Whose round is it anyway?

02 November 2001 by
Whose round is it anyway?

The world is a small place. And nowhere is this more evident than in the ever-contracting British pub market.

Consolidation has been the name of the game over the past couple of years, and the trend is set to continue. It's not so much that the number of premises is declining - there are still around 60,000 pubs across the UK, although this level is forecast to decrease. Rather it is the number of companies that is shrinking, as the big players swallow up or offload their assets.

According to industry research company Martin Information, 11% of the country's pub stock has changed hands or is up for sale in headline deals in 2001. This sell-off happened after a four-year gestation period in which the banks - the main owners of the breweries - decided how to restructure and secure their assets.

Martin's chief executive, Peter Martin, predicts that in the future two or three big companies will dominate the sector. Which players these will be is anybody's guess, as agents say the market is still settling down and there may be a few more deals in the pipeline. It is thought they probably won't be British as

Japanese and German companies own 24% of UK pubs.

Wide Nomura portfolio

Japanese bank Nomura owns 5,497 pubs across four stables: Inn Partnership; the Unique Pub Company; Wizard Inns; and Voyager. It is now merging Inn Partnership and the Voyager Group.

Even though Pubmaster, 40% of which is owned by German bank WestLB, last month failed in its bid to buy Britain's largest regional brewer Wolverhampton & Dudley, analysts believe it is only a matter of time before W&D is snapped up by the likes of Punch. Perhaps Pubmaster will try its luck again.

US money is heavily involved in the market. Punch, which is backed by Texas Pacific, spent hundreds of billions of pounds buying the Allied Domecq and Bass-tied estates among others.

Another major deal this year was the sell-off by Whitbread of its pub

portfolio, leaving it to concentrate on its hotel side. And just a few weeks ago, Old English Inns said it was in talks to sell its chain of pubs. Reports say the business has been hit by the impact of foot-and-mouth disease, flooding and last year's fuel protest.

If these buyouts and takeovers continue, what will it mean for the future of the market? Will it be the death of individualism as the big brands take over?

Not at all, says GL Hearn's David Batchelor: "The big players will deal with the main market, but below that we will see more individuals. There will be a raft of operators coming forward."

Just as in any other walk of life, there is one thing the 15m British beer drinkers like, and that is variety. The type of pubs and bars that will succeed depends on where the premises are and what type of customers they are trying to attract. For this reason, says Martin, there will never be just one style of pub. "If all pubs were the same then there wouldn't be any profits made," he adds.

Killian Morris, from specialist leisure agent Davis Coffer Lyons, points out that the recent pub sell-off is opening more pubs up to tenancy. "With the lease and tenant sectors expanding, this means more pubs will be run by individual entrepreneurs," he says.

David and Goliath

There is also a "David versus Goliath" scenario. Having smaller players that will survive under the bigger companies is important for the market from the point of view of bringing new ideas to the public.

Trevor Watson, also of DCL, says: "You can't get cutting edge and innovation from the big boys. As long as you have got individuals able to do that, the pub market will be fine - the larger companies can't respond as quickly to changing trends. Being smaller is about vision and flair."

One potential area of growth is "gastropubs". Although it is still thought of as a niche market, it has started to gain a foothold over the past few years. Niches could be important as pubs are forced to move away from the high street because it is becoming oversaturated.

Despite gloomy industry predictions that the number of pubs is set to decline - the Campaign for Real Ale (CAMRA) estimates that 20 pubs a month are closing - some chains are still expanding.

SFI, which owns the Slug & Lettuce pub chain, is set to open a further 30 outlets by the summer. And JD Wetherspoon is also set to continue its conquest of Britain. The group plans to open at least another 90 pubs in the "foreseeable future", according to a spokesman. It is also one of the only English-based pub chains to have forayed into the virgin territory of Northern Ireland, and is said to be looking at opening in the Republic of Ireland.

But, just as a kind of equilibrium seems to be being reached between the large and small players, industry speculation has thrown another spanner into the pub works. There are suggestions that Nomura could eventually dispose of its various assets. The big question is: which player would be able to buy such a company?

Main industry players - Japanese and German companies own 24% of UK pubs and US money is also heavily involved

Fairbar Backed by Deutsche Bank's Morgan Grenfell. Has 2,998 houses, 1,713 tenanted and 1,285 managed

Bass Leisure Retail Has 2,006 managed houses

Scottish & Newcastle Has 2,624 houses, of which 384 are tenanted and 2,240 are managed

Wolverhampton & Dudley Has 1,777 houses, of which 956 are tenanted and 821 are managed

Punch Group Backed by US Texas Pacific. Has 6,063 houses made up of: Punch Pubs - 5,000 tenanted/leased, and Punch Retail - 1,053 managed and 10 tenanted

Innspired Has 1,000 tenanted houses

Pubmaster Has 2,000 tenanted houses

Nomura Backed by Japanese Bank Nomura. Has 5,497 houses of which 4,474 are tenanted and 1,023 managed. These are made up of: Inn Partnership, 200 tenanted houses, Unique Pub Co, 3,274 tenanted, Wizard Inns, 35 managed and Voyager, 988 managed

JD Wetherspoon Has 492 managed houses

Greene King Has 1,565 houses, 1,064 of which are tenanted and 501 managed

Enterprise Has 2,600 tenanted and 439 managed houses. The company was bought from Whitbread/Morgan Grenfell on 22 May this year

Licensed and Leisure Property Supplement, Autumn 2001

A joint supplement by Estates Gazette and Caterer & Hotelkeeper magazine

The Caterer Breakfast Briefing Email

Start the working day with The Caterer’s free breakfast briefing email

Sign Up and manage your preferences below

Check mark icon
Thank you

You have successfully signed up for the Caterer Breakfast Briefing Email and will hear from us soon!

Jacobs Media is honoured to be the recipient of the 2020 Queen's Award for Enterprise.

The highest official awards for UK businesses since being established by royal warrant in 1965. Read more.

close

Ad Blocker detected

We have noticed you are using an adblocker and – although we support freedom of choice – we would like to ask you to enable ads on our site. They are an important revenue source which supports free access of our website's content, especially during the COVID-19 crisis.

trade tracker pixel tracking