So long Roger ... missing you already

... damned right Mr Whiteside (with apologies to Aardman)

In today's Publicans' Morning Advertiser the outgoing CEO of embattled Punch Taverns gets to have his say on the pub trade and his time at Punch. 

This is my reply ...

All the best Mr Whiteside, sadly for thousands of individuals who were at the shitty end of the partnership stick and were stripped of their assets whilst the company of which you are so proud paid down its debt mountain with their life savings, your words will ring somewhat hollow.

Yet again we see the "low cost entry" mantra reiterated as justification for sharp business practices but no acknowledgement or even a whiff of an apology to the hapless victims of your company's (and others) "high cost exit" business model.

As few will mourn your passing from the "stormy seas of the pub sector", so will few mourn the passing of Punch et al when they finally succumb to regulation and market forces.

Angry blogger? You bet! When the industry that I have worked in and been proud to be part of for over 30 years is in such crisis. Yes, tax and duty, supermarkets and smoking have all had their part to play, but the billions of value in our national estate of pubs that has been stripped out by pubcos must surely be a major culprit.

I am glad you enjoyed your time at Punch, on your salary I should imagine that the odd frosty reception, coffin bearing protestors and angry blogs haven't been too onerous a burden.

The once in a generation chance to bring the pub industry to an equitable settlement through regulation is not to be feared as you and others who have a vested interest in the status quo would like... rather it is to be embraced as the only chance for this industry to survive. If thousands of pubs do come to the market on a free of tie basis (be it freehold or rented) with transparency of rents and other costs then this will be no bad thing.

Just as it was not beyond the wit of Punch to re-brand the tie as a buying club (surely this must get a lifetime marketing award from somebody) nor will it beyond the wit of individual operators to join or create their own genuine buying clubs to extract their true value from the supply market.

I recognise the need for the market to create its own levels (both in terms of absolute numbers of pubs and the beer those pubs consume) and that there is a place within the market for the tied model. But it has to be a model that rewards in equal measure the capital and entrepreneurial input of the tenant and the capital and estate management input of the landlord.

What the average bloke(ess) who take on a pub want from a landlord is a fair shake of the stick, if they succeed so be it, if they fail so be it. Some are good at running pub businesses, some are not, but the emphasis has to be on fair ... and whilst we're at it honest and transparent. You and your colleagues within the BBPA have steadfastly resisted this to the point that Parliament has finally run out of patience.

So, in closing I have a message as an angry blogger to you ... bring it on!

What more proof do you need George?

Source:BBPA

So beer consumption is down yet again, with the BBPA reporting that 138 million less pints were consumed in the last quarter of 2012 than the same period in 2011. With CAMRA's headline figure of £1 per pint going to the Exchequer in tax and duty per pint this means our economically illiterate, dogma driven Chancellor received £138,000,000 less from beer drinkers. At that rate of decline this would mean a straight line annual decrease in tax revenues of over half a billion pounds.

Given that the government and others are convinced that price is the pre-eminent factor in determining consumption of alcohol (otherwise why pursue the ludicrous policy of minimum pricing) surely the retention of the automatic, above inflation beer duty escalator is counter productive to their stated aim of reducing debt and deficit?

What on earth is persuading Mr Osborne, Mr Alexander, the serried ranks of Treasury mandarins and even the Opposition Treasury Team from reviewing the position as required by Parliament in its debates on the duty escalator in November 2012 and the pubco/tenant debate earlier this month?

Could it be the incessant trumpeting of pub operating companies reporting increases in like for like (LfL) trading figures that assail us every day ... so far this year (since January 2nd) I have received email newsletters etc reporting:

Oakham Inns           +7.7% for December sales

JW Lees                  +40% increase in pre-tax profits for the year

Arkells                      +3% in sales

Innventure                 +7.2% in sales

TCG                          +2.5% in sales

Walkabout                +8.6% in sales

Be At One                +2.6%

Grand Union Bars   +13% sales

Loungers                  +4.1% sales

Chapman Group      +10% sales (approx)

Anglian Country Inns ..."double digit increase in sales" ... and that's just in the seven days to the 9th of January.

I understand why companies have to continually reassure the ever-insatiable market that they are a sound investment and that business is booming but could it be that in those very announcements that eagle-eyed observers within the Treasury are convincing themselves, as my local MP puts it " ... a balance does need to be struck between fair taxation and sustainability of the brewing industry".

For many thousands of pubs who are at the sharp end of the tax and duty regime of this and the previous administration (lest we forget that it was Labour, not the Coalition who introduced the beer duty escalator) I wonder whether their LfLs are as encouraging. For, you see, at least seven of those companies listed above who reported such encouraging figures, beer and other alcoholic drinks sales account for less and less in their trading and profit figures. For instance JW Lees report that food sales in its managed house now account for 43% of their income and Oakham Inns is proud to declare it is food-led with sales boosted at one of their outlets by 12% on the back of publishing a best-selling cook-book!

How close are these experiences to the community pubs that serve little food, either through lack of facilities or customer demand i.e. the wet-led pubs that are the back-bone of the pub trade? I'll wager the 4.8% drop in beer consumption across the on-trade in the last quarter was borne mainly by community wet-led pubs, which, for many outlets must have meant a far greater decrease. Whilst the health lobby will be rubbing their collective hands with glee at the decrease in consumption, many publicans will be struggling to keep a roof over their heads.

Perhaps when the long-awaited consultation on the regulation of the pub industry (and more importantly the pubco / estate owning breweries) will receive sufficient representations from ordinary, pint-pulling publicans to demonstrate that even with the best will in the world to make their businesses a success through diversification of products and services, owner operated pubs who simply cannot take advantage of the "restaurantisation" of the trade need special consideration in their deliberations.

Perhaps, just perhaps, the mandarins in the Treasury and their political masters will take note of what their colleagues at the BIS are doing and realise that they are killing yet another golden goose (with the continuation of the duty escalator) that the nation's economy and soul can ill afford to lose. It would be a shame if back street boozers, locals' hangouts  ... all The Moon Under Waters disappear from our national heritage and psyche.

Setec Astronomy ...

One of the planks of the Licensing Act 2003 was the public involvement or democratisation of the licensing process so it was somewhat worrying to learn that the government may withdraw its current requirement for alcohol licence notices to be published in local newspapers, warns the Newspaper Society (NS).

Worrying? Yes, on two fronts ... firstly do we as an industry want licensing decisions taking place in camera ... isn't this diametrically opposed to the government's stance on involving local communities in saving local pubs as community assets? If locals don't know, for instance, that yet another pub is to be turned into a Tesco Express of Sainsbury Local, the first that many will know about it are the notices in local newspapers. Whilst I am all for reducing red tape and the ever increasing costs of licensing surely this is disadvantageous to local communities who might wish to save their local pub?

It suggests scrapping the present requirement that those applying for new licences, or making full licence variations, must advertise their applications in a local paper or circular.

According to the home office's impact assessment, the likely annual cost to the regional press industry would be between £6.2m and £7.9m, which would be a welcome saving for pubs and other licensed premises.

The NS believes the proposals would lead to local licensing matters being decided in secret. In a statement opposing the plan, the NS says the proposal "must be rejected" and it has "nothing to do with the government's aims of cutting alcohol-fuelled crime and anti-social behaviour..." It continues:

"Enabling the whole community – not just the immediate 'neighbours' of a venue - to be as informed as possible about new licences and about applications for variations… is itself a vital tool in those aims by enabling the community to raise concerns directly relating to these issues. The role of statutory notices such as licensing applications is as valid today as when they were originally introduced: to ensure that important information which can have a real impact on community life is publicised as widely as possible."

A previous government proposal to suspend the requirement to publish planning notices in papers was rejected after publishers campaigned against it. And earlier this year, the Welsh Assembly rejected similar proposals in relation to traffic notices. The NS is to submit a response to the home office alcohol consultation before it closes on 6 February...

What is more worrying is the government shoe-horning this proposal into their consultation  on "Delivering the government's policies to cut alcohol fuelled crime and anti-social behaviour." Is this just another back-door way of continuing the assault on ordinary drinkers and the venues that serve them? I should think, that cost aside, most publicans have no problem justifying their licences and the way they administer them in the public arena so why does HMG want councils to reduce the conversation about licensing?

How much more disjointed or disingenuous can this current administration get?

(BTW ... Setec Astronomy is an anagram)

How Costa got women to "spill the beans" ...

In Marketing Week I spotted a quite lengthy article on engaging customer segments ... one section that caught my eye is, I think, of relevance to pubs ... so to save you all time I've turned it into a Market Intelligence Report and posted it on the Market Intelligence Report page

Market Intelligence Report - Cask Marque

Cask Marque have released the results from a NOP survey of Cask Ale Drinkers ... here's a snapshot ... on the Market Intelligence Reports page

Less is more ... for big business

Much has and will be written about the decision by Heineken to reduce the strength of its John Smith's Bitter ... maybe as part of the drinks industry's commitment to remove billions of units of alcohol from the UK market, maybe as a nod to responsible drinking ... what very few will highlight is that at the same time they will be increasing the wholesale price (not the price the consumer pays, but the price that retailer pay) by 2.5 pence.

2.5 pence is not a lot, but by the time the retailer (in most cases community pub operators), where the majority of John Smith's is sold, have factored in margin protection (i.e. they don't lose money by selling a more expensive product) and VAT this will translate to a 5p a pint increase.

So Heineken reduce their duty bill to the Treasury by £6.6 millions and increase their turnover to protect their financial position in the face of rising costs but in their own words will pass some of the duty savings on to customers ... I just wonder how much?

Like their beer or not this does reek of yet more immoral capitalism and as such should be condemned by publican and drinker alike, however, it will be the poor old publican who gets the blame for the price rise and who will be accused of profiteering as consumers remember the 2.5p headline price rise and the 5p price increase at the bar and wrongly assume the publican is trousering the difference.

In essence you get what you pay for be it beer or burgers, as we have seen in the media in the last couple of days too. If you want to drink less expensive beer then choosing a weaker beer is an option; if you want inexpensive burgers you buy "budget" or "everyday price" burgers that may contain horse and/or pig or other unidentified "beef filler".

The alternative for consumers is to realise that the days of cheap beer and cheap food are well and truly over, and choose quality over quantity. Choose a local brewer who brews and sells his or her beer within a small radius of where it is brewed. Choose a local butcher who uses farm assured meat from farms within a small radius of the butchery. Choose local cheeses from local cheese-makers, bread from local bakeries, choose local ... you will benefit from better quality, increased confidence in provenance, more robust community economies, increased local employment ... the list of benefits goes on.

Unfortunately for the majority of consumers price is the over-riding consideration in these days of austerity, which goes a long way to explaining why the likes of HMV and other high street retailers are disappearing. Perhaps pubs will prove to be the exception to the rule as it's impossible to buy the "pub experience" online and have it delivered to your door-step.

Dig for Victory ... and profit

Perusing the Telegraph the other day I came across this gallery by Toby Buckland of his suggestions for fruit and veg that newbie gardeners might consider cultivating in 2013 and it got me thinking.

There must be any number of beer gardens, paddocks, flat roofs, patio areas and other exterior areas that pubs could exploit to grow a few things that would a) improve your sustainability credentials b) improve your "provenance" in your menus c) give you a little pleasure and fresh air and d) most importantly increase your profit.

Having consulted my gardening guru I have come to realise just how many delicious vegetables you can fit into a small growing area or raised bed. Tomatoes, courgettes and potatoes can all be squeezed into tight spaces. The key to success is ensuring you make the best use of the space you have with clever planting techniques and the right crops.

My guru tells me that seed companies frequently produce new varieties of vegetables to be grown as dwarf plants, in small areas and even in pots or just grow bags. For instance squash plants come in varieties that can be grown up a trellis (saving much-needed soil space), and you can grow a decent crop of aubergines from just a couple of dwarf plants.

Choosing which vegetables to grow

Before planting, think carefully about what you want to grow. Nearly all vegetables can be cultivated in smaller areas, but there is no point dedicating space to a crop you won't be able to incorporate into your pub menu; and (unless you are prepared to give up a significant part of your beer garden or plough up that little used bowling greeen) you might want to avoid veg that take up a large amounts of space. These include:

• asparagus
• brussels sprouts
• celery
• squashes (unless climbing)
• maincrop potatoes

With food price inflation expected to exceed 5% this year you might consider cropping the more expensive veg on your menu. Not only will they taste better when fresh, but there are "quick to grow" varieties such as legumes (peas and beans). Because they have a high sugar content, legumes taste best when eaten within an hour of being picked, after this, the sugar turns to starch, which can leave them tasteless and bland. What better USP for a pub menu than freshly picked pub produced peas? (Sorry, couldn't resist the alliteration there.) Even with the best of wholesalers "fresh peas" may well have been lying on their shelves for some days before you purchase them, reducing their taste. Legumes that grow well in small spaces include:

• runner beans
• broad beans
• french beans
• peas

Dwarf varieties grow well in containers whereas climbing ones make excellent use of vertical space (such as walls and fences) whilst also looking attractive.

Many salad leaves, such as rocket, are expensive and taste of very little after they have been packed and delivered. The leaves are easy to grow and take up very little space. They can even be grown amongst other plants, to maximise soil space.

Using your space

If you only have a small space in which to grow vegetables, you should grow crops that will be out of the ground within a few weeks rather than months. If you are growing potatoes, grow new potato varieties that will be ready to eat in July rather than maincrop varieties which may not be ready until September. Have seedlings of other vegetables on standby, ready to go straight into the soil as soon as your first crop has come out – brassicas such as winter cabbage or broccoli seedlings can be planted after you have harvested all your peas or beans. Further, if you leave the stumps of the peas and beans in the ground after you have removed the rest of the plant, their roots will continue to provide nitrogen to feed your hungry cabbages. When using this method you should avoid crops that take a long time to grow. These include:

• pumpkins and squashes
• parsnips
• leeks
• maincrop potatoes

Intercropping

You could try growing fast- and slow-growing crops together, or ‘intercropping’, to maximise space. Many crops that eventually take up a large amount of space (such as tomatoes and potatoes) do not actually use this space until they have reached their full size. Take advantage of this by planting a few fast-growing radishes, salad leaves or beetroot in the soil in between rows of the larger plants. By the time the space is needed by the larger plants your fast-growing crops will be long gone. It is also worth training late climbing bean plants up sweetcorn, sowing lettuce seeds among your tomato plants, and spinach in between broad beans.

Square Foot Gardening

If you are looking for a step-by-step guide to getting the maximum harvest of vegetables from raised beds then take a look at this article on the Square Foot Gardening method.

You're having a laff if you think I've got time for all this ...

If this all seems like a flight of fancy and you really cannot squeeze any more into your busy work schedule then speak to your customers ... chances there are any number of experienced amateur horticulturists who will be willing to help ... or how about creating a new (albeit part-time) job for someone?

If all else fails then contact your local allotment committee. Although it's illegal for individual allotment holders to sell their produce, it is legal for the allotment as a whole to sell surplus produce to help fund improvements etc to the allotment. As long as you can satisfy yourself that the food is produced safely then this could be a way of injecting some fresh locally grown fruit and veg into your menu.

Alternatively, if you have a large plot, like the Braziers at the Queen's Arms in Breage, Cornwall you could let it out in parcels as your own private allotments. They have been doing this for the last four years and 15 customers produce food on the land,  10% of which goes to the pub kitchen in "rent". The pub benefits from fresh locally produced food, the customers benefit from extra growing space and the community benefits from an enhanced sense of belonging ... win, win as they say.

At the very least you might think about growing some fresh herbs for your bar and garden ... here's 5 that you could have a go at ... click here

Better Late Than Never ...

8 years of select committee investigations, four detailed and comprehensive reports into the pub trade and finally a full-on Parliamentary debate has resulted in MPs voting for regulation of our industry and in particular the regulation of the larger pubcos. Game over, one might think, however the vote and its expression of the will of Parliament is only the sound of the last lap bell in this marathon to bring fairness to the world of pub.

Whilst the pub trade seem to be able to do little about the "externalities" of taxation and duty escalators, the smoking ban, predatory and irresponsible pricing by supermarkets for alcohol, the ludicrous way that business rates for pubs are calculated and the change in consumer behaviour that has led to the closure of so many pubs it can do something about how the up-coming consultation will frame the legislation that will regulate the pubcos.

The pubcos and larger brewery owned estates (those over the mooted ownership threshold of 500 pubs) will do everything in their power to minimise the impact of any regulation on their business model. Through its mouthpiece, the British Beer and Pub Association (a misnomer for sure, as it has precious little to do with helping individual pubs) the pubcos will make representations that their business model and more importantly how they implement that model should continue.

So, just to remind those who might now take an interest in our industry, beyond that of being customers, here are a few pertinent facts:

In evidence to the last Business, Industry and Skills Select Committee, in 2011, it was reported that 67% of tied tenants earn less than £15,000 a year

46% of tied tenants with turnovers in excess of £500,000 per annum, despite their own best efforts, still earn less than £15,000

To put these figures into perspective I published my own calculation of what this meant in terms of wage comparability when Daniel Thwaites so generously started allowing tenants to earn a floor or £15,000 from their tenancies and for many dedicated licensees this equates to about £3 an hour for a singleton licensee... halve that if you are a couple running a pub.

Set this against what two of the most notorious pubcos, Enterprise Inns and Punch Taverns, 'earn' from their pubs on average ... hardly that of the over-arching principle of a fair division of profit and the new mantra for Parliament and the industry that a tied tenant should be no worse off than a free of tie tenant.

The pubcos will argue that their slice of the pie reflects the "low cost entry" of taking on one of their leases, the countervailing benefits that being part of a large estate brings the tenant. They will try to justify their rent levels as being lower than those of a free of tie tenant, despite tied rents now outstripping free of tie rents; just as they will try to justify the routine price-gouging they indulge in for beer as being a 'wet rent' to make up for their so-called low rent levels and costs of entry.

Commenting on the move towards regulation Adrian Bailey, MP and chair of the BISC Select Committee, he says

“The relationship between pub companies and their lessees has been the subject of regular and sustained scrutiny by my Committee over recent years.

During this period, the industry time and again failed to address the areas of concern raised by us and deliver meaningful reform. Opportunities to put its house in order were squandered.

In our most recent report on the issue, frustrated by the glacial speed of progress, we asked to Government to keep to its undertaking to consult on establishing a statutory Code and Adjudicator, if we so recommended.

I am pleased the Government has now agreed to this and welcome the Secretary of State’s letter. I also welcome his acknowledgement of the pivotal role my Committee has played in the development of policy in this area.

The Secretary of State is expected to appear before the Committee in the near future. I look forward to that opportunity to discuss the consultation in more detail, including the proposed timetable.”

I'll be looking forward to that encounter too as this is a complete U-turn for the government, as David Cameron indicated that there were no plans for regulation after the committee published its last report in his letter to Adrian Bailey.

In its 2011 report, Pub Companies, published on 20 September 2011, the Committee stated:

"The position of the previous Government—endorsed by the current Government—was that if we so recommended, it would consult on how to put the Code on a statutory footing. It is now time for the Government to act on that undertaking. In its response to our Report, the Government has to set out the timetable for that consultation and begin the process as a matter of urgency. We further recommend that the consultation includes proposals for a statutory Code Adjudicator armed with a full suite of sanctions. Considering the amount of evidence gathered by us and our predecessor Committees this should not be a lengthy process; and given the Government’s undertaking to us we do not anticipate any meaningful delay. Furthermore, we caution the Government that offering a compromise of non-statutory intervention would be a departure from its undertaking to us and would not bring about the meaningful reform that is needed." [para 157]

I would usually say better late than never, but for many poor sods, the continuing abuse of the tied relationship by pubcos will have caused untold misery ... so when the government finally announces details of the consultation process I urge all stakeholders in the pub trade (but especially tenants of pubcos) to make a representation with as much detail as possible of how the pubco-tenant relationship has worked for them and what they want to see happen in terms of regulation, appointment of a truly independent adjudicator and the teeth that adjudicator needs to make these immoral and rapacious companies mend their ways.

Suffice it to say, this is a once in a generation chance to cure some of the ills besetting our industry and it behoves us to make sure this chance isn't squandered through apathy and by failing to counter pubco propaganda ... if we get this right then perhaps we can build on the current pro-pub momentum and tackle the other problems we face such as the duty escalator ... and finally at last someone has stated the bleeding obvious, on the Parliamentary record, that pubcos rip their tenants off (and in the process their respective customers too!)

Pubco Debate

No I'm not remaining silent on this ... just want to wait for Hansard to publish full details of the debate before I comment.

New Market Intelligence Report

New advice about food pricing for pubs on the Market Intelligence Reports page

Timely Reminders for the Pub Trade

Just a gentle reminder (or two...)

9/1/13 - Commons Debate on the Pubco / Tenant Relationship - Lobby your MP if a tied house, Lobby your MP if you are a freehouse and show some support for your tied house colleagues

11/1/13 - Deadline to register for Machine Game Duty with HMRC - or face a financial penalty !

Here we go again ...

It's traditional at this time of year to look back at the past twelve months and remind ourselves of the highs and lows.

This year's review starts with a few iconic departures:

Jan 6... Give us an R, Bob and an I and a P ... Bob Hollness

Feb 22... it was the way he told them … Frank Carson

May 17… how we loved to love you baby … Donna Summer

May 20… he gave us Saturday night fever … Robin Gibb

August 6… stargazer and visionary Bernard Lovell

August 11… One Hundred & Eighty … Sid Wadell

August 25… "Giant steps are what you take, Walking on the moon …" Neil Armstrong

Nov 7… they didn’t like it up 'em … Clive Dunn

Dec 5... he helped us Take Five ... Dave Brubeck

Dec 9… xylophones and telescopes … Patrick Moore

Dec 11… "all you need is love" (and a sitar) Ravi Shankar

Dec 26... 5,4,3,2,1 ... Gerry Anderson

And what to say of the rest of the year? Two words will suffice ... Olympics and Paralympics ... nuff said eh?

What I really want to do is not look back in either sadness or joy but to look forward to 2013, which, for me will be The Year of the Pub.

It's been a busy year in the industry and much momentum has been gained in trying to persuade the government to support the pub trade and brewing industry ... the Duty Escalator Debate, opposition to Minimum Pricing ... continued calls for regulation of the pubcos ... alerting the general public to the crippling effects of taxation and red-tape on this most-cherished of social institutions ... the Great British Pub.

It surely must be time for all the "stakeholders" in pubs (publicans, pub staff, brewers, pubcos, customers, suppliers etc) to unite in an effort to promote the positive things that pubs bring to life in the UK ... places of social cohesion, creators of wealth and jobs, responsible retailers of alcohol, charity fundraising centres, buildings of historic and architectural importance, the list goes on and on...

Here are my 12 Principles for The Year of the Pub

1. Support the concept of the pub in all its forms
2. Support the concept of the pub as essential to the social cohesion of the UK
3. Support the concept of the pub as essential to the economic well-being of the UK
4. Pubs recognise the importance of the customer as integral to the success of the pub
5. Pubs recognise the importance of beer in all its forms as integral to the success of the pub
6. Pubs recognise the importance of all brewers as integral to the success of the pub
7. Pubs will promote the concept of the pub as the preferred venue for consumption of alcohol in the UK
8. Pubs will promote the concept of responsible retailing of alcohol
9. Pubs will lobby their local and national political representatives to ease the tax and regulatory burden on the pub
10. Pubs will demand from their suppliers promotional activity & material support of The Year of the Pub
11. Pubs will demand from their suppliers specific advertising in all media in support of The Year of the Pub
12. Pubs will continue the principles ad infinitum

The silent non sequiturs to the principles are easy enough to deduce, and a common theme is that divisiveness within the industry is doing no end of harm and allows those who would see social drinking demonised to the same extent as smoking; those whose corporate strategy is entirely indifferent to the continuance of the pub and those within the trade who only pay lip-service to high standards of service and responsibility create an environment whereby its greatest assets, its customers, finally turn their back on pubs. 

No doubt others would add to the principles, and as such there is a principle of democracy those in government need to understand they govern only with the consent of the people and corporations both foreign and domestic derive their very existence from their customers.

I believe a tipping point has arrived for the hospitality industry, the pub trade in particular, and that without concerted efforts to counter the continuing decline not only will a productive industry be irrevocably damaged but a vital social asset will disappear from many areas of the country... permanently.

So anyway enough of this, let's all raise a glass to peace and prosperity in 2013 ... preferably in a pub!

Another Year ...