Pete Robinson: The pubco disease

Where did it all go wrong?

The entire sorry saga can be summed up in three words - Suits, Greed and Smoking Ban. Okay, that's four words.

Punch was originally the offspring of brewers Bass, spawned by the Beer Orders. But this child was born with a silver spoon in it's north an' south, listing in 2002 with a nice portfolio of some 1,400 outlets.

Growing pains began early and so this ravenous infant embarked on the kind of spending spree that shunts Madonna and Elton John into the little league.

Fueled by the property boom and increasingly irresponsible bankers Punch gobbled up Pubmaster in 2003, a snip at £1.2 billion. Having habitually hoovered up any smaller chains that came on the market their next major purchase came in 2006 with the acquisition of Spirit's 1,829 pubs at a whopping £2.86 billion.

With more than 9,200 pubs under it's belt this firmly established Punch as the industry's undisputed heavyweight champion. Not to mention the darling of the city.

By June 2007 Punch shares were being snapped up by eager buyers at an incredible £14. That's right, fourteen bloody quid a share!

With profits up 13pc to £282m nothing could now stop this leisure sector juggernaut. Could it? Err... could it?

July 2007, as I'm sure you are aware, ushered in the smoking ban.

Despite all the seductive statistics together with the promising predictions of our glorious industry leaders who foresaw 'Jam Tomorrow' the reality was somewhat different.

Somehow the Trade hadn't considered that slinging out half of it's most loyal customers into the cold might affect profits.

Then all the people who never used pubs before the smoking ban mysteriously continued to never use pubs. Who'd have believed that, eh?

The fall in property prices didn't help any but it hit pubs hardest of all. With the collapse in profitability and customer base many pubs, perhaps the majority, are today worth more bulldozed to rubble - or with planning consent for flats.

With plunging profits and crushed by it's mountain of debt Punch turned to squeezing everything possible out of it's tenants, who could ill afford it post-ban. Analysts estimated 30 per cent of the tenanted estate could be unviable.

The veneer cracked and Punch lay exposed. In March this year Punch shares hit an all-time low of just 32p, less than a packet of crisps, with bookies offering odds of 8-11 that they will fall to 1p in 2009.

Thanks to the market's 'bottom feeders' they had rallied a fair bit until yesterday, when they fell back 30% upon news of Punch's desperate cash call. Evidence that buyers are treating these shares as options rather than investments.

It seems inconceivable that Punch could actually go ponto, but increasingly possible. And it would be well deserved. They've nicked my tagline in claiming to be "passionate about pubs", whilst buying and selling them like pykeys at car boot sale.

They've only ever been enthusiastic about money, the driving factor.

It's not that they've taken their eyes off the ball. More like they've arrogantly denied the ball even existed.

Punch's chief executive Giles Thorley said of the smoking ban:

"The market will settle down. Some pubs will suffer more than others. But customers are very quickly appreciating non-smoking pubs."

Really? Insisting he would plug the gap with extra food sales Thorley went on to say:

"The stereotypical bloke who plays machines and smokes isn't as prominent. But that doesn't mean he's not going to the pub."

It's that last bit that really bothers me. What an appallingly offhand, uncaring, ungrateful way to even think about your customers. I'm surprised Mr Thorley doesn't take a leaf out of Basil Fawlty's book and erect signs outside his pubs saying: "No riff-raff".

And this, in essence, is truly where it all HAS gone wrong.

Thorley's attitude is typical of the men-in-suits who dominate our industry.

It's the pubco disease. Unbridled greed and a criminal disregard for the rank and file punter.

Pubs have survived and flourished for centuries on the pennies spent by ordinary men and women. Not the bigger spending wine guzzlers, posh diners or mocha latte sippers.

This shambles would never have happened in the earlier, pre-Beer Order days when the big breweries owned pubs. The men in the brewery boardroom, and at most levels of higher management, were often born into the industry via publican parents. They'd usually worked their way up to their lofty positions from cellarmen, brewery workers, or even heaving barrels off draycarts.

Those men drank in their own pubs, mixed shoulder-to-shoulder with the 'riff-raff' and kept their finger firmly on the Trade's pulse. They knew and understood the business inside out. Most importantly that it wasn't all about profit.

That's where the industry has recently hit the rocks. It's completely lost contact with it's core customer base - and you can't blame the publicans for that.

As long ago as November 2004 Giles Thorley was saying: "We have always taken the view that it will become less socially acceptable to smoke in pubs. It is a matter of managing that evolution."

What breathtaking arrogance, but pretty much in line with what other pubco bosses said at the time. The men in suits have forced an unnecessary evolution on the trade - one that the end-user didn't need or want.

They haven't listened to their pub managers or tenants. They've completely ignored the average pub drinker. Hand-in-hand with politicians who never use pubs - (why should they when it's free in the Palace of Westminster?) - they staked all on a better class of drinker who never materialised.

Meanwhile pissed-off punters started drinking in each others homes and discovered they could get along quite nicely without pubs, thank you very much.

All too late it begins to dawn on even the diehard pro-ban elements of the trade that pubs needed them a helluva lot more than they needed pubs.

So if the trade really wants to win them back we could start by gagging pubco bosses, to prevent them from making dumb, unwelcoming remarks and statements. Or preferably sack the lot of 'em.

And I say this as a confirmed and fully paid-up member of the riff-raff.