KN52025

KEY NOTE Market Plus : Public Houses UK : April 2005

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TABLE OF CONTENTS

EXECUTIVE SUMMARY

Key Note estimates that, in 2004, the total UK public houses market was worth £15.25bn at current prices, a rise of 1.7% on 2003.

The British pub has never had a higher media profile than in 2005, a year which has brought the long-awaited change in licensing laws. In addition, there is a focus on alcohol-related violence and the threat, or promise, of legislation that could outlaw smoking in public houses.

Between February and November 2005, all pubs in England and Wales must take out new publicans' licences which will allow them (if they apply to do so) to stay open for up to 24 hours. (Scotland and Northern Ireland are still reviewing their own licensing laws.) Extended drinking hours have been the focus of exaggerated media attention but, in practice, the option of longer opening hours is of no interest to the majority of the UK's 60,000 pubs.

Binge drinking and underage drinking in town centres have brought on this unwelcome media attention. However, underlying trends among the majority of public houses and their customers are away from `session drinking' and towards a more civilised use of the pub, including the rise of the pub-restaurant. Food now accounts for 20.3% of the typical public house's turnover, which has increased from 7.1% in 1988. The new licensing laws could have much less of an effect on pubs than the proposed ban on smoking, which could provide another boost for the `food pub'. Exclusive consumer research conducted for this report found that 39% of adults would like to see a complete smoking ban, whereas only 18% would like later opening hours.

Ownership of public houses is the other area of major change. Brewers' tied estates of pubs once predominated, but laws restricting this traditional system of vertical integration mean that brewers now control only 14% of the total number of pubs. The remainder includes `free houses', although the major owner is now the multiple `pubco', which leases out its pubs to individual publicans. Enterprise Inns is the largest of these, followed by Punch Taverns, and both are still acquisitive. However, these companies' leased pubs tend to be fairly small and, by scale of turnover, the groups of managed houses are more significant. These are led by Spirit, Mitchells & Butlers, and the influential JD Wetherspoon.

Future prospects for public houses depend on the impact of the new licensing and smoking laws, but growth is much more modest than the media coverage of binge drinking implies. Key Note estimates that, in 2004, the value of the UK public houses market was just 5.9% higher than in 2000. The uncertainties of the next 5 years are likely to restrict the growth rate even further and Key Note forecasts that the market will rise by 5% between 2005 and 2009.

Text © 2005Key Note

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Last updated by Amanda Porteous June 2005