Pring: Pubs must get help now

By Andrew Pring

- Last updated on GMT

Related tags Pint Pint glass Public house Brewers

Pring: Pubs must get help now
MA editor Andrew Pring considers the impact of the latest price rises

You can't say that the brewers didn't flag up what was coming - they've talked about cost pressures for months.

And you can't actually say the rises are outrageous, as in EDF and the other energy bandits.

But what you can say is how on earth are licensees meant to pass on what should translate into between 10p and 15p price rises, when beer sales are plummeting and consumer confidence is waning fast?

That's the kind of price a pint of beer will have to be marked up by if GPs are to mean anything at all in the pub.

Already over the past year or two, competitive pressures mean that many licensees have had to let their beer GPs fall below the magic 50% - something that stocktakers constantly rail against.

But if holding the line on a proper GP means you must sell your beer at £4 a pint, there are very few licensees suicidal enough to risk that kind of price with their customers.

Most licensees will feel they have no option but to absorb some of the price rise themselves and sacrifice margin again.

Sacrifice

Perhaps they can get away with a 5p rise and pray their customers swallow it as part of life these days.

But no one else in the trade seems to be sacrificing margin. Brewers may say they're not recovering their full input cost rises, but the latest round of rises can't leave them that short.

And being bigger operations, they have bigger opportunities in the first place for economies of scale and other business synergy benefits.

As for pubcos, are we likely to see them sacrifice margin and share some more discount with their tenants? It's unlikely: they're just not built that way, and the City would never forgive them.

Tenant support

What pubcos seem to be doing is trying to offer more help to licensees. Both Punch and Enterprise are ramping up their tenant support, which is to

be applauded.

But what must surely also happen - and this applies to all pubcos, regional brewers as much as national giants - is that rent levels must be looked at afresh.

Automatic rises cannot be the order of the day. Each pub must be judged on its individual circumstances.

And given both the bosses of the two biggest pubcos are publicly acknowledging that times are tough for their licensees, let's hope that a common-sense approach to rent reviews and RPI rises prevails.

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