A bit of crystal ball-gazing

By Hamish Champ

- Last updated on GMT

Related tags Pubs Recession

Predicting the future is a mug's game. That said, I'll set aside common sense and take a punt on a few things I reckon will occur in the coming 12...

Predicting the future is a mug's game. That said, I'll set aside common sense and take a punt on a few things I reckon will occur in the coming 12 months.

The economic wellbeing of the pub-going population and the smoking ban are likely to prove to be two of the biggest factors that will affect pubs in 2008.

As we head towards what is traditionally one of the pub trade's busiest periods the economic omens are not great. Neil Woodford, the head of Invesco, one of the UK's largest investment firms, said recently he believed there was a strong chance Britain would be in recession by the end of next year.

Such sentiments will only serve to worry a lot of people.

In the old days a pub was somewhere people went to drown their sorrows. The problem is nowadays, with a growing number of pubs being converted into premium-end food establishments, the place many people will be tempted to head towards in tightening economic times will most likely be the supermarket and then their living rooms.

Unless, that is, pubs are able to persuade their Doubting Locals to stick around and enjoy the atmosphere - albeit a smoke-free one - of their facilities.

It doesn't take a degree in applied physics to conclude that while many upper-end pubs will ride out and even prosper on the back of the smoking ban, the restriction will continue to eat away at local community pubs, certainly until the sun shows its face in the spring. By which time, who knows how many pubs will have closed?

The smoking ban is clearly going to be an issue for thousands of pubs that rely upon drinking trade. But consumer spending, under increasing pressure despite last week's 0.25 per cent base rate cut, will be equally as important in 2008.

While the eating-out market might not stall, the sector will be buoyed by the drive among many operators to focus on their value offers; this in spite of fears of a price war.

The lack of domestic interest in next year's European Football Championship is a blow, but while footfall won't match what might have been if either England or Scotland hadn't fallen at the last hurdle, true football fans may turn out anyway to watch the tournament in those pubs where it is being shown.

As tough times start to bite - and many say they are already biting - the more savvy pubcos will ride to the aid of their licensees who have worked hard to keep their businesses steaming ahead, but who still encounter difficulties. There is a growing feeling that certain pub company models, as they currently stand, will not be able to withstand the economic downturn many fear is heading our way.

A glut of vacant pubs bereft of customers or planning permission does no-one any favours.

Meanwhile the credit and debt market hangover will carry on for a few months, limiting the scope for corporate deals. Some companies will forge ahead regardless, although mega-deals might be off the agenda for some time.

Following a number of deals last year, notably Greene King's acquisition of the Loch Fyne seafood chain, the line between pub and restaurant will continue to be blurred.

As a footnote, despite all the problems they face, I don't believe - as some do - that pubs are facing extinction, although the chief executive of one brewer said to me last week that the smoking ban/economic-related pain will last two, possibly three years.

But pubs will evolve as their customers' needs and wants change, as the demands for better service, better facilities and better products become more concrete.

My personal hope is that what I would term 'proper pubs' don't wither as a result of the move to offer more food and more child-friendly facilities, important though these are.

Mine's a pint.

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