What happened in the pub industry in 2018?
The heatwave combined with an unexpected run in the World Cup that took England to the semi-finals and resulted in beer sales recording their first third quarter growth in the on-trade for 15 years. And that was despite a shortage of CO2 which, for a while, looked like it might leave pubs with no beer just when they needed it most. Somehow, though, we coped. Indeed, as some restaurant chains suffered closures resulting from high food costs and a saturated casual-dining market, wet-led pubs for once outperformed them, thanks to a growing enthusiasm for craft beers and pimped-up gin and tonics.
Rates ‘kill two pubs a day’
But by no means was it fun for everyone. Pubs continued to close at a disturbing pace despite the rate easing a smidgeon to 18 shutdowns a week, according to the Campaign for Real Ale’s figures,and despite, too, a continuing growth in new-builds on the outskirts of towns, micropubs in low-rent high-street sites and taprooms in breweries. In November, the Government’s Office for National Statistics confirmed that, since the turn of the century, we’ve lost a quarter of our pubs, though employment in pubs and bars has remained stable, reflecting an increase in larger, more complex, food-led operations.
With many factors no doubt at play, the year’s prime culprit behind the cull was high business rates, which one commentator estimated was killing off two pubs a day. Industry bodies called for an extension of the existing rates relief for smaller pubs and in his autumn Budget the Chancellor duly obliged. He also announced a freeze on beer, cider and spirits duty – though not on wine – following a vigorous industry campaign around the slogan Long Live the Local.
Brexit, of course, loomed over all. Signs emerged that consumers were starting to tighten their belts and many pub operators worried about how, with the end of free movement, they were going to find people to work behind the bar, let alone find customers to serve. JD Wetherspoon chairman Tim Martin was a notable exception, however, continuing to campaign for a hard Brexit, and coming in for some stick for expressing his forthright views on his pubs’ own beer mats.
Rows over the implementation of the pubs code and the market-rent-only (MRO) option also rumbled on through the year as the country’s largest pubco, EiGroup, continued to reduce, refine and restructure its estate. Meanwhile, what remained of the other pubco giant, Punch, since it was broken up in 2017, welcomed a lively new member of the family in May when parent Patron Capital acquired the 54 managed houses of Brighton-based Laine Pub Company.
Smaller fish caught
There may have been no mega M&A deals during the year, but there was significant activity in the mid-market as a number of successful groups, like Laine, became targets for takeovers. Also in May, real estate investment trust NewRiver consolidated its role as a key pubs player with the acquisition of Hawthorn Leisure and its 300 managed and tenanted outlets, while August was another busy month seeing Stonegate pursue its ambitious expansion programme by snapping up Be At One’s 33 city centre cocktail bars plus 15 Novus Leisure venues.
Finance house Aprirose, which already owns Milton Pubs & Taverns, increased in presence in northern England by buying 25-strong community pub operator Wear Inns, and at the gastropub end of the market The Restaurant Group added Karen Jones’ 11 Food & Fuel sites in London plus the four Ribble Valley Inns to its Brunning & Price group. Earlier in the year, BrewDog acquired the 14-strong Draft House chain and Fuller’s Brewery bagged the boutique pubco Bel & The Dragon having earlier expanded its brewing side by taking over Sussex brewer Dark Star, best known for its Hophead pale ale. Larger brewers adding to their ‘craft’ credentials by absorbing smaller producers is a global trend, and Heineken UK caused a stir in July when it acquired a minority stake in Beavertown Brewery.
Strangely, there was less fuss when a couple of weeks later Kirin’s Australian subsidiary Lion preyed on another London craft beer icon, acquiring 100% of Fourpure.
Pop back to the ’80s
The year also saw brewing giant Molson Coors grab Suffolk family firm Aspall Cyder, and Ireland’s C&C Group, which brews Tennent’s in Scotland, acquire one of the industry’s longest established national wholesalers, Matthew Clark. The pub trade had a shock in September when Leeds-based themed bar operator Burning Night Group fell into administration, but the most surprising event of 2018 surely came when ’80s crooner Rick Astley announced he was opening a bar in London – with Danish cult brewer Mikkeller. At least Mikkel Borg Bjergsø, as his mother knows him, can rest assured his childhood pop idol is never going to let him down.
