Pub trawl
The pub is the embodiment of Britishness, the heart of the our community. The British think so. Each week a staggering one third of the adult population tunes into "true-to-life" TV soaps centred around the Rovers Return, the Queen Vic and the Woolpack.
Overseas visitors think so, too, since pubs are the single most visited destination of foreign tourists. But it would surprise the hundreds of thousands of American, Japanese and German tourists visiting a pub this summer that the ultimate benefactors of their outing are most likely to be themselves - or at least their compatriots who run company pension funds.
The truth of the matter is that since March 2001, the biggest players within our most quintessentially national industry are owned not by ruddy-faced Britons whose fathers stormed Anzio or served in the Burmese jungle, but our new chums in the global village, the Japanese, the Germans and - old fighting buddies - the Americans.
The takeover of Britain's pubs has been rapid, and for some will confirm the belief that Britain won the war, but lost the peace.
As recently as 1995, the pub industry was controlled by national and family-controlled brewers (see table above right). Compare this with the table on the opposite page to see that out of the top 10 giants which then dominated the industry, three have ditched their pubs to concentrate on drinks brands, hotels, restaurants and the wider leisure market.
Two other names have disappeared - Greenalls to Japanese-owned Nomura and Marstons to Wolverhampton & Dudley - leaving only four out of the 10 - Scottish & Newcastle Retail, Bass Leisure Retail, Pubmaster and Greene King - as solid survivors.
Of these, Bass for the moment retains its managed estate, having sold its leased pubs to US-backed Punch and its brewery to Belgium's Interbrew.
True, it also leaves Wolverhampton & Dudley, but industry commentators are in two minds about writing them in as an independent entity, believing Pubmaster will soon swallow that once-proud name. Pubmaster would most likely retain the tenanted estate and dispose of the managed outlets - a likely buyer could be German-owned Fairbar.
In short, it means that within six years, seven of the top 10 pub operators will have ceased to exist in their own right.
The biggest of the new players are backed by foreign banks looking to invest in the cash-rich British pub industry. In other words, these new statistics show that three US-, Japanese- and German-funded companies control 24% of Britain's 60,000 pubs. And they will grow their share. They have the funding and there's no shortage of pubs for sale - 2,700, reckons consultant Martin Information, which says that 11% of the country's pub stock has changed hands or is up for sale in headline deals in 2001.
British influence is expected to decline further. Of S&N, the biggest British firm left in the top league, there are questions over its commitment to its pubs division, which underperforms its main brewing interests. S&N is believed to want to shed 740 managed houses and 180 tenancies, and possibly exit pub retailing completely.
Who will be the new buyers? Fairbar, under the new and ebullient direction of ex-Bass Lease managing director Ian Payne, has money sloshing around to boost his tenanted and managed estate. And he is almost certainly eyeing Bass's remaining 2,000 managed outlets, with which he is very familiar.
A perfect example of British failure to dominate its own industry is Whitbread. As recently as 1999, Whitbread reflected the brewing and pub-operating business, and was even poised to shoot into the first ranks of pub-owning superstardom by buying Allied Domecq's pub estate.
But having lost out on that deal at the last minute by fast-footed Hugh Osmond's Punch (awash with American dollars via Texas Pacific), Whitbread sold its brewing interests to Belgium's Interbrew shortly before the Belgian acquired Bass's brewing interests. Then in March, Whitbread further helped the foreign stranglehold on British pubs by off-loading 3,000 leased and managed pubs, including the Hogshead chain and Dome café bars, to Fairbar, the operator established by Deutsche Bank's Morgan Grenfell Private Equity.
Once synonymous with pubs and brewing, Whitbread is left with hotels (Travel Inn and the UK Marriott franchise), fitness centres (David Lloyd) and its underperforming restaurant division of Beefeater and Brewers' Fayre (to be rebranded as Out & Out), TGI Fridays, Bella Pasta and Café Rouge.
So how will Britain's new pub owners shape the future? "The future will be more consolidation, an overwhelming trend towards tenancies, reversing the 1990s industry focus on managed estates, and more specialisation for managed estates," says industry consultant Peter Martin of Martin Information.
"Of the managed side of the business, the real UK leaders in growth are single- or two-brand specialists such as Pizza Express or Wetherspoon's, not the multibranded operators. The same goes for the US," says Martin.
"Generalists aren't working. We've seen Greene King get out-of-town centres and sticking to what they're good at. Single concepts such as Wetherspoon's succeed by focusing on what works. Bass is streamlining its remaining managed houses down to a few key brands in the main high-street sites."
So Enterprise, Pubmaster and most of Nomura, Punch and Fairbar will be simply property owners leasing pubs to tenants and enjoying two revenue streams - rent and wet-rent (profits from beer wholesaling to tenants).
"We'll see more major tenanted/leasehold operations while the branded players will increasingly be specialists," Martin confirms. "This leaves opportunities for local niche operators who know their market and will further squeeze the viability of the big companies' smaller branded managed houses."
BRITAIN'S BIGGEST PUB OPERATORS IN 1995
| Number of pubs | |
| Grand Metropolitan | 6,500 |
| Bass | 4,078 |
| Whitbread | 4,623 |
| Allied Domecq | 3,406 |
| Scottish & Newcastle | 2,957 |
| Greenalls | 1,959 |
| Pubmaster | 1,753 |
| Wolverhampton & Dudley | 1,000 |
| Greene King | 900 |
| Marstons | 882 |
