Public house sector trends

(last updated July 2019)

What has been happening in the pub trade

During the last decade or so there have been a number of important developments affecting the licensed trade:

  • an overall decline in the number of pubs - the economic downturn during the late 2000s and early 2010s increased the number of closures each year and the decline has continued during the 2010s, even though the rate of closures slowed slightly in 2017/18
  • the growth of large pub chains owned by non-brewing pub companies
  • a trend towards very large pubs, often fitted out to a particular theme
  • pubs targeting a certain market, particularly families
  • a significant increase in the number of pubs offering meals and snacks - and the rise of the 'gastro pub'
  • a general decline in beer consumption
  • the rise of the micro-brewery and brew pub as people have become more and more enthusiastic about real ales and craft beers
  • some relaxation of licensing legislation, in particular the laws that cover 'regulated entertainment'
  • increased regulation of catering activities and pressure from the government to provide healthier meal options
  • increased competition from other leisure venues
  • legislation banning smoking in pubs and other public indoor spaces. Many pubs have set up extensive heated outdoor areas to attract both smokers and non-smokers
  • concerns over late night disturbance and disorder
  • measures to reduce 'binge drinking' and the introduction of new mandatory licensing conditions in England and Wales which ban irresponsible drinks promotions
  • a general increase in alcohol-related violence
  • strong competition from supermarkets selling cut-price beer and wine
  • proposals to introduce minimum prices on alcohol, and measures to give local authorities more control over permitted opening hours and allow them to introduce a levy on late night licences

There have been many casualties in the licensed trade as a result of overcapacity in the sector - smaller pubs in particular may find difficulty in competing against the large, managed 'superpubs' in some locations. Following the introduction of UK-wide smoking bans, many pubs decided to focus more strongly on food sales. But this led to prices being forced down because competition intensified.

During 2014 the government examined the 'beer tie' system under which tied tenants rent their pubs from large organisations like brewers and 'pubcos'. This followed many years of campaigning for reform from organisations like CAMRA. New rules have been included in the Statutory Pubs Code that came into force in July 2016 and which in the future should offer tied tenants greater freedom and the possibility in some cases of opting for a 'market rent only' agreement with their landlord.

Illegal alcohol and tobacco products smuggled into the UK from other countries remain a major source of competition for the off-licence trade, and the government has made considerable efforts to clamp down on them over the years. A compulsory registration scheme for alcohol wholesalers was introduced at the start of 2016, and, since April 2017, all businesses that purchase alcoholic drinks now need to make sure that their wholesalers are registered.

Unfortunately, after a brief recovery between 2013 and 2015, the economy slumped once again and the position worsened after the vote in June 2016 to leave the EU. Low economic growth continued throughout 2017 and into 2018 due to the continuing uncertainty over the Brexit negotiations, higher inflation, weakening growth of real wages and the loss of consumer confidence in the economy. This is forecast to continue throughout 2018 and 2019. The fall in the value of the pound following the Brexit vote led to the cost of imports becoming very much more expensive. The state of the economy has meant that consumers have reined in their expenditure on eating and drinking out, instead buying cheap alcohol from supermarkets and drinking at home. In an attempt to avoid further decline in the industry, the Treasury announced that pubs in England with a rateable value of less than £100,000 would receive £1,000 rates relief in 2017/18. The November 2017 Budget froze alcohol duties, with the exception of super-strength white ciders.

You will have to decide whether:

  • demand will be high enough in your area to support your business. If your pub is in a rural area there simply may not be enough customers unless you can offer something special to attract them from further afield
  • your local economy is healthy enough - if your area has suffered from many business failures and factory closures recently your customer base is not likely to have much disposable income

Keeping up to date with developments

Joining a trade association is an excellent way of staying up to date with developments.

There are a number of trade associations representing the interests of the licensed trade, including:

  • the Federation of Licensed Victuallers Association (FLVA)
  • the British Beer and Pub Association (BBPA)
  • the Wine and Spirit Trade Association (WSTA)
  • the British Institute of Innkeeping (BII)

You can find out more about these organisations on their websites. The Beer and Pub Association website contains guidance for licensees on the alcohol licensing regime and the mandatory licensing conditions.

Hospitality Ulster is the trade association for Northern Ireland's licensees.

The British Hospitality Association and the Institute of Hospitality offer services to businesses in the hospitality, tourism and leisure industries.

The Home Office is responsible for alcohol policy and licensing. You can read about alcohol policy and licensing in England and Wales on the Gov.uk website.

Subscribing to a trade journal is another good way of keeping up to date. The Publican's Morning Advertiser contains features and articles of interest to those running a pub - visit their website to find out more.

Trade shows

You will be able to obtain a lot of useful information if you go to a trade show or exhibition for the food and drink sectors. The Exhibitions.co.uk website includes details of forthcoming trade shows and exhibitions for many different industry sectors.

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