Pub Visiting - UK - September 2008

ISSUES IN THE MARKET
Main issues
Definition
Abbreviations
MARKET IN BRIEF
Market set to dip as ban and economy bite
Cost pressures increase
Increased emphasis on value
Operators forced to look to new revenue streams
Leased/tenanted pub operators dominate industry
Managed sector holds its own
Consolidation process continues apace
Entertainment is the key
INSIGHTS AND OPPORTUNITIES
Sup and shop?
Meeting needs?
Pub as the hub?
FAST FORWARD TRENDS
Trend 1: Third Place
What’s it about?
What’s it mean
What next?
Trend 2: Style Returns
What’s it about?
What’s it mean
What next?
Trend 3: Trial Without Error
What’s it about?
What’s it mean
What next?
 WHAT IS FAST FORWARD TRENDS?
INTERNAL MARKET ENVIRONMENT
Key points
Fewer people drinking in pubs…
Figure 1: Pub/bar visiting for a drink or a meal in the last 12 months, 2003-07
Figure 2: Frequency of visiting pubs/bars for a drink only, 2003-07
…and declining beer sales
Figure 3: Volume sales of beer, by channel, 2003-08
Figure 4: Distribution of beer sales, by volume, by channel, 2003-08
Attitudes towards drinking and going out
Figure 5: Agreement with selected lifestyle statements regarding drinking, 2003-07
The ties that bind?
Rising cost base ratchets up pressure
Figure 6: Trends in retail prices for selected items, 2003-08
Drink-related disorder
The REIT stuff?
BROADER MARKET ENVIRONMENT
Key points
Disposable income and spending take a knock from the credit crunch
Figure 7: Trends in personal disposable income and consumer expenditure, 2003-13
Consumer confidence hit but shows slight signs of recovery
Figure 8: GfK NOP Consumer Confidence Index, August 2007-August 2008
Demographic issues for the pub trade
Figure 9: Forecast adult population trends, by socio-economic group, 2003-13
Pre-/no family lifestage growth underpins market but opportunities elsewhere
Figure 10: Forecast adult population trends, by lifestage, 2003-13
Growing youth population will boost market
Figure 11: Trends in the age structure of the UK population, by gender, 2003-13
Growth in flexible working
Figure 12: Working status of adults aged 18+, 2003-07
Less time on chores = more time for leisure?
Figure 13: Amount of time spent on household chores on an average working day, 2003-07
CAMPAIGNS AFFECTING PUBS
Key points
Fair Pint
Proud of Pubs
The Pub is the Hub
Best Bar None
Challenge 21
LEGISLATION AFFECTING PUBS
Key points
Licensing Act – kill or cure?
Cost or benefit: opinions differ
Apocalyptic predictions prove unfounded
Mixed impact
The smoking ban
All smoke no fire?
Budget duty increases pile on the pressure – and more to come
Minimum wage burden increases
Statutory holiday pay and other benefits
Alcohol Disorder Zones (ADZs): making pubs pay the price?
One rule for one industry?
COMPETITIVE CONTEXT
Key points
Priority attached to eating and drinking out drops
Figure 14: Expenditure priorities, 2007 and 2008
Distinctions between different types of outlet becoming ever more blurred
Figure 15: Forecast of the UK market for eating out, 2003-13
Figure 16: Market size of sectors competing with pubs, 2003-08
Competition intensifies from home drinking
Figure 17: Volume sales of alcoholic beverages, by distribution channel, 2002-07
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Choice
It’s all about experience
Role in the community
Unique atmosphere
Popular choice for value meals
Weaknesses
Increased competition from other out-of-home venues
Increased competition from supermarkets
Consumer confidence
Pressure on margins
Saturated market
WHO'S INNOVATING?
Key points
Sakura typical of convergence trend
Queues a thing of the past?
A better alternative to waiting at the bus stop
All-weather measures for smokers
Free Wii hits the spot
Technology gives brand point of difference
M&B shakes up draught carbonates
MARKET SIZE AND FORECASTS
Key points
Closures and consolidation
Figure 18: Total pub outlets, 2003-08
Deteriorating trading conditions
Figure 19: UK pub industry market size trends, 2003-13
Tough trading conditions prevail
Only the strong will survive
Factors used in the forecast
SEGMENT PERFORMANCE
Key points
Steady shift away from wet revenues
Figure 20: UK pub industry turnover, by sector, 2003-08
Is food the answer to the industry’s prayers?
Soft drinks buck the market
Other revenue increases in importance
Hot beverages boost
Machine revenues hit by smoking ban
Cigarette vending under threat but other opportunities exist?
MARKET SHARE
Key points
Mitchells & Butlers leads on sales
Figure 21: Leading pub operators in the UK, by turnover, 2007
Punch and Enterprise dominate outlet numbers
Figure 22: Leading pub operators in the UK, by outlet numbers, 2008
COMPANIES AND PRODUCTS
Key points
Major players
Figure 23: Leading operators and brands in the pub market, 2008
Admiral Taverns Ltd
Financial performance
Figure 24: Key financial indicators for Admiral Taverns Ltd, 2007
New developments
Enterprise Inns plc
Financial performance
Figure 25: Key financial indicators for Enterprise Inns, 2003-08
Figure 26: Enterprise Inns turnover, by sector, 2006 and 2007
Responding to smoking ban threat
Licensee profits up
REIT conversion on hold as market weakens
Greene King plc
Figure 27: Greene King plc pub estate profile, 2008
Financial performance
Figure 28: Key financial indicators for Greene King plc, 2004-08
Figure 29: Greene King plc revenue, by division, 2007 and 2008
Managed business more than holds its own
Pub Partners improves profitability
Belhaven booms
New developments
JD Wetherspoon plc
Coming to a high street near you
Financial performance
Figure 30: Key financial indicators for JD Wetherspoon plc, 2004-08
Bar and machine takings down in wake of ban
Food is the star
Capex investment continues
Cause for optimism?
New developments
Marston’s plc
An acquisitive player
Active in both managed and tenanted/leased sectors
Financial performance
Figure 31: Key financial indicators for Marston’s plc, 2003-08*
Figure 32: Marston’s plc turnover, by division, 2006 and 2007
Pub retailing drives company sales growth
Food contribution grows
Wines and spirits up but machine take down
Future finances looking strong
Mitchells & Butlers plc
Whitbread deals increase emphasis on food-led sector
A bias towards residential pubs
Financial performance
Figure 33: Key financial indicators for Mitchells & Butlers plc, 2003-08
Figure 34: Mitchells & Butlers plc revenue, by division, 2006 and 2007
Food-led operations lead growth
A well-balanced estate
Sales mix changes significantly
Value food does the business
Review backs strategy
Grounds for optimism
Punch Taverns plc
Financial performance
Figure 35: Key financial indicators for Punch Taverns plc, 2003-08
Figure 36: Punch Taverns plc revenue, by segment, 2006 and 2007
An evenly balanced business
More compact managed estate increases average weekly sales
The REIT choice?
Recent developments
Scottish & Newcastle Pub Enterprises
Figure 37: Key financial indicators for Scottish & Newcastle Pub Enterprises (Management) Ltd, 2005-06
Whitbread plc
Financial performance
Figure 38: Whitbread Plc segmental analysis, 2007/08
Figure 39: Key financial indicators for Whitbread’s pub restaurant operations, 2007 and 2008
Recent developments
Other operators
Cains Beer Company
Food & Drink Group
Regent Inns
Town & City Pub Company/Bay Restaurants
BRAND ELEMENTS
 BRAND MAP
Figure 40: Attitudes and usage of pub brands, June 2008
 CHEF & BREWER
What the brand is trying to achieve
What the consumer thinks
Figure 41: Attitudes towards the Chef & Brewer brand, June 2008
 JD WETHERSPOON
What the brand is trying to achieve
What the consumer thinks
Figure 42: Attitudes towards the JD Wetherspoon brand, June 2008
 O’NEILLS
What the brand is trying to achieve
What the consumer thinks
Figure 43: Attitudes towards the O’Neills brand, June 2008
 THE SLUG AND LETTUCE
What the brand is trying to achieve
What the consumer thinks
Figure 44: Attitudes towards the Slug and Lettuce brand, June 2008
 YATES’S
What the brand is trying to achieve
What the consumer thinks
Figure 45: Attitudes towards the Yates’s brand, June 2008
 BRAND QUALITIES OF PUB BRANDS
Brands tending to lack personality
Figure 46: Personalities of various pub brands, June 2008
Figure 47: Personalities of various pub brands, June 2008
 EXPERIENCE OF PUB BRANDS
JD Wetherspoon’s leading the pack
Figure 48: Consumer usage of various pub brands, June 2008
 BRAND INTENTIONS FOR PUB BRANDS
Consumers looking to know more about some brands
Figure 49: Consideration of various pub brands, June 2008
 BRAND MOMENTUM FOR PUB BRANDS
Yates’s in need of modernisation
Figure 50: Momentum of various pub brands, June 2008
 BRAND MOTIVATION FOR PUB BRANDS
Despite its efforts, Wetherspoon’s is still thought of as a place for a pint
Figure 51: Motivation for choosing various pub brands, June 2008
 BRAND SATISFACTION FOR PUB BRANDS
Pubs falling short of pleasing punters except for Smith & Jones
Figure 52: Satisfaction with various pub brands, June 2008
 BRAND COMMITMENT TO PUB BRANDS
Lacking emotional engagement with consumers
Figure 53: Commitment to various pub brands, June 2008
Figure 54: Commitment to various pub brands, June 2008
 ROUND UP
BRAND COMMUNICATION AND PROMOTION
Key points
Managed pub operators lead the way
Figure 55: Expenditure on advertising, by selected brewers and pubcos, 2003-07
Figure 56: Expenditure on advertising, by selected brewers and pubcos, 2007/08
Dual role for websites
Putting on events
Drink suppliers’ own marketing efforts
Bacardi
Budweiser
Carlsberg
Corona
Foster’s
Miller Genuine Draft
Smirnoff
WKD
HOW OFTEN DO PEOPLE VISIT PUBS?
Key points
How often do people eat and drink in pubs?
Figure 57: Frequency of visiting a pub to drink and eat in, 2006 and 2008
Who are pub drinkers?
WHAT ATTRACTS PEOPLE TO PUBS?
Key points
Figure 58: Enticements for visiting pubs, 2006 and 2008
Entertainment rocks
Less scope now for better catering?
Sport: men love it but big turn-off for women
Old favourites continue to draw people in
Appeal of table service wanes with weaker economy
Machines – not a reason to visit in themselves
Entertainment and sport popular among heaviest pub-goers
Figure 59: Most popular enticements for visiting pubs, by frequency of drinking in a pub, April 2008
Games and specialist offerings also popular among frequent visitors
Figure 60: Next most popular enticements for visiting pubs, by frequency of drinking in a pub, April 2008
Entertainment, sport and theme nights go together
Figure 61: Most popular enticements for visiting pubs, by enticements for visiting pubs, April 2008
Games complement entertainment sport and themes
Figure 62: Next most popular enticements for visiting pubs, by enticements for visiting pubs, April 2008
WHAT DO PEOPLE THINK OF PUBS?
Key points
Figure 63: Attitudes towards pubs, 2006 and 2008
People and atmosphere promote more frequent pub-going
Figure 64: Most popular attitudes towards pubs, by frequency of drinking in a pub, April 2008
Pubs play vital social role
Figure 65: Next most popular attitudes towards pubs, by frequency of drinking in a pub, April 2008
Horses for courses
Figure 66: Most popular attitudes towards pubs, by enticement to visiting a pub, April 2008
Discerning/choosy consumers most keen on entertainment
Figure 67: Next most popular attitudes towards pubs, by enticement to visiting a pub, April 2008
Close association between local pubs, people and atmosphere
Figure 68: Most popular attitudes towards pubs, by attitudes towards pubs, April 2008
People go to great efforts to find traditional pubs
Figure 69: Next most popular attitudes towards pubs, by attitudes towards pubs, April 2008
WHAT FACTORS ARE INFLUENCING CONSUMER BEHAVIOUR RELATING TO PUB VISITING?
Key points
Figure 70: Consumer behaviour towards pubs, April 2008
Is the smoking ban positive for industry?
Credit crunch bites
Creatures of habit
‘Regulars’ feeling left out in the cold
Figure 71: Consumer behaviour towards pubs, by frequency of drinking in a pub, April 2008
Changing nature of pubs
Figure 72: Consumer behaviour towards pubs, by enticements for visiting a pub, April 2008
Tempting discouraged consumers back
Figure 73: Consumer behaviour towards pubs, by attitudes towards pubs, April 2008
Smoke ban smokescreen?
Figure 74: Consumer behaviour towards pubs, by consumer behaviour towards pubs, April 2008
PUB VISITING TARGETING OPPORTUNITIES
Key points
 PUB VISITING TARGET GROUPS
Figure 75: Pub visiting target groups, April 2008
New Lease of Life (15% of respondents)
Oblivious to Smoking (24% of respondents)
Locals (22% of respondents)
Wherever’s Convenient (15% of respondents)
Disinterested (24% of respondents)
Figure 76: Pub visiting target groups, by key attitudes, April 2008
APPENDIX: HOW OFTEN TO PEOPLE VISIT PUBS?
Figure 77: Frequency of visiting a pub to drink in, by detailed demographics, April 2008
APPENDIX: WHAT ATTRACTS PEOPLE TO PUBS?
Most popular enticements for visiting a pub, by detailed demographics
Figure 78: Most popular enticements for visiting a pub, by detailed demographics, April 2008
Next most popular enticements for visiting a pub, by detailed demographics
Figure 79: Next most popular enticements for visiting a pub, by detailed demographics, April 2008
APPENDIX: WHAT DO PEOPLE THINK OF PUBS?
Most popular attitudes towards pubs, by detailed demographics
Figure 80: Most popular attitudes towards pubs, by detailed demographics, April 2008
Next most popular attitudes towards pubs, by detailed demographics
Figure 81: Next most popular attitudes towards pubs, by detailed demographics, April 2008
APPENDIX – WHAT FACTORS ARE INFLUENCING CONSUMER BEHAVIOUR RELATING TO PUB VISITING?
Figure 82: Consumer behaviour towards pubs, by detailed demographics, April 2008
APPENDIX: PUB VISITING TARGETING OPPORTUNITIES
Pub visiting target groups, by detailed demographics
Figure 83: Pub visiting target groups, by detailed demographics, April 2008
Pub visiting target groups, by frequency
Figure 84: Pub visiting target groups, by frequency of eating and/or drinking at pubs, April 2008
Pub visiting target groups, by attitudes towards pubs
Figure 85: Pub visiting target groups, by attitudes towards pubs, April 2008
Pub visiting target groups, by consumer behaviour towards pubs
Figure 86: Pub visiting target groups, by consumer behaviour towards pubs, April 2008
Pub visiting target groups, by enticements
Figure 87: Pub visiting target groups, by enticements towards pubs, April 2008