This article was written in 2019, before the coronavirus send a further jolt through the already beleaguered pub industry.
As of March 2020, Coronavirus means pubs are forcibly closed. While the government has put a generous package in place to prop up UK businesses, for many it won’t be enough. If you’re a publican worried about your establishment’s survival please call us, or click the live chat to find out how we can help.
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Since 2000, a quarter of pubs have closed in the UK, totalling more than 13,000 locations. Four out of five people have seen a pub close down within five miles of their home.
Although the industry has been in decline for some years, recent evidence suggests the situation is growing critical for British publicans.
What’s most concerning is that the majority of these closures have been small, independent pubs – larger chains have been able to consolidate their business around bigger bars.
“We need the Government to act now to save our pubs from extinction.” said Tom Stainer, campaigns and Communications Officer for CAMRA.
We look at the decline of one of Britain’s most venerable institutions.
How Many Pubs are Closing in the UK?
Why are so Many Pubs Closing?
Shifting Consumer Habits
In the pre-digital era, the pub was one of the central hubs of any community, a place to meet, relax and let of steam. Over the last two decades, a huge cultural shift has transformed both the options and the priorities of the typical consumer.
Smoking indoors was banned in 2007, wine has risen in popularity vs beer, and the arrival of Netflix in 2012 marked a seismic shift in the way people chose to spend their evenings.
A recent New York Post article explored the notion that Millennials simply go out less , citing financial stress, exhaustion and a healthier lifestyle as factors.
‘If we look back to the Victorian era, there really wasn’t much to do in the evenings but go out and socialise,’ commented James Watson, Co Founder of Protect Pubs. ‘Contrast that with the kind of virtual society we have today where young people are glued to their smartphones, connecting with others via social media and then getting their entertainment from Netflix and it’s easy to see why pubs are suffering. And the same time the relative cost of visiting the pub as a proportion of income has changed and is now the highest level it’s ever been.”
People Drink Less
While drinking was once an ingrained part of British life, decades of health legislation, Road Safety campaigns and rising costs mean Millenials and Gen Zers are far less likely to drink than their parents.
A recent study the Office of National Statistics found the number of adults who said they drank alcohol was at its lowest since surveys began in 2005.
In fact, young people aged 16 to 24 years are less likely to drink than any other age group.
Dr John Larsen, Drinkaware Director of Evidence and Impact said ““This new study adds to the body of evidence showing that drinking behaviours in the UK are changing, particularly amongst younger generations.“
Sofa Vs. Pub
2014 marked the year when more alcohol was purchased in supermarkets than in pubs and restaurants for the first time.
Contrast that with 1980, when pubs accounted for some 87% of all beer, lager and bitter bought in the UK.
Contributory factors to the shift included supermarket price wars, whereby large chains are prepared to take loss leaders on key brands in order to capture overall market share, and the shift towards home delivery prompted by chains such as Deliveroo.
A study by Mintel reported that 3/10 Millenials choose to drink at home “because they believe it takes too much effort to go out.”
Wine and Spirits Over Beer
Against a backdrop of declining alcohol sales, beer drinking has been especially hard hit. Globally, beer makes up around ¾ of all total alcohol drunk by volume, though this diminished to by 1.8% to 185bn litres last year.
All of the big beer drinking markets are being affected by the same factors, price and changing tastes. Between July and September 2017, some 35 million fewer pints were sold in British pubs.
Experts point to a shift in taste towards wine or gin, tighter drink driving rules, and a new found health consciousness.
Economics certainly play an impact too with one study suggesting that a 1% increase in price leads to a 0.46 reduction in consumption.
While the beer industry’s own challenges have been partially offset in recent years by the resurgence of craft beer, this has largely benefited shops and supermarkets over pubs. As Christopher Snowdon, author of the Institute of Economic Affairs detailed study puts it: “Britons are not just losing their taste for beer, they are losing their taste for beer in pubs in particular.”
Alcohol Duty, VAT and Business Rates
Duty on booze is an important source of revenue for the government, set to bring in £11.5 billion in 2018/19.
Alcohol duty has also put a dent in pub’s profits, adding over 50p to the price of a pint and putting a real burden on lower income households who may already be struggling with the cost of living. Currently beer duty adds just under 11p for every 1% of alcohol a standard beer has.
Beer duty in the UK is 14 times higher than it is Germany. Add to that the standard 20% VAT, plus around 20p per pint in business rates and it’s clear that taxation is having a powerful effect on pub occupancy.
JB Wetherspoon chairman Tim Martin recently pointed out how these imbalances in the tax landscape appear stacked against pubs.
“What the trade obviously needs is tax equality with supermarkets. Pubs pay about 20p per pint on business rates and supermarkets pay 2p. Strangely, many MPs are keen to revive high streets and are receptive to the principle of equality – high streets need pubs.”
Soaring Property Prices
One lesser known theory for why pubs close attributes the trend to high property prices. With many pubs occupying older buildings right in the centre of communities, their bricks and mortar value tempts publicans to sell to developers, or convert for another use.
‘Although it’s true that many pubs are being sold,’ says Protect Pubs James Watson, ‘very few landlords even own their pubs so they are not the ones benefiting. It’s the pub co’s, that own about 50% of the country’s locals, who are taking advantage of this. The handsome plots they own are now worth far more than a pub could bring in, with their ridiculously high operating costs and very low margins.’
Can the British Pub Decline be Halted?
As with traditional retail, the British pub stands at a cross-roads, the victim of shifting market forces and consumer behaviour, but without an obvious path out of trouble.
“There’s no doubt the golden age of the pub has ended,’ comments James Watson, ‘but that doesn’t mean it needs to become extinct. My advice to all landlords is to figure out what your particular community needs and try to incorporate that into your business model. In some rural places, pubs now include the post office, or a village shop, or even a church. People get together for worship and then have a pint. If that kind of system can work, then perhaps more pubs can find creative ways to evolve. ’
In a study commissioned by Camra, called Friends on Tap, behavioural psychologist Robin Dunbar concluded that the very health and happiness of the nation may be closely tied with our pubs. “The single most important factor determining health, wellbeing and survival is the size and quality of our personal social networks,’ the study reports.
“People who said they have a ‘local’ or those who patronise small community pubs have more close friends on whom they can depend for support, are more satisfied with their lives and feel more embedded in their local communities than those who said they do not have a local pub.
If we can persuade people to get off their smartphones and get down to the pub to talk to each other, it is likely to have dramatic effects on health and wellbeing, as well as community cohesion”