Bitter times for brewers

Press, 14 April 1982, Page 10

Bitter times for brewers

From the "Economist.” London Business at Britain’s pubs is as flat and lukewarm as the beer they serve. The average price of a pint of beer has climbed 50 per cent to 60p ($1.08) in just two years. People are spending less time, and drinking less in pubs. Sales in Britain’s 76.000 pubs were down an average of 8 per cent in 1981. Since 1980, 20.000 jobs in pubs have been lost. The Government put the boot in again this week by adding 2p to the tax on a pint of beer. An old cliche had it that pubs were recession-proof because people drink more in hard times. Pure froth. Pub-goers have cut their beer consumption in this recession as real incomes have started to fall. Brewers have followed by paring production from 41.2 M barrels (there are 288 pints a barrel) in 1979 to 37.7 M in 1981. Beer prices soared because of steep tax' increases (120 per cent up since 1979) and attempts by breweries to cover costs and offset shrinking volume. Breweries, which own nearly two-thirds of the pubs in Britain, are now operating at 55-60 per cent of- capacity.

abou| 20 per cent less than they would like. Brewers are full of complaints: the weak economy, higher taxes, bad weather, antique laws restricting opening times, and pub. owners are bitter about growing sales of cut-price beer in supermarkets, accounting for about 12 per cent of total beer sales. Britain’s 33,000 non-profit private clubs are also luring patrons with cheaper beer and slot machines paying big jackpots: the maximum payoff in pub machines is £2. The fashion for wine bars has also hurt the pubs. But there is.still some life left in the pub. The British spend more than $10.9 billion a year on beer, about 80 per cent of that in’ pubs. While brewers have been selling off smaller and less profitable pubs, they plan to spend $1555M, more than 70 per cent of their total planned capital investment, on pubs in the next three years. Pubs are trying to shed their traditional image as rough-hewn places dominated by men and darts. They are offering better food (at last), video games and more slot machines. Even so, the brewers' society thinks business will still be bad in 1982, with production down IM barrels on last year.