'Resilience of pubs is one of the biggest things to come out of the pandemic'

Pernod Ricard UK managing director David Haworth knows a thing or two about the drinks market, after all, he joined the company in 1989 and has held a plethora of roles across the business and across a variety of countries before taking on the top job.

The Morning Advertiser​ spoke to Haworth to find out how the business has dealt with the pandemic and what is on the horizon for the business.

What makes the UK on-trade different from other countries you've worked in such as Germany, Greece, Czech Republic and Ireland?

“The UK is much more concentrated, as you would expect. The big players, the beer boys, historically owned all these chains of pubs and that is still the case today with Greene King, Fuller's and then you've got Stonegate now, which is a phenomenal sized business,” he says.

"The licensing laws in Germany are much easier, to get a licence to sell liquor and alcohol than it would be in the UK."

“The other countries I have worked in never had that. They didn't have that concentration. What you get in the UK is a completely different kind of experience and expectation from those customers because of the service levels - they are delivering for hundreds of bars, which is very different to if you've got an open free trade in the other markets.”

When it comes to the German on-trade market, the licensing rules are different to the UK, as well as the costs associated with running a business.

Haworth explains: “Germany is my most recent experience. The licensing laws in Germany are much easier to get a licence to sell liquor and alcohol than it would be in the UK.

“You get very different experiences, the cost of rentals and so on in Germany generally tends to be less and then the alcohol tax in Germany is much, much lower than here so booze is relatively cheap in comparison to [the UK].

“It's a really different world but what you don't get in Germany is the concentration of people actually going out all the time. They tend to go out less and more at weekends so Wednesday, Thursday, Friday, Saturday would be where the business would be in Germany. Sunday, Monday and Tuesday are quite quiet. Whereas in the UK, it's not like that.”

He also reflects on his time in Greece where the market and demographic is much more seasonal.

“Looking further south, Greece has a fantastic on-trade business where the vast majority of sales, when I was there, were on-trade driven,” Haworth says.

“You've got the summer bar scene where bars open for just the summer months on the beaches and then a lot of the city bars close. And then in September/October time, the summer ones close and the winter ones open again.

“Very often people who operate a summer bar also own a winter bar so they move their staff from the beach area back to the city, particularly in Athens, where I was.

“In Greece they order by the bottle, so you order a bottle of Chivas or Absolut and stick it on the table and the group drink that with mixers.

“Whereas in the UK, that 'buy the [whole] bottle' [behaviour] doesn't exist at all. [In Greece], you pay quite a lot for that bottle, it's not cheap but it is a way of expressing the kind of money you've got - the more expensive the bottle for some people, the better, for other people it doesn't really matter.

Coming slightly closer to home, he points to Ireland, where visiting the pub varies slightly from England.

The managing director says: “The Irish experience is all about the welcome, and a lot of the modern bars [there] are now all-day opening.

“They start with breakfast, lunch - it's not dissimilar to here in many ways - and then as the night gets older, it gets a bit more upbeat. But you can also have the traditional Irish experience if you want it.

At the end of the day, comparisons are difficult, he points out: “They are all different, you can't really compare Greece with the scene in Germany and the one in the UK. But the UK for me, is much more concentrated, that's the biggest difference.

“The other big thing is the cocktail culture doesn't exist as much in those other countries.

“We are much more advanced here with that, and I think 22 of the top 100 mixologists come out of the UK - that tells you everything.

“A lot of trends tend to come from out of the UK rather than those other countries.”

Are there any aspects of the drinks trade or on-trade in other countries you've worked in operators in the UK could learn from? Any trends from the other countries that would be well-placed to take off in the UK?

“That's a difficult one because in many instances you can do a lot of stuff in the UK because you've got this concentration.

“You can do big activations with chains. For example, our Malibu ‘#LetTheFunshine' immersive experience would be hard to coordinate in countries where the owner of a bar may only have three or four outlets maximum whereas here, you can do that pretty easily.

“I don't think there's much in that area people can really learn from. Whether you're talking the whole cocktail thing and the shift generally from beer to spirits is quite an interesting one. That's a trend that tends to be coming from other countries too.

"The US is also a market where you're seeing a bit of a shift now in drinking better for you, lower ABV, refreshing drinks, but that's happening in the UK more and more as well.

“Calories are another thing where everyone is trying to get drinks that are lighter and more sessionable.

“Younger people in particular are very conscious of what they are doing.”

Haworth highlights how much of a benefit offering cocktails can be to a pub’s bottom line

"There are a lot of other areas, such as the boom in virtual cocktail making across the globe is [one] people could look at and there are some relatively straightforward cocktails, such as the Pina Colada, that are back in vogue now. If I had a bar, I'd certainly be offering a couple of relatively straightforward, not that difficult to make [options].

“You can make good margin out of cocktails. People at the moment are spending plenty of money on themselves because they haven't been out and you can get a good margin.

“In other countries, most of the operators look at their margins very closely and see if they can get people to premiumise and trade up a bit, quite frankly there's more money in it for them.

“That's an area where probably the UK guys could go because you see premium spirits, super premium and ultra premium spirits are growing everywhere.”

What do you think are the main areas for growth and innovation for Pernod Ricard over the next 12 months? Will that premium space be the focus or are there other areas that will be prominent?

“With the on-trade opening up again, we said we would leave innovation alone a bit for the first couple of months of reopening.

“The last thing bar operators want is people coming in and trying to complicate things when life is tough enough, especially the nightclubs - you see what they've been through, [for the trade] it's been pretty stop and go but for nightclubs, it hasn't been go at all.”

However, now restrictions have eased, the company is looking to increase activity with operators.

Haworth says: “Now we will start to activate the brands again in the on-trade, now things have settled down a bit, we have got a lot of stuff taking place.

“We have got a new product from Jameson coming out in August.

Jameson Orange​

Pernod Ricard is introducing a new variant to its whiskey range - Jameson Orange.

With a 30% ABV, the new tipple is a zesty, sweet expression and is set to hit UK shelves and the on-trade this month (August).

The spirit aims to attract the Millennial and Generation Z demographic and introduces a low-sugar twist to the flavoured spirits category.

“Lillet is a priority for us now, which is a French aperitif, going back into this trend of drinking less alcohol. Lillet, without any mixer, is 17% ABV so if you add the mixer it's much lighter.

“We've got terraces in the Big Table Group and Hilton Hotels,  the outdoor areas at Revolution de Cuba and the Malfy-inspired afternoon tea. There's a lot of support coming out of us.”

Haworth refers back to the uplift in cocktails, he previously mentioned, giving operators the opportunity to upsell.

He says: “We are starting to see this cocktail trend and there is the premiumisation piece, which is really massive at the moment. That will continue.

“People are saying after lockdown 'I'm going to look after myself a bit, I'm going to splash out a bit, I'm going to spend a bit more'.

“Even things like Champagne. You would have thought during the pandemic Champagne would be struggling, but it isn't.

"I know maybe for some, they are not interested in getting people to drink Champagne but it gives you an idea of the mindset consumers are in at the moment.

“The euphoria of the Euros probably has fuelled that even more. Over the past 10 years, premium-plus spirits have grown roughly double digit so I would say that's probably going to continue.”

How optimistic are you around the on-trade's recovery and will things ever go back to the way they were pre-Covid for pubs in the UK?

“The Brits are pretty resilient people and most of us are sick to death of being locked down and locked up. We have got this taste of freedom and the vaccination programme has been hugely successful, in a way we are a bit of a test case for the rest of the world because they are not as open as we are.

“If you asked me to predict the future, I would say we are not through this Covid situation fully yet."

“Everyone is looking at us at the moment and saying 'what's going on with the number of cases rising, what will the impact be on the on-trade and will we stay open?'

“If you asked me to predict the future, I would say we are not through this Covid situation fully yet.

“There's a probably still a few hills to climb, I'm not so sure we are at the top of the mountain yet.

“Let's be honest, we are social beings, everyone wants to be with friends and go out and have a good time.”

The Pernod boss points to his experiences of how consumers appear to have returned to the trade in droves combined with restrictions in place earlier in the year.

He adds: “You've seen it everywhere. Trying to get a booking when it opened up in April/May time, I struggled to get bookings unless I booked it weeks in advance.

“Some people then didn't turn up, which was very irritating for the operators but it's very resilient.

“People naturally want a bit of a party atmosphere when you go out, you want a good time, you want to see other people, people watch, all those things we have missed and it's here to stay.

“I don't see all of a sudden we are going to be happy with virtual cocktail making at home between friends and just inviting people into your home. People still want to treat themselves.”

Looking at the way you've been working over the past 18 months, what's the biggest way Covid-19 has affected you professionally?

“The past year has taught me the importance of people and trying to manage and look after your people. No one person has experienced the same emotions.

"People with young kids, the kind of mental health pressures on people to constantly be on Teams calls and feel they've got to do a job and manage families, that's been pretty stressful for people.

“My kids, thank God, have grown up. I don't know what it would have been like if I had the four kids, if this had been 15 years ago, it would have been a different story for me.

"We need to have empathy and manage through this crisis by making sure your people are okay and doing what you can to look after them.”

“We didn't furlough anyone for example. We decided that at the beginning that we didn't think it would be the right thing to do. Most people really appreciated the fact we didn't do that."

Haworth ensured he kept in touch with teams regularly amid lockdowns and the company kept staff engaged through offering various training options.

He says: “I'm not saying we were perfect but we certainly tried to do that. The other learning I would say is, professionally, I write to people every week.

“At the beginning of the crisis, I was writing to them every day. It was an update.

“There were links to training courses, mental health courses, we invested a lot into trying to make sure people [were okay].

“I hadn't done a lot of that type of thing [before], I don't think many of us had.  [We hadn't] really taken a lot of close looks at the impact on people until the Covid crisis hit then I really had to get involved in 'what are we going to change? How are we going to manage our way through this?'

“We didn't furlough anyone for example. We decided that at the beginning that we didn't think it would be the right thing to do. Most people really appreciated the fact we didn't do that.

“If you took one learning for all of us out of this, and I know we say people are important in businesses, but honestly the support people have given each other has been the biggest, single driver. 

“Just some days you can feel people need a bit of a lift and I was trying to encourage people that if someone was living on their own, please ring and just look after each other. Generally people responded to that pretty well.”

What is the biggest thing Pernod Ricard has learnt about its customers since the start of the pandemic?​

“It's got to be the resilience of our customers. What they have been through, and their employees as well, it's been a hell of a tough time for them.

“The airline industry is probably the only industry that has gone through something similar.

“When you're closed, then open, closed, open, for me it shows the resilience of the pub trade generally to react and adapt quickly to what's happening.

“The other thing they did, a lot of them adapted their business models as well, to try and keep afloat. things like meal kits, online masterclasses, all these kind of things.”

“We expected it probably to be more closures than have actually happened so that will tell you how resilient people are.”

Pernod Ricard aimed to aid its customers with adapting their businesses throughout the pandemic.

“We were helping a lot of customers with that. Again the entrepreneurial, the spirit of publicans, came through in many, many places,” Haworth says.

“A lot of the pubs are the life blood of communities and everyone felt for them and still do.

“That's why you've seen a lot of local pubs doing well. Local communities really want to support them again.

“When you see all these shops closing on the high street, you don't want to see all your pubs closing.

“The resilience of the trade is the beating heart of the community and in the past year, we've seen what it means to not be able to go to your local pub and now you can go to it and most of them, thank god, have survived.

“We expected it probably to be more closures than have actually happened so that will tell you how resilient people are.”

Comparing how pubs and bars are opening in the UK, what are the main lessons at the moment that have been picked up from the period of opening last summer? Is there anything that happened last year that is shaping your approach or shaping the on-trade's approach this time?​

“It's quite different this time because last year we weren't all vaccinated, now everybody has got at least one jab, you would have expected. Mentally, we are in a different place.

“Last year, people tended to be a little more hesitant because you were petrified if you got it, you might end up in hospital. This time around none of us are thinking we will end up in hospital.”

In fact, Haworth states there are opportunities the trade can now maximise as a result of lockdowns and restrictions that have previously been in place.

He says: “You've got a lot of pent-up demand from young people to get back out there and enjoy life in an on-trade nightclub, that hasn't happened for 18 months.

“I've got kids who are in that age, 21 to 30, and they are desperate to go out and party. It's going to be slightly different. A focus on outdoor space.

“That trend of drinking outdoors in good weather, people will continue to do that.

“Everyone has learnt a hell of a lot over the past 12 months so it wouldn't be the biggest drama for people to generally be able to adapt, not that I want any change to the freedom [we have now].”

From what you've seen or heard from other arms of Pernod Ricard's business, how well have pub and bar operators in the UK weathered the pandemic compared to European counterparts?

“Everywhere is different. If you look at Spain, they've had a pretty horrendous time and most of their business is on-trade led. They had a really tough time.

“It's impacted all areas of hospitality across the globe. Some places are still closed now and others are closing down again.

“It's quite difficult to make the comparison with what we have been through here.”

“The bar operators here probably have adapted to the technology better.” 

Haworth outlines how the Government support in the UK differs from elsewhere across the world.

“The other thing here is you've got to recognise the Government for the amount of support they have given with the furlough scheme and so on.

“That didn't happen everywhere and they have tried to be positive about the reopening of hospitality and we are probably in a better place than many other countries.

He also highlights how the ever-changing restrictions in the UK has meant operators have had to tackle technology.

“The bar operators here probably have adapted to the technology better,” Haworth adds.

“In the UK we are pretty advanced in the use of technology. If you go to some of the pub groups, you download the app, it works and you're up and running ordering your drinks and that's worked pretty well.

“This kind of model of adapting quickly to something is probably something our European counterparts have not [responded] to as well.”

Staffing is a crisis impacting every part of the sector at the moment, including Pernod Ricard. Haworth outlines exactly what this has meant for the business.

He says: “The big issue for the trade at the moment is staffing and even deliveries. You're reading about it all.

“We've got that problem too and our competitors in the drinks businesses have it as well. We can't get trucks to pick goods up at ports sometimes. There's a real issue with that.

“I don't know how the Government is going to solve it but I don't think what they have done, extending the hours or whatever by one hour per driver per day, is going to solve that issue.

“It's a real problem that is having a massive impact on businesses including ours. If people are frustrated with not getting the deliveries they've ordered, that's why.”

“We seem to be the only country in the world having that problem.

“When I was in Paris recently, I was talking to my counterparts from Europe, the Middle East, Africa and Latin America and nobody can understand what the hell our problem is and why we've got it.

“A lot of people went back home, into Europe and of course Brexit happened and they aren't coming back.

“No one wants to go to an on-trade outlet and have a horrible experience and not get their food for an hour and a half or two hours and get very frustrated so you're probably better off not opening those tables.

“If people are fully staffed, have they got the experience of serving and making drinks? All of that is another thing.”

As a result of this and the possibility of existing staff members having been away from work for prolonged periods due to lockdowns, training is in huge demand, Haworth highlights.

He says: “I do think some people have found when people have been on furlough and now they are being asked to come back, they are saying 'no I don't want to come back, I want to do something else'. 

“The attractiveness of the industry is something that needs to be addressed. Working in a bar or restaurant, why we can't attract those people and how we are going to do it in the future is something we have all got to think about because it is a good career.

“You can start in a bar and become a bar owner and have a good living from it and we need more people to do it.

“Like everything else, everyone is competing for talent - there are plenty of jobs in the UK.

“Now we are coming out of the lockdowns, we are seeing there's quite a lot of movement going on in the jobs market but how do we make sure we fulfil all these roles?

“That's one of the questions at the moment that we need to answer and the Government needs to play a key role in doing this. It's not working at the moment.”