Alcohol Consumption Decline

14 Sep 2010

Alcohol consumption in Britain’s pubs is 25% lower as drinkers switch to lower priced supermarkets. Britain’s community pubs are on a life support machine and if the poison of high rents and artificially inflated prices is not removed it is these pubs that will disappear and thousands of jobs will disappear as well says GMB.

A new GMB study shows that the amount of alcohol sold in Britain’s pubs was a third higher in 2002 than now. This decline in sales is a result of the artificially high prices that tied pub tenants have to charge to recover the high wet and dry rents charged by the pubcos who own the freehold of the pub properties. For every four drinks sold in 2002 pubs now sell three. This new analysis by GMB, the union for tied tenants, shows that alcohol consumption in the on trade (pubs, clubs and restaurants) in the UK has fallen every single year since 2002. In 2009 consumption in the on-trade was 24.5% lower than it was in 2002.

By contrast, consumption of alcohol supplied by supermarkets and off-licenses grew every year to 2008 when it was 21.7% higher than in 2002. Off-trade consumption did decline in 2009 and is now 12.3% higher than it was in 2002. The growth in total alcohol consumption since 2002 has been steady reaching a peak in 2004 since when it has fallen back. In 2009 total consumption was 3.8% lower than that level of 2002 although that level is still above the consumption levels of 2000.

Approximately 25,000 UK pubs are owned by 7 pubcos and run by tied tenants. Punch Taverns, Enterprise Inns, Greene King, Marstons, Fullers, Admiral, and Scottish & Newcastle. The tied tenants are forced to buy their wholesale supply of drinks from the pubco at double free market rates (i.e. the wet rent) and are paying dry rents that are up to 4 times open market rents. This adds approximately £1 to the retail price of drinks sold in these pubs. Tied tenants have been joining GMB to try to get this system changed. Hayley Brennan, a publican from Portsmouth, is the GMB lead organiser and is addressing meetings of publicans this evening in Leeds, tomorrow in Oxford and on Thursday in Chatham, Kent.

Paul Kenny, GMB General Secretary said, “Britain’s community pubs are on a life support machine and if the poison of high rents and artificially inflated prices is not removed it is not an exaggeration to say that these pubs will disappear and thousands of jobs will disappear as well. To the question ‘does a higher price for alcohol lead to a fall in consumption?’ the answer is a resounding ‘yes’. This GMB analysis shows that Britain’s community pubs are being killed off as drinkers walk away from the high prices the pubs are forced to charge by their pubco owners. It was the private equity inspired sale of the income of tied pubs to bondholders in off shore tax havens that gave rise artificially to inflated retail prices in the tied pubs to pay the exorbitant rents needed to pay the bondholders. This has lead to a fall in consumption in the on-trade which has led to pub closures and a severe decline in income of the tied tenants.

The so called British Beer and Pub Association (BBPA), which purports to represent pubs but in fact represents the property companies, published it’s analysis of alcohol consumption recently. They drew attention to the per capita fall in consumption but they omitted to point out that consumption in pubs is now almost 25% lower than it was 8 years ago. BBPA keep banging on about taxes on alcohol but fail to point out that their pubs have to charge an extra pound a pint simply to pay the above market rents. Politicians and regulators have done absolutely nothing to help the tied tenants who have had to turn to GMB to try to get a remedy.”

Hayley Brennan added, “The BBPA have been fluffing up the figures to disguise the fact that their pubcos members are killing the community pubs by hoovering money out of the industry to pay their debts. We are at a critical point in this industry. The GMB‘s figures clearly show how bad things are. Everybody seems to be waiting for someone else to do something to sort this out but the reality is that there is no action and the pubs are continuing to close. Unless the tied tenants themselves take action and take it soon the community pubs will disappear. Consumers have shown that they will not pay the higher prices and that will not change. In my meetings with the tied tenants this week I will be pleading with them to come on board and take action.”