'tis the time of year...

Writer's Block...

I don't know why I've not been able to summon the will to put digit to keyboard much recently, maybe it's my growing cynicism about the state of the world in general and the British pub industry in particular... but fear not it would appear the muse has returned and like the little devil that perches on Tom or Jerry's shoulder from time to time, she has started whispering in my ear again...

This from an industry newsletter, Propel Information:

"Diageo to “reframe” Guinness brand: New premium Guinness taps and glassware are being installed in 8,000 pubs in the UK as part of owner Diageo’s “massive overhaul” of the brand in response to slowing sales. John O’Keefe, global head of innovation, beer and Baileys at Diageo, told the company’s annual investor’s conference in Dublin: “Slow sales have been driven by worsening macroeconomic conditions in Western Europe, particularly in Ireland. The last six months of our last financial year, we really felt the austerity programs biting in.” The company is now targeting its three key markets in Ireland, the UK and Africa, to “reframe” the brand. O’Keefe said: “We’re massively overhauling what this brand is about, in terms of our pack through to how we show up in bar through to a new global positioning, and how we’re going to regionally bring that to life in a way that’s culturally relevant and resonant for the next generation."

I wonder how much this latest exercise in pointless rebranding is going to cost Diageo, its shareholders and ultimately its customers (wholesale, retail and drinker) ? At a conservative estimate of, say, £500 a pub (new font, fitter to replace fonts, new POS. new glassware) that's got to be some  £4 millions, add on another for marketing, advertising, social media campaigns etc ant that' s a cool £5 million.

Apart from an exercise in vanity on the part of the likes of O'Keefe and a classic example of how now to use semiotics what's the point? After all the Guinness "brand" is so well known, not the harp or the gold lettering, but the bloody beer in the glass you dolt, so why does it need to be "massively overhauled"? In the first instance I bet they end up still using the harp and the lettering and in the second, unless they're going to have a Coke Zero moment, the beer will remain it's usual bitter/sweet unctuous black and whiteness, then this would appear to be a massive waste of time and money.

O'Keefe and the other fools at Diageo need to realise Guinness' dominant brand position within the UK and other markets for stout is virtually unassailable, hence the long-standing "tradition" of charging through the nose for it. 

So, here's an idea for you Mr O'Keefe, scrap the new fonts, the new glassware and all the marketing hype and just drop the bloody price of your beer! I feel sure this would reverse your company's declining beer sales and would make it "culturally relevant and resonant for the next generation" ...it would also go down quite well with the current generation.

Funny isn't it? When the muse lands, I always need my meds? Nursey? Where are you?

Simon Townsend... not quite a new broom...

So Ted Tuppen is to retire from his role as CEO of Enterprise Inns in 2014... here are his farewell remarks made to City analysts where he bigs up those he leaves behind...

“I feel like Sachin Tendulkar walking to the crease for the last time without the talent and without the adulation. So where have we got to on this journey to rehabilitation? It has been a good year after a tricky start ending with like-for-like growth in Quarter Four, a trend that’s continued in the first seven weeks of the year. You’ve heard from Simon Townsend how hard we are now working and the progress we are now making to deliver against this key like-for-like challenge for 2014. What have we achieved? Well, we have certainly dealt with Stage One. We have reduced our debts by well over £1billion with our bank overdraft now standing at just £41million net. This reduction in the level of our borrowings has been reflected in the increased value of the equity of our business and you will recall that we explained that in some charts last year – we would focus on paying down debt as we could see that creating real value for shareholders. 

We have successfully launched our £100million convertible bond, reducing the cash cost of our borrowings and extending the maturity thereof. We have a tax efficient structure and a manageable amortisation profile that will no longer require asset disposals to pay down debt - and that is hugely important. Getting the confidence of the market that we were going to continue to be here was probably going to be worth about £1 per share. 

So what next? Sustainable like-for-like growth in income per pub - we’ve done (that for) a quarter and we’ve done another seven weeks (since). But the key is to continue this, to deliver sustainable like-for-like income growth. The comparables for the coming year are reasonably helpful and all we have to do is deliver like-for-like income growth. The whole business is structured to deliver that growth and everyone in the company is aware of what we have to do to drive publican profitability and reduce the cost of business failures. Stage Two is being achieved and the sustainable bit is within reach and I think if we can deliver sustainable like-for-like income growth that ought to be worth £2 per share. 

To some extent we have already dealt with Stage Three. Subject to the impact of our historic disposal programme working its way out of the business over the next few years, we should now be in a position where, if we get like-for-like income growth and we efficiently recycle disposal proceeds back into the estate, we have a genuine expectation of delivering real EBITDA growth. EBITDA growth leads to additional cash generation, improving pub values, amortising debts and increasing value for shareholders. (We) reckon this ought to be worth at least £3 per share. And if you look at the share price over the last few years it’s been an interesting journey. The green line is our underlying asset value and I have to say, I’m pretty proud of the fact that during this very tumultuous, tempestuous period of the last few years we have managed to keep that green line pretty stable around about the £3 per share level. There was a moment of massive over excitement in 2006 as you can see by the black line - the level to which the share prices fell at around 25p. But the nice thing is if you just look at us getting control of things over the last three years you can see that we have moved from 88% discount to net asset value to a smaller number now. We are making real progress and we just have to continue that journey. 

Who is going to deliver the next part of that journey? I leave the board on 6 February and will be around for a while after that to just make sure the team are not distracted from those key operational tasks by the outcome of Vince Cable’s consultation. I have taken responsibility for dealing with that and will continue to do so. We have been building this succession infrastructure for a few years now and the board is confident that we have got it right. (Our finance director) Neil Smith has been with us for three years now, has had a tremendous impact on the business and has built real confidence amongst you and our institutions. James Croft, our property director, has been with Enterprise for ten years, first of all in finance roles. He has now been in charge of property for a couple of years and we have seen his robust approach have a very positive impact on the overall condition of the estate, through investment and enforcement, both of which are equally important. As well as driving our disposal programme and our capital expenditure programme towards a higher level of profit generation we have a very clear task - and that is to be able to use 60%, say, of our £60 million a year disposal proceeds for really driving the business forward, proper trade-generating capex. (Commercial director) 

Ed Cottrell, two years in, has had to deal with the collapse of WaverleyTBS and, at just the wrong time this September, had to deal with the strike and the work-to-rule by our major beer supplier, our only beer supplier. These have been very time-consuming and Ed has done a fantastic job. At the same time as dealing with these real crises, he has launched our Sky and BT entertainment packages, made available free Wi-Fi across the entire estate and, most importantly, built a team around him that will drive innovation and sales growth across the business. 

On the operations side, you’ll see that there won’t be a Chief Operating Officer (COO) because we have developed our three managing directors, Nick Light, Ian Ronayne and Kim Francis, to take on the roles of regional or sector COOs. So we have a COO North, a COO Midlands and a COO South. It has been their responsibility, with full understanding of the challenges, to make sure they have (created) a fully committed, skilled and effective team of divisional directors and regional managers, who completely ‘get it’ and who will deliver consistent improvement in publican ability, profitability and stability – in short, to deliver growth across their sector of the business. 

Finally, and most importantly, is Simon Townsend, who joined me in 1999 and joined the board in 2000 and became COO in 2006, just in time to get used to the job before the crash came. Simon has worked tirelessly and with great integrity as we have striven to keep our pubs open and our publicans profitable often in the face of ill-informed and unjustified abuse from the campaign groups who seek to change the business model for their own ends. 

So I am confident in that team, I wouldn’t be leaving otherwise and I am confident that I am leaving the business in good hands to carry on with out clear strategy and to deliver real value for our shareholders. The outlook? We are making progress on all fronts. I am retiring in the knowledge that Enterprise is being run by a great team of people and the whole team have real confidence in and total commitment to the continuing success of Enterprise.”

In his opening remarks this asset stripper par exellence at least has the honesty to admit he neither has the talent of  Sachin Tendulkar and that his departure will no be met with adulation. I can think of many hundreds of tenants and ex-tenants of his company who will certainly not shed a tear at his departure.

But note the emphasis on sweet-talking City Analysts into accepting a share value of £3, never have I seen such a cynical attempt to manipulate a share price, one that will bring this pugnacious retiree a fortune of many millions of pounds if he cashes in at that price. For the tenants (he insists are earning some £37,000 a year from his over-rented pubs buying his over-priced beer, whilst CAMRA proved 80% of tied tenants earned considerably less) this will be of no solace, as they've probably had no spare cash to invest in Enterprise shares.

At least those in "profitable" pubs will be relieved to learn that no more disposals will be required to service Enterprise's debts and their future in their respective pubs are today just a little more secure. What will make their lives easier, fairer and more profitable will be the "distraction" of Dr Cable's consultation into the relationship between pubco/brewery landlords and their tenants, the outcome of which and the recommendations thereof are now overdue. It seems that Ted is not quite done buggering up the pub industry however, as he seems to indicate he will be sticking around to have his usual reasoned and temperate (not) say in whatever BIS comes up with.

One can only hope those who remain do concentrate on "publican profitability and stability", honour Ted's "pledge" to cap beer price increases (a bit of a joke given the eye-watering level being charged currently) even in the face of "ill-informed" campaigners who just want the over-arching principle of "no tied tenant being worse off than a free of tie tenant" which Parliament has expressed as its will in this matter.

If it weren't so painful for many Enterprise tenants this type of self-serving tosh might be mildy amusing, but I fear Ted may yet have the last laugh as he swans off into the sunset counting his grubby millions.

Featured Articles

A timely one this...

Waxing Lyrical...

...a commentary on beer or 21st century "democracy"? You decide...

Read all about it...

To coincide with the National Cask Ale Week, the redoubtable Pete Brown has once again done us proud with this year's Cask Report... just click the pic to download your copy...

Calling all pagans...

It's gonna be that time of year again soon...

Top Tips and more for your pub's Hallowe'en party... just click the pic...

Introducing DrunksRUs...

Harold Wilson is widely attributed as saying "A week in politics is a long time" and this is never more apt than in the national conversation about alcohol and how to deal with those who use it irresponsibly, whilst not punishing those who quietly enjoy a tipple without causing society at large a huge problem.

Successive administrations have looked at the societal ills of binge-drinking, long-term alcohol abuse and the like, and have come up with various solutions, for instance, minimum pricing. With a bit of luck the issue of minimum pricing is a dead duck, although Newcastle City Council still seems to think it's a good idea by trying to introduce a licensing condition of a minimum price of 50p per unit. I think the argument against minimum pricing has been won for now and alternative strategies will be sought and promoted.

One such strategy being mooted this week by the Association of Chief Police Officers (ACPO) is the introduction of commercially run American-style "drunk tanks". Drinkers who get so intoxicated they cannot look after themselves would be cared for in holding cells until they sober up and charged for the pleasure, as well as being fined for being drunk and disorderly. Police believe a commercially run initiative would act as an extra deterrent to excessive drinking as well as freeing up officers from having to deal with late-night drunkenness. The ensuing media frenzy today in is superbly timed to coincide with the national police "week of action" during which pubs and, I trust, other alcohol retailers are "reminded" of their duties and responsibilities under the licensing law.

The suggestion has won the backing of some police and crime commissioners, who are keen to tackle alcohol-related problems and keep policing costs down. Yesterday, Adrian Lee, the chief constable of Northamptonshire and ACPO's lead on tackling alcohol problems, said:

 “I do not see why the police service or the health service should pick up the duty of care for someone who has chosen to go out and get so drunk that they cannot look after themselves. So why don’t we take them to a drunk cell owned by a commercial company and get the commercial company to look after them during the night until they are sober. When that is over we will issue them with a fixed penalty and the company will be able to charge them for their care, which would be at quite significant cost and that might be a significant deterrent.”

ACPO estimate it costs between £300 and £400 a night to hold someone in a police cell, while police can only issue a fine of up to £80 for an offence of drunk and disorderly. So there is clearly a discontinuity between the cost of dealing with this problem and the police's ability to cover their costs, in this instance it would appear crime does pay.

More than 31,000 people were given a fixed penalty for the offence last year, whilst it is not known how many of those would have been so drunk that they had to be held in a cell overnight, I'll bet there are plenty of custody suite and A&E managers who would welcome the proposal. On the cost-benefit front only 25% of fixed penalty recipients would have needed to sober up in a cell for the proposed scheme to break-even, so the economic imperative is compelling.

Another attractive element to the proposal is the principle of the "polluter pays", those who get so bladdered they cannot stand, pay for the cost of their care. Alcohol-related crime is estimated to cost the economy around £11 billion a year including £2.7 billion to the NHS alone, so anything that reduces those bills has to be welcomed.

Mr Lee added that commercially run cells might also be a safer environment for drunks because medical staff could be on hand to look after them. Sir Hugh Orde, the president of ACPO, said drunks were “very high risk” and needed checking every 15 to 30 minutes:

“It is a huge cost on staff and when one of these people tragically dies, the service is quite rightly criticised.”

The idea seems to have support from some Police and Crime Commissioners too and A Home Office spokesperson said:

“Local authorities, the police and other agencies already have a range of powers to tackle alcohol-related crime and disorder. We believe local communities are best placed to take action in response to local problems.”

I have to say the idea does seem attractive, with all the empty retail units in our high streets there would be plenty of room to covert them into DrunksRUs™, Plenty of scope for employment for custodians and medics, and the inevitable layers of management involved in any commercial enterprise. 

So who will run these commercial drunk tanks? Will it be those paragons of efficiency Group 4 or Serco who seem to run most of our "public services" these days? I can just see the adverts now:

Or could we please just deal with one of the root problems of binge-drinking, the ridiculous "pocket money" pricing by the off-trade, most notably the big supermarket chains? Jeremy Browne, the crime prevention minister, said: 

“The Government is taking a wide range of action to tackle alcohol-related crime and disorder. This includes introducing a ban on alcohol sales below the level of duty plus VAT to tackle the worst cases of very cheap and harmful drink.”

Well Mr Browne, how about getting local licensing authorities to just impose the same sort of licence conditions for off-trade licences as pubs have with regard to "responsible" drinks promotions? Or don’t you and your colleagues in government and parliament have the political balls?

Or why not just increase the cost of fixed penalty fines to a level that will deter anti-social behaviour such as being drunk and disorderly? 

Just a thought...

I knew it was too good to be true...

Well I knew it wouldn't be too long before the current coalition government got back in to the swing of things after their summer break and the diversions of foreign policy and the economic situation lost their ability to stop ministers spouting utter nonsense.

Today, it has been reported the minister responsible for crime prevention, Jeremy Browne, has revealed the government's thinking on the future of Personal Licences having considered its extensive Alcohol Strategy consultation responses. Earlier this year it was mooted the current need to renew Personal Licences every ten years might be scrapped. Now the honourable gentleman is proposing getting rid of Personal Licences altogether.

(For those not in the know, there are two types of licence related to the sale of alcohol in the UK, the aforementioned Personal Licence ensures individuals receive adequate training to enable them to sell alcohol safely and responsibly, the second is the Premises Licence which regulates how venues such as pubs and restaurant and retail outlets such as off-licences and supermarkets are operated).

If you cast your mind back to 2003 when the current Licensing Act came into force there were, and are, four principal Licensing Objectives, to wit (and in the order they are enacted):

1.the prevention of crime and disorder

2.public safety

3.the prevention of public nuisance

4.the protection of children from harm

The minister should take note, the area of government he should be principally concerned with, the prevention of crime, is right up there at number one. Strange then, that his concern should be the 'administrative and financial burden' on businesses which sell alcohol.  This über-nuMPty reckons the move could save businesses around £10m a year as the Government finds the personal licence system may not always be the “most targeted and proportionate way to ensure alcohol is sold responsibly, for example, all premises – from the riskiest to the quietest – must comply with the system regardless of whether it is locally appropriate or not”

So with a conservative estimate of some 100,000 premises licensed to sell alcohol the 'saving' might be £100 per business. That's just under two quid a week, hardly a financial burden and not a great amount to worry about 'saving' in the grand scheme of things. I wonder if the minister has considered the "unintended consequences" of his proposals? But what are they? 

Well, I'm glad you've asked. The consultation (into personal licensing) proposes enabling targeted, local alternatives to personal licences through locally applied conditions to premises licences.(At the moment, all alcohol sales must be authorised by a personal licence holder, who must have completed training on the risks alcohol can present if handled irresponsibly. They must also notify licensing authorities if they commit any offence which suggests they may be unsuitable as a manager at licensed premises.)

Browne said that the decision came after "extensive discussions" with the trade, police and local Government during the recent Alcohol Strategy consultation (sic) and he reckons the saving would still allow licensing authorities to keep "a focus on measures to tackle crime and disorder at licensed premises. This consultation is an opportunity for licensing authorities, the licensed trade, police officers and the general public to share their views on this proposal. In particular, the Government is seeking views on whether it would cut costs for businesses and maintain appropriate safeguards against crime and disorder at licensed premises.”

Notwithstanding the continued focus and demonisation on the on-trade I wonder if Mr Browne, has carried out a full cost-benefit analysis? I think the hospitality industry should insist one be carried out on this proposal as the switch, ten years ago, from the old Justice's Licence system to the current licensing regime cost the industry hundreds of millions of pounds to implement. Does the minister think it would cost any less to needlessly re-jig licensing arrangements again?

Going back to his ministerial brief, does the minister think removing the professional qualifications a Personal Licence holder has to hold, the training licensees have to undergo to achieve those qualifications and thence obtain their licence is going to do anything to promote the four licensing objectives? Surely if one is serious about lifting those in the pub trade from "trades (wo)man" status to that of professional practitioners who operate their businesses with the best standards of conduct and adherence to the law, then scrapping the de minimus requirements of the Personal Licence isn't going to improve the situation.

There have long been rumblings from local authorities, who are charged with administering our national alcohol laws, for them to be allowed to set their own local licensing fees as opposed to nationally imposed rates. If this ridiculous proposal comes into effect and licensing is on a local basis with the myriad of regimes this will give birth to then only one logical conclusion can be drawn and that is licensing costs will sky-rocket as cash-strapped councils seek to further "monetise" the licensing process.

And let's not stop there. Under the current regime a Personal Licence holder can pretty well work anywhere in the UK (with a few minor variations in Scotland and Northern Ireland). There is one national qualification, one national set of criteria for obtaining and retaining the Personal Licence, so how would several hundred individual licensing regimes and requirements help keep costs down, let alone protect the licensing objectives? How would this help the labour market? Surely it would lead to less flexibility for individuals and businesses alike. I think Browne's colleagues in the DWP, the Department for Business and Industry, the Treasury, Numbers 10 & 11 might have something to say if he knackers the free flow of qualified licensees around the country. Even Lord Tebbit would be hard-pressed to suggest licensees "get on their bikes" and go where the work is if these barriers to free movement of labour are imposed.

What, pray minister, is your proposal for the role of Designated Premises Supervisor (DPS) on existing Premises Licences? At present the DPS is, what under the old system was the "landlord" or "landlady", the person responsible for ensuring licensing laws are adhered to. A DPS must, for now, hold a current Personal Licence. So who will be responsible under your mad-cap proposals? A new qualification and new licence for the DPS? How will this save businesses money? Local councils will still have to administer some form of licence for those who actually sell the booze, there will still need to be a minimum level of training and there will still need to be an "examining board" to ensure only those who pass the test get a licence. Who will pay for this? Who will pay for the transitional costs? Well my guess is it'll be business and ultimately their respective customers. Will there be a refund for the thousands of Personal Licence holders for not only their licence fees but the training they underwent?

Here's another thought, under the existing arrangements the Premises Licence has been fairly well protected from the short-comings of an individual DPS in the event of a review. What protection will there be for owners such as freeholders and yes, even the dreaded pubcos, who by and large hold the Premises Licences for their pubs and bars? I for one can see the potential for huge costs for owners of licensed premises when licences are lost on the football field of local council politics and local police commissioners' re-election campaigns.

Clearly Mr Browne has not considered the consequences of these proposals, perhaps he never had a wise old grandmother to remind him that "if it ain't broke, don't fix it". Equally clear is that "joined up thinking" isn't part of the minister's vocabulary either. For, imperfect as our licensing system might be now, think how completely bollixed it'll be if the hospitality industry and the off-trade have to deal with any number of variations. I can see the likes of Tim Martin having a nervous breakdown as he tries to reconcile disparate licensing regimes to the needs of his national pub empire. And pity the poor local government officers who have to implement any changes, imagine the (wo)man hours that'll go into dismantling the current system and building a new one.

I've maintained for some time this government has a schizophrenic attitude to its Alcohol Strategy and Mr Browne's latest wheeze does nothing to change my view. And to think I was doing so well over the summer, I'd managed to reduce my intake of pills, I'd stripped the padding out of my cell and nursey even had time for a well-deserved break. Back to the drawing board on that one. Thanks a bunch Mr Browne.

Well at least I won't have to change the motto on my coat of arms as it will firmly remain " Nutrix, medicina, nunc!"

The Good Pub Guide...

Many others have, and will no doubt, comment on the editorial in the latest edition of this paid for advertising tome, I just have this to say...

... normal service (and a lot more words) will be resumed in September.

Latest newsletter out now...

 

To get yours delivered direct to your inbox sign up at the top of the page...