The state of independence

For the fifth year, the MA has polled its freetrade readers and finds them

braced for a tough year. Tony Halstead kicks off a six-page special

The UK's freetrade sector officially spans an astonishing range of more than 100,000 diverse premises types, ranging from pubs through to sports and social clubs, hotels, restaurants, bars and, of course, nightclubs.

Freetrade pubs account for less than a quarter of this figure but remain a clear driving force, despite a changing trade landscape as venues rise to the challenges of new customer demands and changing lifestyles.

Brewers and drinks suppliers remain convinced that the traditional freehouse pub will continue to be one of the sector's big

players, despite the ever-increasing number of fanciful futuristic style bars and modernist venues, which are now encroaching on the market.

Officially, there are about 17,500 free-houses and free-of-tie premises out of a

total of 58,000 traditional pubs in the UK, a figure which has been added to in recent years by a rash of "bottom end" disposals by the pub companies.

Market analyst AC Nielsen says the structure of the free-trade sector is a complex one, with many more licensees enjoying a range of different tied arrangements with their

pub company and many different types of

on-trade premises able to source products as free agents.

Trade consultant Graham Page says: "It is technically correct to describe this sector as independent, although everyone trading is locked into a deal of one sort or another.

"Many licensees, while nominally tied for beer, are free to buy in certain other drink categories such as such as wines, spirits or soft drinks.

"In number terms, I feel things may change as the sector prepares to take some strain from the smoking ban, which may see many marginal sites failing to survive or being sold off for alternative use."

Changing market

The 17,500 freehouse operators across the country are the only ones that are totally unrestricted in the way they source their beer and drinks.

This is the world of £100-a-barrel beer discounts and attractive deals on a variety of other wet-trade supply.

A shortage of decent quality free-trade, high-barrelage pubs means many brewers have actively targeted other types of licensed trade venues, such as working men's clubs, sports clubs and other high-street bars, where attractive loan deals and sponsorships can often "buy" lucrative beer and drink accounts.

This is a changing market which highlights the fact that an increasing number of leisure venues are now capitalising on the sale of alcohol as a key income stream. Hotels, restaurants and sports clubs are just three areas where wet sales have ceased to be a bolt-on to the business and instead are a key

revenue driver.

Pubco buying strategies

If freehouses still account for a quarter of the country's traditional pubs, property experts believe the landscape has changed over the past five to 10 years.

Chartered surveyor Christie+Co's director of public houses, Colin Wellstead, believes there is a shortage of quality at the top end of the market.

"The aggressive way pub companies have been buying up houses means better quality stock has been taken out and replaced by bottom-end disposals," he says.

"Quality remains the big issue and with many better pubs being sold off-market prices have risen and properties now regularly change hands for £1m or more."

But capture a good freehouse and the trading rewards can be considerable. Wellstead says that, although beer discounts for tied tenants have improved in recent years by up to as much as £50 per barrel in some cases, a freehouse licensee could expect to get a £100 discount or even more.

However, the main board director at chartered surveyor Fleurets, Simon Hall, believes that the number of genuine, owner-occupied freehouses is on the decline.

He says: "The pubcos have been active buyers over the years, but changing trade patterns means they are changing their pub purchase criteria.

"The drop in beer drinking and the in-

crease in food trade means that the pubcos are now looking at pubs with lower trading barrelage.

"They know that they can get a certain amount of rental income from a pub, which means that, where not so long ago they would only look seriously at a five-barrel house, this number has now dropped to as little as three barrels."

He adds: "Pubcos do a lot of their deals off-market and appoint agents to find sites for them, which means many pubs that change hands are never publicly advertised."

Brewers' approach to swelling their share of the freetrade

Brewers used to be the main players when it came to supplying pubs, but with the continuing development of the freetrade and the growth of a variety of drinks suppliers, they have had to up their game and modernise their approach

Brewers are adopting new business strategies to maintain their grip on the freetrade market, which is now being challenged by wholesalers and specialised beer and drinks suppliers.

Gone are the days when a brewer would simply roll out a heavily discounted beer deal to a working men's club (WMC) and then retire for a celebratory all-day drinking session with the committee.

The strength of the WMC sector has diminished over the past 15 years and brewers are now turning their attention to other sector players such as sports clubs, restaurants, hotels and a range of more niche retail outlets.

Freetrade deals are now sold more as a package with sponsorship and a range of spin-off support thrown in to

offer customers far more than just a beer and drinks supply.

"The market is changing and there is no longer

a one-size-fits-all strategy to win freetrade business,"

explains Marston's Beer Company managing director Alistair Darby.

"Individual deals are now worked out to fit a specific account and our sales team need to go that extra mile to identify what suits a customer.

"The pressure is on many customers who now have to compete with a growing number of different outlets."

He adds: "Costs are rising and beer consumption is dropping, so the accent is now very much on addressing a changing trade and helping people develop their businesses more effectively."

Providing a quality service

Marston's has 2,000 freetrade accounts, which comprises 40% pubs and 40% clubs with the remainder hotels, restaurants and other outlets.

"Potential customers now look on us to provide a load of extras and while we remain an active lender into the freetrade there is a lot of business support we can now offer.

"We are using our corporate knowledge and experience to lend customers the sort of support we can offer our own managed pubs," Darby says.

The name Marston's has become synonymous with cricket over the past couple of years and the high-profile sponsorship of the England team has helped the company make inroads into the lucrative sports club supply sector.

"In general terms, there is a wider base of freetrade now than ever before, with hotels and restaurants keen to develop wet sales to boost their overall business. It's a thriving market but a changing one," he warns.

Northern brewer Daniel Thwaites is another company that has used sports sponsorship to win a string of freetrade

accounts in the sports-club sector. Blackburn-based Thwaites operates 1,250 freetrade accounts, predominantly across its North-West heartland.

Golf clubs, cricket clubs, soccer clubs and rugby clubs have provided rich pickings for Thwaites, which has poured a substantial amount of cash into grass-roots sports to make its presence felt and is now reaping the rewards.

Its sponsorship of Lancashire and England cricketer

Andrew Flintoff through its flagship cask-ale brand

Lancaster Bomber two years ago proved to be a marketing master stroke for the company.

Thwaites now has pouring rights at Lancashire's Old Trafford crick