Drinks analyst warns of Price of segmentation

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Stuart Price, drinks analyst at WestLB Panmure, has warned of a grim reality facing the UK licensed retail sector.Speaking at The Publican Conference...

Stuart Price, drinks analyst at WestLB Panmure, has warned of a grim reality facing the UK licensed retail sector.

Speaking at The Publican Conference earlier this morning (Thursday) he said: "It seems to me that licensed retailers are in the same rush to brand and segment as commuters are to get a seat."

Mr Price said that so far the industry and its commentators had been nothing but complimentary about the revolution in the licensed retail world.

He warned it could be only a matter of time before certain segments suffer a similar malaise to that which is now affecting traditional pubs.

He said that those retailers who focus too much on one specific type of customer will end up as the Wimpy's of the sector - me-too operations that all look like one another but only a few customers go to.

Given the nature of demand, and that there is a chronic state of over-supply - about 720 people per pub - there is an inevitability about segmentation.

But Mr Price said any applauding of management teams for coming up with new concepts is akin to applauding them for just turning up.

He concluded that there may be many casualties among those who choose the segmentation route to profits.

He said: "After looking at the industry as a whole, we believe the ability to transform the mirage-like benefits of segmentation into real shareholder value is rare. Many may wither and die trying to get to the promised profit pool."

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