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Smoking Ban Flattens Pub Beer Sales

The final quarter of 2007 figures shows it to be the worst of a bad year for pub beer sales with the amount of pints of beer sold during the period leading up to the Christmas holiday season declined by about 10%, as smokers who are not allowed to enjoy a cigarette with their pint in the warmth, drank less to avoid the cold or simply just stayed at home drinking supermarket beers or looking to producing their own with homebrew packs. During this first winter since the smoking ban in public was brought into fruition in July 2007, beer sales in pubs during November dropped 9.7% from the same period in 2006.

Although it was expected that the ban would hit the hardest during the cold months of winter, the November decline was by far the sharpest since restrictions were extended from Scotland into Wales and England. Sales of beer in the UK during August, the second month of the smoking ban, were down only 2.5%. The figures from November followed declines of 8.2% for September and 7.7% for October and seemed to show no favorites as it appeared to hit every type of beer.

 "All categories fell - there was nowhere to hide," said Mark Brumby, an analyst at Blue Oar Securities. "Premium ale was down 6.9%, standard ale 9.6%, standard lager 10.4%, premium lager 8.3% and stout 10.6%."

He went on to suggest that smaller, tenanted pubs and free houses were likely to be among the most exposed to the exodus of smoking patrons, while larger managed pub groups have increased their food offerings, trying to appeal to people previously put off by the smoky atmosphere.

Industry insiders expect double-digit declines of beer sales for December and January. Rob Hayward, chief executive of the British Beer & Pub Association, said it was too early to make such a call, but there was no reason to expect a recovery in beer sales. "I think the general sense in the industry is that the last quarter of 2007 was the worst part of a bad year." Some industry insiders expect double-digit declines for December and January. Rob Hayward, chief executive of the British Beer & Pub Association, said it was too early to make such a call, but there was no reason to expect a recovery in beer sales. "I think the general sense in the industry is that the last quarter of 2007 was the worst part of a bad year Summer weather, with its long warm evenings has always had an impact on trading, boosting trade from outside beer gardens. Now the industry's winter sales are also vulnerable to the elements.

Scottish & Newcastle, Britain's biggest domestic brewer has estimated the smoking ban will mean an 8% decline in beer sales volumes.

Pub beer sales have been in a uniform decline on a monthly basis for about three years, hit by changing lifestyles and aggressive discounting on multi-pack "slabs" at supermarkets. This trend has been accelerated by the smoking ban.

One senior industry figure, who asked not to be named, said on-trade pub sales - about 55% of overall sales by volume - were likely to fall behind the take-home trade this year for the first time in living memory!

Food Sales Taking Over

John Hutson, chief executive of Wetherspoon, said he was optimistic about the long-term impact of the smoking ban. "The big picture is that we are just going to find new customers. Don't forget there are more than 75% of people out there who don't smoke." Most of the major pub operators are expected to give trading updates at the end of the month. Many have seen large share price falls in the past six months, though this has largely reflected a reappraisal of their property asset values rather than their trading performances.

Pub Chains such as Harvester, Toby Carvery and O’Neills claim they now sell more turkeys than Tosco, while Wetherspoons have taken the lead in selling breakfasts of more than 250,000.  All of these groups are managed by Mitchells and Butlers as is Lavazze coffee which is now top of the list of coffee sales in the UK.

As pubs serve more meals and offer a cleaner non smoke filled atmosphere, it is likely to make up for any drop in beer sales by welcoming new customers who in the past have declined their offerings.

Who knows, maybe the next time we go into our local surgery we may hear someone ask for help in quitting smoking as they want to sit in their local pub and enjoy a nice refreshing beer without the cloud of smoke hovering above them.