UK Pubs And Brewers Feel The Pinch As Drinkers Stay At Home

UK pubs and brewers feel the pinch as drinkers stay at home
November 16, 2008
By Andrew Cleary
London - Robert Munro buys his booze at liquor stores these days. As his expenses rise and Britain teeters on the edge of recession, the London house painter is cutting back on nights out, preferring to pour his own drinks at home. 'It's gotten more and more expensive to just head down to the pub for a drink,' says Munro. 'You're paying silly prices for a pint - you can drink at home for half the price.' Five British pubs are closing every day, according to the British Beer & Pub Association (BBPA), as pound-pinching drinkers embrace staying in. That may hurt beer makers like Heineken and Carlsberg more than distillers, such as Diageo, because brewers generate the majority of their UK sales at bars, where profitability can be double the level of retail outlets. Beer sales at pubs, known as 'on-trade', fell 8.1 percent in the third quarter, meaning 1.1 million fewer pints drunk daily, the BBPA says. 'Steep declines in the on-trade are a problem for margins,' Joergen Rasmussen, Carlsberg's chief executive, said earlier this month. 'Being the most profitable segment, it's a problem for us and jfk space center for everyone.' Britain, whose economy contracted last quarter for the first time in 16 years, accounts for about 3 percent of the global beer market, according to researcher Canadean. Heineken, which became the UK's biggest brewer after buying Scottish & Newcastle assets this year, would see its UK volume fall 4.4 percent next year, analysts estimated. Carlsberg's volume would fall 3 percent. By contrast, analysts forecast Diageo's western Europe sales would rise 2.3 percent next year, and review space heaters the UK would be in line with that figure. Brewers aren't faring much better at the so-called off-trade - supermarkets and wet crawl space liquor stores - where beer sales fell 6 percent last quarter. To be sure, spirits sales in pubs have dropped 6 percent this year, though the total increase in Britain is 2 percent, according to Nielsen data, driven by a 4 percent off-trade gain. About 80 percent of liquor sales are outside bars and pubs. Brewers have less clout with big food sellers to negotiate pricesshelf space than liquor companies because grocery chains consider beer discounts a major draw, says Trevor Stirling, an analyst at Sanford C Bernstein in London.