Wales Focus: view from the top
One irrefutable fact about Wales is that the pub or club has always been at the centre of life whether it be for socialising or linked to our passion for sport.
The first thing to consider when looking at the pub market here is the small population - around three million people - and the low number of urban centres, mainly down the M4 corridor with conurbations in and around Newport, Cardiff and Swansea and, on a smaller scale, along the A55 in North Wales. Around a million people live and work in Cardiff and the immediate area.
Given the terrain and lack of good transport infrastructure there is a gap in trading links between north and south and means that branded operators tend to be concentrated in and around conurbations.
This gives a regional player like SA Brain the opportunity to develop a strong identity across the more rural communities and that is a key part of our rationale for sponsoring the Welsh rugby team.
As well as ourselves, key players include Punch Taverns, Enterprise Inns, Marston's (having bought Celtic Inns last year) and Felinfoel.
There is a higher proportion of individually-run houses in our marketplace including tenancies, leases and small, privately-owned rural pubs in remote locations that are often untouched by time or current decorative trends, surviving on their reputation as 'hidden gems'.
One area of growth has been increased visits to Wales linked to tourism and big events at the Millennium Stadium. West Wales in particular has seen significant growth in second homes as well as a rise in tourism and is starting to mirror the development of Cornwall over the last 10 or 15 years.
Brains acquired Innkeeper Wales a couple of years ago and has made a significant investment in our pub estate in the West. Managing the seasonality of these houses is a challenge but represents attractive opportunities for licensees to run exceptional businesses in a lovely part of the country.
From a retailing perspective, the smaller population, the industrial heritage and trade structure mean food and drink prices tend to be lower than the UK average.
Competition in urban areas is high and value offers can be important. Although growth in food is strong, the proportion of food sales lags behind that of England. There are more wet-led pubs and fewer gastropub operators. But menu development has been a key area for Brains - and an emphasis on local sourcing brings a 'Celtic pride' theme to our menus.
In terms of beers the Welsh market has tended to favour lower gravity keg and smooth ales. There is a lower mix of cask beers but there is evidence that, in line with UK trends, Welsh consumers are experimenting with more challenging brews, and Brains has successfully launched SA Gold while the growth of continental beer styles has stimulated us to launch a lighter coloured beer called '45'.
The key challenge facing pubs in Wales this year is the early introduction of the smoking ban on April 2. This means the period to plan for the ban has been condensed and it will inevitably mean not everyone is fully prepared when the ban arrives.
Brains is working with the Welsh Assembly to try to ensure planning processes are as efficient as possible and that a common sense approach is taken once the ban is in place.
We fully expect and indeed will welcome visitors from the trade between April and June, eager to gauge the early effects of the ban in Wales!
