So, a new year then. Challenges await all those operating in the pub and brewing sectors in the coming 12 months, particularly in the light of last week's VAT increase, the government's proposed beer duty hikes and an economy preparing itself for the impact of the government's cuts to public expenditure.
Consumers face the prospect of having less money to spend on themselves as taxes go up and the spectre of unemployment deters some from splashing out on treats such as nights out. Pubs have to respond to the demands of the economic environment at the best of times, and these certainly aren't the best of times. It'll be tough, but the coming year will be anything but dull.
As is our wont at this time of the year we asked a few industry types to gaze into their crystal balls and give us an indication on what 2011 might hold for the trade…
Roger Whiteside, managing director, Punch Partnerships: "With the outlook for the economy remaining uncertain, I'm hopeful that 2011 will see the industry coming together to promote the unique things that make pubs so special. We have a great opportunity to work together to encourage more people to use their pubs and attract new talent into the sector. At Punch, we've made real progress on our Pathway to Partnership programme, and will continue to build on these foundations as we move into 2011. The rollout of our new lease agreement, coupled with the Punch Buying Club, means that the opportunities and risks in taking on a pub have never been clearer, putting us well on our way to become the best value and most trusted pub business in the UK."
Neil Robertson, chief executive, BII: "Trade will remain pretty flat. Beer volumes will decline slightly, food volumes will increase slightly. Pubs will continue to close, but at a lower rate, and alternative use disposals will stay pretty flat at about a third of all sales. All in all, much of the same as this year. The codes of practice and the Pubs Independent Rent Review Scheme (PIRRS) are having some impact, which will be noted by MPs. The Royal Institution of Chartered Surveyors (RICS) guidance will be important, as will the Business and Enterprise Select Committee's (BISC) view of RPI rent increases. The innovation on lease agreements will be welcomed, but critics may look for more. Has the industry done enough on reducing risk for the less experienced entrants, whilst encouraging the more experienced? You decide. Rent and assignment will remain contentious, as will Sky prices. Companies will spend more on training as they see those that spend doing better. Deregulation will continue to be a focus, but don't hold your breath. Still, the prospects of simpler National Insurance, real time tax visibility and reviews of small business tax are welcome. The government will find cuts to public expenditure harder to implement than it now thinks, while the banks will lend a little more, although it won't be to our sector unless we help them understand our risks better. This is part of our plan for next year. Interest rates will rise and there will be a little more venture capital activity."
Nick Bish, chief executive, Association of Licensed Multiple Retailers: "I am optimistic for 2011. Not only because upwards is the only direction left to go, but more importantly because the issues that face our business are being tackled maturely and thoughtfully. It is just possible that the pubcos really do understand that a fair deal for lessees makes good business sense and that good codes of practice are more than just a device for getting out from under the political cosh. I know that's what people are saying but they have only until June to deliver. Government intervention does not have a good track record, in this or licensing. And in this area too it may be that good sense will prevail and the more outlandish element s of licensing reform, already partially overturned, will be further moderated. When all this happens and investment confidence in our sector returns then we have the skills and the people ready to expand. This makes jobs, and employment is the one barometer that makes people feel good and go out and spend. Oh! - and it will be a glorious summer."
Simon Emeny, group managing director, Fuller Smith & Turner: "Our industry has had more external factors to deal with than any other sector I can think of and yet our teams continue to work creatively and positively to give enjoyment to many. The staff and tenants in our pubs are a credit to our industry. So with my glass half full, here are my 'sunny side' predictions for 2011:
1. Our new coalition government will recognise the contribution that pubs make to jobs and The Big Society and freeze duty on draught beer.
2. The Royal Wedding will bring a chance for communities and pubs to join together to have fun.
3. The market will be flooded by low strength beers.
4. By the end of the year, we all start to look positively at 2012 and the first Olympic Games in London for 64 years.
5. Spurs will beat Chelsea in the Champions League Final at Wembley. I'll be delirious with joy, Michael Turner [Fuller's chairman] won't be!"
Simon Clarke, licensee and senior member of the Fair Pint Campaign: "BISC indicated it expected to see real progress before the 2011 deadline, otherwise government intervention may be considered. The main 'event' remains the same - tenant profitability. RICS has tried to close 'open market rental value' loopholes, previously 'misinterpreted' at the tenants expense, by rewriting valuation guidance. The pubcos have reinvented their agreements, many of which have no rent reviews at all and no security of tenure, thereby side stepping new RICS guidance and avoiding open market rentals in the future. On the tie, some are seeking to pull the wool over our eyes by offering 'free of tie options' (or 'pricing'). Sadly, these deals can only be had if the tenant agrees to an unsustainable, unrealistic rent determined by the pubco or brewer; the RICS guidance is side-stepped again! RICS did its bit, while the pubcos are clearly seeking to avoid doing theirs under a veil of meaningless 'code' activity. We should all hope for a workable, voluntary framework; if this is not achieved government intervention seems more likely ever day - and the clock is ticking. Roll on June 2011."
Tim Martin, chairman/founder, JD Wetherspoon: "2011 will be a crucial year for the pub industry, which has been decimated in recent years by tax and regulation, for which recent industry responses have been more intelligent and robust, but which for most of the last decade have been lazy and inadequate. But we're still making massive mistakes, such as imploring the government to put minimum prices on supermarket drinks. A far better response, which would provide a gigantic boost to the pub business, would be to equalise tax between pubs and supermarkets. The latter don't pay tax on food sales at all, and the VAT per pint, due to lower prices, is far lower in supermarkets. We should go for five per cent VAT for pubs on bar and food sales. If we achieve this in Britain, similar to the lower VAT rate achieved in France, the world will be our lobster. If we don't, the real problem for pubs, the tax subsidy we provide to supermarkets, will ensure many more hundreds of pub closures in the coming months and years."
Mark Brumby, leisure sector analyst, Langton Capital: "2011 is upon us but, after various comments and predictions, many of them negative and some of them positively blood-curdling, what does the new year hold for the on-trade? The start to 2011 will prove somewhat inauspicious: January's VAT hike, plus beer duty set to rise by two per cent ahead of inflation (again) in the March 23 Budget and a number of brewers (though not pub-owning brewers) flagging sharp - four to seven per cent - price rises to come in the first quarter. Hence, in addition to the potential