The Publican/Heineken round-table: Culture Shock?
Introduction - Richard Bradbury:
Pubs are having one of the most difficult trading years ever. Many are saying next year will be even harder. As we look at ways to tackle this we've seen a lot of emphasis on the rush for food but have seen less on the drinks side of the equation. Beer is still the most important category for most pubs but yet we hear a lot about the shifty from on to off-trade but what we want to look at more is that the consumer is spending more of the leisure pound outside the home than ever before. So it is not so much that beer is shifting into the home but beer is losing out in the battle for the leisure pound. We want too look at some of the reasons for that and what we can do about it. There is huge passion for the pouring and style of pouring cask and stout as well as cider. But lager has been left behind. It is the same with coffee in the on-trade - it has come on leaps and bounds, where lager has not.PART ONE
Can continental café culture actually work in the UK?
Peter Linacre: f you speak to anyone in this country about what they drink beer from, their mindset is completely focused on pints. I find it astonishing that in this industry we want people to drink beer with food more and yet we have the pint glass. If you go abroad and ask for a beer it comes in a beautiful stem glass, usually approximates to half a pint and costs about five quid, and it's fantastic. We then come home and have a pint of Heineken or Stella and refuse to pay £3 for it. And that is where this industry is stuck. Everything is devoted to a pint.
Andrew Cooney: There is a price fixation in this country - you wouldn't see any form of price promotion on beer in outlets abroad.
Matt Spencer: There isn't a price fixation in our outlets because what the coffee industry focuses on is premium product, not volume. In the beer industry there seems to be a fascination with volume. The focus is on serving the product in large glass (i.e. pint glasses), fixation on price and, I have heard the phrase twice this morning, on "hitting volume discounts". That is not customer facing at all. And you end up destroying your brand well.Who is driving this obsession with pints?
PL: I don't think anyone is necessarily driving it - it is just conservatism of the industry.
Geoff Brown: It is the legacy of an industry that has been around for hundreds of years. But interestingly the business model for people like us is built around pints and volume. It is in our interest to sell more beer. The idea of value versus volume doesn't work for us particularly. We want to be at the cutting edge of the way the thing changes. But we wouldn't want to radically change the industry overnight at the risk of compromising our business model. Most of the people who run our pubs wouldn't thank us for it either. Most people who buy into the tenanted model have done so in order to sell lots of beer. You can beat me up all day and say that continental café culture is the future, and I might agree with you, but we have got 7,500 individuals running pubs that are built on a history of what they have been in the past.
Chris Hewin: You cannot assume that the whole market is the same. There is without doubt a growing demand for a different kind of beer serve in certain parts of the industry. But we have a large number of very traditional community boozers in our estate. And there the introduction of a continental stem glass serve for the high volume drinking traditional male drinkers is possibly not the way to go right now - maybe in five or ten years who knows.
But in our more aspirational outlets we do use more interesting glassware and without doubt in the right houses it does pay dividends.
GB: There are outlets where the expectation is for the drinks to be served in pints, the pints to be full and the prices to be cheap. I am good friends with one of our licensees who runs an excellent pub. He has the new Brasserie Artois kit and glassware and the reaction to it he says is simple. New customers, those who are dining love it; they love the chalice glass. Traditional Stella drinkers would rather leave the pub than drink out of it. So he has to stock both glasses and his staff have to know which customers drink out of which and that is a difficult challenge.
AC: That is the real challenge for a retailer - looking at both the old and the new customer. I think there are some pubs which are high and dry now - they are predominantly wet led and their consumers are gone. They have gone to rival pubs with a more premium offering.
Paul Smith: I don't think you are going to end up with one thing. The chasm between up market bar and community pub is getting wider - the former is getting ever more premium and the latter is becoming more price focused.
How strong is the political desire for café culture?
PS: There is certainly a desire to create a less aggressive attitude to drinking. One of the strands of it is probably to create more of a café culture. But it has recently become slightly ridiculed. So I am not sure if the government is backing away from that.
RB: Despite the relative deflation in off-trade pricing we still have one of the lowest differentials between on and off-trade pricing and yet it's really only in the UK and Ireland that we have this debate about pricing. If you talk to Spanish or French on-trade they are not focused on this issue.
PL: I just tend to think that the market is so much more fragmented than we even think. My observation around the area in which my pubs operate is that the younger more affluent drinkers do not actually drink very much. Obviously there is a section of society that is focused on "filling their bellies up" and that is all we and government tend to focus on - the binge drinking side of it.
Culture changes in incremental stages. Just sitting down on café chairs and tables in Covent Garden is not going to change culture. The customer is far more sophisticated and savvy than people think. They will say "I can session drink and I can also just have one glass of wine".
GB: Right now people will use that continental café culture offer - they will be happy to pay £5 for half a pint in the right outlet and other times they will want to drink several pints which are cheaper. The café culture offer is increasingly interesting and valuable but are they suddenly going to wake up overnight and do this all the time and sit outside? It is only ever going to change in increments.
The question political figures who want to see café culture should be asking themselves but rather how do we accelerate the rate of change? There is a café culture in existence but it is just very small. So how do you make it more desirable?
Why is Café Nero successful?
MS: People come to us for the experience. And great product - without that we're dead. Because to be honest the price difference between on and off-trade in coffee is huge - it blows the disparity between on and off in beer out of the water. You can make a cup of instant coffee at home for 1.5p. You will pay £3 for that in our outlets. It starts with great product and is backed up by great service.
Do you see pubs as a threat?
MS: We do not currently see pubs in our trading area as a rival. Not in the slightest. Because of people's traditional view of pubs which is wet-led, beer drinking. I think in the future pubs will become more of a destination for that kind of daytime, casual leisure experience. Smoking has now removed a lot of those barriers - they are becoming nicer places to spend time for families. So now we are starting to
