A view from left field: Death of the pub

Updated Thursday 11th December 2008

Steve Godrich explores the pub trade - why some pubs are thriving while at the same time a number have shut.

Pubs are closing at a rate of knots (apparently 36 per week at the last count), under pressure, originally, from a pincer movement between social change and competitive forces, and with little sign of redemption. Is it finally the end of this great British cultural institution? The Pointer Pub, Leeds Creative commons image Icon phill.d under CC-BY-NC-ND licence under Creative-Commons license The Pointer in Leeds - victim of a declining sector/

For too long, government intervention has tampered with the trade under the pretence of defending consumers who were being ripped-off by greedy brewers (who both brewed and retailed the beer they produced). For example The Beer Orders fundamentally changed the industry structure separating the brewer from the pub owner/operator in an attempt to put pressure on the industry to reduce the wholesale price of beer (and hence, theoretically, drive a reduction in price in the pubs to retail customers).

Over time, though, more government intervention has negatively impacted on the pub. For example, non-smoking regulations drove a core customer group out of the pub and back to their homes; the so-called (by government and the media, at least) binge drinking youth, became a symbol of social evil which needed to be controlled. This led to licensees/pub companies being pressurised into dropping any competitive activity which appeared to promote bingeing.

Meanwhile the supermarkets snuck up on the rails, offering cheaper alcohol. This dovetailed neatly with our unwillingness to venture out, as we hid behind our PCs, video games, DVDs and other assorted home amusements which we could enjoy with a cheap Chardonnay at our side. So, given all this, is it any surprise that the pub has been, and still is, coming under increasing pressure as a viable business.

Well, perhaps, the real surprise is that the pub, as an institution, continues to not only survive, but thrive in some instances.  J D Wetherspoon continues to open pubs and has reported solid figures. Smaller companies (such as Tynemill in the Midlands) seem to have little problem selling mash-tun loads of real ale; and I can bet that, even now, you can all think of a successful country pub which you might recommend.

What is it about these successful pub operators, that keeps them going in such tough times? Well, Wetherspoon acts as a true pub retailer. They employ high street retail tactics, for example extremely professional point of sale material, positioned carefully in each pub. (Just visit a Wetherspoon on any Thursday for their Curry Night and you’ll see what I mean). Tynemill specialises in real ale where beery aficionados go to ‘sample’ rather than sup.

The staff offer a no-quibbles ‘try-before-you-buy policy on all their real ales recognising that consumers are unlikely to invest their £2.50 in a pint of something which they’ve never tried before. Cleverly, though, this drives custom and footfall as customers now go into these pubs to see what’s the latest available real ale offering. The best country pub has great food, quaint surroundings and great service which serves our need for convenience and value whilst spoiling us a little, too.

Whilst the pressure of social change (spurred on by government regulation) and competition (principally from the supermarkets) has forced a vast number of pubs to close, the smart guys have evolved to play to their strengths and develop other areas of competitive advantage.

The real skill is that the successful pub operator has had to adapt to the changing environment

The real skill is that the successful pub operator has had to adapt to the changing environment. Business academics use a number of models to identify and analyse these factors. Applying Porter’s Five-Forces model (which can be a useful tool to analyse the attractiveness and competitiveness of an industry) to the pub retail market, reveals that in terms of providing ‘drink’ the pubs were always going to lose out to the newer market entrants: the supermarkets.

Where the successful pub operators got savvy was that they offered something the supermarkets couldn’t. For example, quality real ales, attractive surroundings to drink them in, with, in the best pubs, fantastic personal service. Whilst the mal-contents in the trade might hark back to ‘the good old days,’ the forward-thinking have just got on and created a ‘new’ pub: one that has adapted to these changed times and is responsive to market demands.

The pub trade has been around for centuries and has creatively adapted to meet whatever challenges it has faced. I predict that the day of the pub is not over, but that it will change. It may be true that only the great and the good will survive, but reports of the death of the pub are somewhat premature.

With all this talking I could do with a pint – what are you having...?

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