureau reckon 99% of UK households buy bread, 44% of men and 25% of women eat it twice a day and that 97% of bread is either bought from supermarkets and high-street bakers … what a market-place to exploit!

We all search for differentials to give our pub the edge over the competition, we all work incredibly hard to make sure our premises are welcoming, our beer bright and our food appetising … so why not add a further difference that the big boys will not take up quickly?

Just one suggestion from the RBC website for budding bakers is to approach their local pub and see if the kitchen can be used out of normal cooking sessions. Think about this one … you could rent out your kitchen (overnight or early morning perhaps) when you aren't using it and it isn’t paying for itself and you could have the added benefit of the aromas of freshly baked bread to add to your pub's 'ambience' and 'artisan' bread baked on the premises for your menu. I used a similar strategy with great success by allowing a specialist vegetarian/vegan caterer to use the pub kitchen "out of hours" - not only was part of the pub asset used to full effect but we were also able to offer high quality food to our vegetarian/vegan customers.

Studies have shown that on average 76% of money spent with local businesses is re-invested locally as opposed to only 36% re-investment by national chains, but we all know that from jobs we farm out to regular customers, such as plumbers, painters, builders etc who drink in our pubs. Not only do we often get 'mates rates' but we also see a fair amount of expenditure re-invested by those trades-persons back over the bar. Creating a sustainable partnership with a local artisan baker within your premises could provide a valuable reputational boost … so we can't all be beer and brew-houses (the tie, space or finances might preclude that) but many pubs could be beer and bake-houses with little difficulty. Even if you can't go the full hog of giving up your kitchen on a permanent basis, why not offer your facilities to a local baking group, in a return to times long ago when all the bread in the village was cooked in just one communal oven? Go one step further ... set your own group up.

Loaf in Birmingham, have become tenants of Everards the brewer, who have purchased premises for the new Loaf HQ as part of Everards’s ‘Project Artisan’ – an innovative scheme to purchase and then lease out buildings suitable for artisan food and drink businesses that need to expand, initiated by Everards after the success of their project to convert pubs for micro-breweries (Project William). Everards investment in the property means that Loaf can take on a bigger and more suitable premises than we otherwise could have done.

Increasing numbers of pub customers are what LOHAS (Lifestyles of Health and Sustainability) marketers call “drifters” who: 

•         Want to choose environmentally-friendly products, but often choose ones that aren’t

•         Want to do more to protect the environment, but don’t know how

•         Believe that considering the environmental impact of their purchase decisions is too difficult

•         Think they personally cannot make a difference

RBC taps into all of these drifter aspirations especially as an easy way for them to buy 'ethically' without having to really think about it … LocAle from CAMRA does exactly the same. Food miles, beer miles, short grain chains (RBC's version of food miles) all add to the attraction of the proposition. Mintel the market research experts say 

 "Those companies that cannot keep up with the progression of LOHAS consumer demand risk losing market share."

So full asset use, local interaction and 'green credentials' combine to provide a USP that the big boys will be loathe to emulate, not bad from something that only really requires four ingredients, flour, salt water and yeast. Check out the RBC website it has a fantastic set of resources on all things bread and more than likely will put you in touch with someone looking to bake locally.

If you need any convincing not to buy commercially produced bread take a look at this from the Gaurdian newspaper:

  Nuff said eh?

Sauce for the goose ...

So once the Olympic flame is extinguished, the fireworks have disappeared into the ether and TV schedules return to normal, what next for pubs? 

One area of significant growth in both the off and on-trades, bucking the trends in falling sales is Premium Bottled Ales (see the BBPA statistics for sales declines). Marston's have just published their Premium Bottled Ales Report 2012 and huge like for like, year on year growth.

 

So what lies beneath this rare success story in the age of double (or is it triple) dip recession? Well the first thing to note about the report is that it is aimed primarily at the off-trade and the growth in this sector is 11% in the UK (16.4% in Scotland and 80% for flavoured beers), which the authors say is due to Premium Bottled Ale (PBA) satisfying "consumer demand for authentic, crafted products" :

The greater consumer appeal for PBAs has been driven by a higher perceived level of product quality and value delivering an ‘affordable treat’, with appeal based on:

·        More taste and flavour than other beers (63%*)

·        Authentic crafted product, rather than manufactured commodity (37%*)

·        Produced by regional and local brewers rather than  multi-nationals (36%*)

*Source: Marston’s Drinker Survey Nov 2011

This has led to some 455,000 extra customers to the PBA off-trade market and a loss of 160,000 customers from the standard ale off-trade market. Surely if supermarket shoppers are switching in such great numbers it only behoves the pub trade to capitalise on these changing tastes and ensure a wide range of PBAs are available when supermarket shoppers go out for a drink, in this case familiarity does not breed contempt.

It recommends that in order to further grow the off-trade market that retailers should adopt some key strategies, which, if savvy on-trade operators were to adopt (or at least adapt) could deliver significant returns not only in terms of PBA sales but increased customer foot-fall.

The Marston's report reckons that there are £20millions of lost sales in the off-trade due to "out of stocks" - so a key recommendation pubs could adopt is to ensure that stocks reflect customer demands (although any competent on-trade operator knows this already). 

The report goes on to say that there are 10 "drive brands" that deliver 45% of total space yet only use 20% of shelf space. It recommends single facings - something a pub may not be able to do if the demand is for chilled beer - but attractive, back of bar displays of single facings might work. A pricing policy of "multi-packs" on a selected range increase the "weight of purchase" (i.e. these shoppers spend more overall)... something pubs can definitely do.

The report recommends that more shoppers (in the case of pubs customers) can be encouraged by concentrating on " flavoured and lighter, golden beer styles" that are attractive to a younger and female biased clientele. According to the report flavoured beer sales grew 57%  and golden beers grew by over 20% in 2011.

It goes on to talk about dual sited displays and such but seems to indicate that stocking key brands will "signpost" this for customers and the use of cross category linked promotions. In the case of pubs this could easily be food-matching opportunities. (The report lists the top 20 selling PBAs, including the average off-trade price to help you assess where your pricing might comfortably sit to make then sufficiently attractive to your pub customers,)

Something pubs have known about for a long time is how important engaging with customers by having staff well-trained in product knowledge and able to recommend products to customers (food matching and for the "experimenter" type customers) is to building sales. At the very least, if you don't run to a full printed PBA menu, make sure your team know what they are selling, the style of beer, the taste, the origin and use some chalk-board space to create some tasting notes/beer of the week etc.

Lastly Marston's is recommending to its off-trade retailers that they, in effect, ditch poorer performing categories and products to make way for an expected growth in the PBA market. The report's authors are of the opinion that legislative change (such as the mooted Minimum Pricing for alcohol) and tax policy (the continuance of the duty escalator) will see brewers reducing ABVs and concentrating on flavour. (The report cites market research that 40% of consumers would choose a weaker beer in the afternoons and weekday evenings.) So dig out those stock reports and make some intelligent choices about what isn't selling, have a "sale" to get rid of it and replace it with what consumers seem to want i.e. PBAs.

The supermarkets are often blamed for the decline of the pub trade, so why not cash in on all the hard work and expense the off-trade and brewers are committing to growing this sector by making sure you have a wide range of PBAs available?

The full report can be found here