by M&C editor Mark Stretton
The pressure from Whitehall and the media for the industry to stop flogging cheap drink and stem alcohol-fuelled disorder has intensified with the advent of new liquor laws. Everyone has an opinion, and in an age where there is always someone to blame, the accusatory finger is pointing squarely at the on-trade. Whether the industry is to blame or not doesn't matter. Perception is more important than reality and the perception is town-centre bar operators are getting fat on the land of excessive drinking.
This stems in part from over-supply. Trading on the high street has been pretty ugly for almost three years. This intense competition has driven drink prices downwards. At the same time, as companies busied themselves trying to keep sales lines moving forward, as any competent retailer should, the 18 to 25-year-old consumer was running around drinking circuits, like a kid in a sweet shop, feasting on a wall of cheap booze.
A certain proportion of the public have always revelled in drink, and drunkenness, but now there is a greater concentration of people in one area. So, if you want to see boorish behaviour, you know where to look. And it feels like organised boozing.
Essentially, there are two problems for operators on the high street one social, one economic. Unfortunately, and this is the rub, sorting out one will exacerbate the other. And that begs a question do companies really have the will to embrace policies designed to curb excessive drinking and disorder when the consequences could be greatly reduced profits? Costs are spiralling through a plethora of regulations to which can now be added new licensing laws. Licensing costs for town-centre pubs are likely to be 10 to 12 times that of small bottom-end community pubs, although it could be argued that the cost is entirely relative. But there is also the threat of a police levy through Alcohol Disorder Zones. Something has to give on the high street.
There are two 500lb gorillas in the shape of JD Wetherspoon and M&B who seem to be battling for high-street business, purely on price. When Yates Group announced a minimum price on a bottle of beer of £1.25 not exactly prohibitive to the consumer M&B dropped prices for the same products in some sites to £1.19. Coincidence? I don't think so. It saw a statement of responsibility from a rival as a business opportunity.
So what does everyone else do? Companies cannot raise prices if volumes collapse, highly-geared businesses quickly becomes loss-making ones. Companies, it seems, are walking a tightrope between staying competitive and being responsible.
All promotions that encourage speed drinking must go. As long as a price for one unit is the same as it is for 10 and the worst excesses such as inclusive promotions are consigned to the history books the industry can probably argue its corner.
Voluntary action may also strengthen the industry's position. However unpalatable, it will show that the trade is serious about being responsible. Maybe companies that operate in town centres should think about a contribution to policing? Perhaps all operators should make it clear that none will apply for extensions beyond an extra hour or two? They might also want to consider funding some research into town-centre trouble to measure the reality of the situation. The danger is that when licensing reform kicks in, drink-fuelled crime in town centres will not dissipate. We really do not want that.
PS: One thing is guaranteed. A fragmented industry with rising costs and shrinking profit margins screams consolidation. SFI is up for sale. Barracuda, Inventive Leisure or Regent Inns could be the next to go. More deals are coming.
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