News round-up: pubs

New laws put pressure on pubs and bars sector.

Pub operators have had to cope this year with the chaotic overhaul of the licensing laws and a proposed ban on smoking - and the Government wants them to pay for policing disorderly drinkers. Martyn Cornell reports.

It was a year when pubs were scarcely ever out of the news: smoking bans, binge-drinking, licensing reform all kept the pot boiling.

There were other themes which might not have made the pages of the sector's most critical daily newspaper, the Daily Mail, but were important all the same.

One of Britain's most influential food critics, Egon Ronay, recognised and praised the gastropub phenomenon in his new guidebook.

A series of big deals kept the pub sector high-profile on the City pages as well, with Wolverhampton & Dudley (W&D), Greene King, Fuller Smith & Turner, the Laurel Pub Company and Punch Taverns making a series of big acquisitions.

Also there was Punch buying Avebury and Spirit Group to become the biggest pub operator in the country. Meanwhile, new operators such as Admiral Taverns found a niche by mopping up the less-profitable pubs the large firms no longer wanted.

The more thoughtful observers pointed out that 2005 marked the end of the idea, fashionable since the Beer Orders of the early 1990s, that managed pub operations and tenanted pub operations should be kept as far apart as possible. The success of the "mixed operation" model, as practised by W&D and Greene King, where managed and tenanted pubs could be swapped backwards and forwards as the operational need dictated, has proved this.

This meant it was possible for Punch to hint, without giving City analysts concern, that it might continue to run at least part of its Spirit Group purchase as a managed pub division.

January saw JD Wetherspoon announce it was opening two entirely smoke-free pubs, one in Exeter and one in Swindon in March. Wetherspoon's chief executive, John Hutson, said: "We wanted to gain experience of operating a non-smoking pub in advance of a ban." As the company opened more smoke-free outlets through the year, it soon found the experience led to more (low-margin) food sales, but fewer (higher-margin) drink sales.

Meanwhile, the British Institute of Innkeeping (BII) accused the Daily Mail of being "inaccurate and sensationalist" in its claim that changes in the licensing regime meant Britain was heading for 24-hour drinking.

The month also saw the Government propose a scheme of levies on pubs and bars in "Alcohol Disorder Zones" to pay for extra policing to tackle binge-drinking.

By February the Government was getting the first warnings that its proposal to ban smoking in all premises where food is served from mid-2007 would see far more pubs than previously thought simply stop serving food.

Problems with the congested timetable for the changeover to the new licensing regime also quickly became apparent. A fortnight after the start of the six-month window during which more than 140,000 existing licensed premises in England and Wales could start applying for "grandfather rights", most councils around the country hadn't received a single application.

In April the British Hospitality Association accused some local authorities of going further than necessary, and "gold-plating" the statutory requirements under the Licensing Act by, for example, trying to insist that there must be a "personal licence holder" on the premises whenever alcohol is served. The British Beer and Pub Association (BBPA), the Association of Licensed Multiple Retailers and the BII took three councils to court to try to stop this.

Also in April, W&D, having integrated its 2004 acquisition of Burtonwood, offered £46m for the Cumbrian brewer, Jennings. Robert Tchenguiz raised his profile higher in the pubs world by adding Yates Group to Laurel, which he had acquired in 2004. A month later he hoovered up much of SFI Group as well.

May saw Scotland vote in its own total ban on smoking in public places, due to start in April 2006. The ban on smoking in pubs in Scotland led to more sites being put on the market, according to Steve Mallon, managing director of Scottish pub operator Maclay Inns.

He said: "The smoking ban will mean operators will have to raise standards or roll over and die."

Meanwhile, south of the border, just weeks before the 6 August deadline for the preservation of "grandfather rights", only 5% or so of pubs and bars had put in their licensing application forms, while 80% of completed forms were being rejected because of errors.

The BBPA announced a ban by its members on "happy hour promotions that encourage binge-drinking and alcohol misuse and fuel antisocial behaviour", a move widely, and inaccurately, headlined as a ban on happy hours.

Greene King made the first of two summer acquisitions in July by snapping up near-neighbour Ridley's for £45.6m. A short while later it made a £187m offer for Belhaven Group. The Scottish brewer and pub owner said it was happy to sell because of the uncertainty over the impact on business of Scotland's smoking ban that was due to start in April 2006.

With just two weeks to go to deadline, less than half of all licensed premises in England and Wales had submitted the necessary Licensing Act paperwork to local authorities. However, most pubs eventually scraped in under the bar - with overworked councils then rejecting variations on grounds that they didn't have time to consider the application.

After a row in Cabinet, a defeated health secretary, Patricia Hewitt, was forced to concede in October that the Government's proposed smoking ban in England would, indeed, exempt pubs that did not serve food. The compromise was rejected as unworkable by all other sides of the debate as something that would leave England isolated in the UK.

Fuller's surprised everybody in November with an agreed bid for the Hampshire family brewer George Gale.

Despite constant attempts by opponents to have the start date postponed, and with many pubs complaining they had not received their paperwork, the Licensing Act came into effect as planned on 24 November. Scenes of drunken debauchery on every street corner around the clock strangely failed to materialise…

The year in pubs

January

• Wolverhampton & Dudley (W&D) offers £119m for Burtonwood.
• London police chief Sir John Stevens calls for the transition to the new licensing regime in England and Wales to be delayed.

February

• 7 February Start of the transition to new licensing laws in England and Wales.

March

• Health Select Committee chairman slams Government proposals for partial smoking ban as "totally impractical".
• British Beer & Pub Association (BBPA) launches Beautiful Beer campaign to revitalise image.

April

• W&D bids £46m for Jennings Brothers.

May

• Yates Group is swallowed up by Laurel Pub Company for £202m.
• BBPA's new code of conduct bans promotions that encourage binge-drinking.
• New minister for media, tourism and licensing: James Purnell (pictured).

June

• Fuller's Swan Tavern pub in London becomes first to be granted a 24-hour licence.
• Charterhouse Capital Partners buys Barracuda Group for £262m.
• Laurel pays £80m for 98 former SFI pubs and bars.
• Government launches consultation on its smoking proposals.

July

• Ridley & Sons bought for £45.6m by Greene King.
• 400 doormen prosecuted for not having new Security Authority Licence.
• Sky hikes pub sport TV prices, outraging publicans.

August

• Greene King buys Scotland's largest independent pub company, Belhaven, for £187m.

September

• Alchemy Partners' Tattershall Castle pays £177m for Spirit Group's 178-strong city centre division.
• Research by Action on Smoking and Health finds many pubs will ditch food to sidestep smoking ban.

October

• 28 October Government keeps partial ban proposal for England and Wales and moves start date forward to summer 2007.
• Northern Ireland to ban smoking in enclosed public places from April 2007.

November

• 24 November New licensing regime in England and Wales commences.
• Department of Health admits ignoring its own smoking consultation after findings made public.

December

• Punch Taverns tables £2.7b bid for Spirit Group to create the UK's largest pub group.

The year's big deals

• Yates Group is swallowed up by reinvigorated Laurel Pub Company for £202m.
• Greene King makes successful £187m move for Scotland's largest independent pub company, Belhaven.
• Charterhouse Capital Partners buys Barracuda Group for £262m.
• Punch Taverns tables £2.7b bid for Spirit Group to create the UK's largest pub group.
• Newly formed Tattershall Castle takes control of Spirit Group's 178strong city centre division.

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