Coming year likely to be "toughest ever", predicts Fuller's boss

The coming year will be the toughest the pub and brewing industries have seen in living memory, according to Fuller, Smith & Turner chairman Michael Turner.

Speaking today as the London brewer announced a four per cent rise in pre-exceptional profits before tax for the last financial year to £23m, Turner warned that the economy was "in disarray" and that consumers were under increasing pressure, particularly with many having to renegotiate their mortgages.

However, he said he believed Fuller's emphasis on a premium-led quality pub offer would enable it to trade profitably through what would clearly be a difficult trading environment.

"Within the industry we have better prospects than anybody. We will be focusing on quality and the premium end of the market," he said. There was nothing to be gained from being at the lower end of the sector, he said.

As the anniversary of the English smoking ban loomed, Turner said he saw positives from the restriction - a pub's environment was fresher, he argued, while the cleaner atmosphere made the adding of letting rooms to pubs "much easier".

Fuller's said accommodation, along with food, was and would remain key drivers in growth across the group's estate, particularly its 162-strong managed business.

Capital expenditure would grow by £1m in the coming year, up to £16m, Turner said.

"For those who invest in their estates, over a three year period things will start to come through. But it's currently tough to isolate the ban from other issues impacting the industry, such as consumer confidence and the weather," he added.

Turner, who said he believed becoming a real estate investment trust was not a long term solution for any business in the industry, also called on the government to act on supermarket pricing, although he recognised the likelihood of any action was negligible.

Fuller's had increased its bar prices by between 15p and 20p a pint since the recent duty increases, while beer being sold in supermarkets for the equivalent of 50p a pint was "mind-blowing".

"To use cheap alcohol as a traffic builder cannot be described as a good thing," Turner said, although he stopped short of agreeing with other observers who have labelled such a practice "immoral".

"Supermarkets are good customers of ours, but they have to price alcohol sensibly," he said.

Fuller's revealed that its beer volumes to the off-trade rose seven per cent, and accounted for 17 per cent of the group's own-brewed production.