Victorian outlook a bad brew for UK pubs’ millennial prospects

A s handy an indicator of forthcoming recession as any is the catering sector in general, and licensed premises in particular. There is something of Victorian morality in this index – how can we squander the family’s pennies in a gin alley, when there are little hollow-cheeked mites in the corner of a flag-stoned slum kitchen?

Happily, there are relatively few such circumstances at the end of the 20th century compared with 100 years ago, but talk of recession is doubtless one of the factors which keeps breadwinners and their partners out of the pubs. That and poor weather; there were few opportunities to use the sunscreen in July and August, so beer gardens were empty.

Most commentators also throw in a poor World Cup performance as an added negative factor, but since that only happens with monotonous regularity every four years, I don’t really grasp the rationale behind it.

Anyway, the scene is sufficiently gloomy for Whitbread, owner of Dome, Pizza Hut and Bella Pasta to name a few, to announce that it has halted its expansion programme, which promised 80 new pubs and restaurants and an investment of some 400m. Bass followed with a profits downgrade of five per cent, which knocked 15 per cent off its market capitalisation.

The whole brewing sector began to resemble a sky-diver overtaking the more leisurely parachute descent of the overall market. Scottish & Newcastle suffered, while further damage could be inflicted by forthcoming statements from Greenalls, Wolverhampton & Dudley and Diageo, the giant combination of Grand Metropolitan and Guinness.

All of this may be predictable enough, with talk of interest rates, recession, wet weather and even David Beckham’s red card, but it’s all rather weird when you consider that British consumers are spending more than ever on eating out, and the trend is rising.

The British spend some 29 per cent of their disposable income on eating and drinking out, and the proportion is growing by 1p in the pound per year. US citizens spend 50 per cent of disposable income in this way, a proportion that has almost doubled over the past quarter of a century.

I fear what we may be witnessing is an industry which blames all the usual culprits when share prices take a tumble, but refuses to face the truth, whatever it may be. To my mind, the truth could be that it’s not only pub morality which is locked in the Victorian age, but the entire industry itself.

A significant proportion of tied houses – the pubs owned by the big brewers – were gutted in a misguided modernisation programme in the Sixties and Seventies. Among other developments, this modernisation led to the kind of consumer reaction that spawned the Campaign for Real Ale, which went much further than simply lobbying for better quality beers. The demand was for “traditional” environs in which to drink it.

The licensed trade has consequently been through a kind of mid-life crisis over the past 30 years, trying to recreate a mythical golden era with ersatz bare-boards and sawdust, while also endeavouring to appear groovy by developing youthful “themes”, to appeal to the all-important 18- to 30-year-old consumers that were drifting away to more stimulating pastimes.

In a sense, the pub trade hasn’t grown up, but to blame it for not doing so may be unduly harsh. It has had to labour under some of the most burdensome government intervention that any British industry has had to suffer – most notably the Beer Orders of the previous administration that ordered the disposal of tied houses and the imposition of forced competition in the shape of “guest beers”. That, in turn, led to Draconian new lease conditions being imposed on tenanted premises, which drove many of them to the wall.

In this context, it’s fascinating that some of the big players in the tenanted sector are now financial houses, such as Nomura and Daiwa. The point being that, for reasons both within and beyond their control, the traditional owners of licensed premises have failed to get their act together.

Supposedly trendy branded chains, such as Bass’s All Bar One, will have temporarily efficacious effects, but they don’t address the long-term problem: what do British consumers want from licensed premises? I have no empirical evidence to support this, but I bet the long-term answer doesn’t lie in the blackboards and sturdy Victorian workhouse tables of All Bar One and its imitators.

The trouble with the pub trade is not only that it looks back fondly to Victoriana, in the hope that its customers will do likewise, but that it can be misled in the short term into thinking such a strategy might work. Witness JD Wetherspoon, the back-to-basics pub chain which is one of the industry’s recent success stories. It now talks of city centres being too expensive, and of moving out of town to suburban sites. I hope it finds sufficient young-fogey nostalgia there to support it, but I’m doubtful.

The pub trade suffers today from looking back, not with anger but with longing. I don’t pretend to have the answers, but the future must be more continental in its Europeanism (the proliferation of coffee shops is symptomatic of that) and pubs must find a millennial face.

The British can’t afford to blame the weather, and pubs must be dragged into the 20th century before we reach the 21st.

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