Drinks sales forecast to plunge by £1b this year

Drink sales in the pub sector are likely to fall by a massive £1b this year and will decline by a similar figure next year, experts predicted today.

While many pub operators have turned to food to improve turnover, food sales across the pub sector would have to rise by 20% in order to fill the gap entirely, foodservice consultancy Horizons warned.

Its report, How Can Food Fill a £1bn Gap?, shows that pub sector sales (both wet and dry) were worth £22.5b in 2007, with food (and associated drinks) representing around 28% of that turnover - £6.21b.

Horizons suggests that the UK pub sector could realistically improve turnover from meals by £400m, which still leaves a shortfall of £600m

Peter Backman, managing director at Horizons, said: “Food has a lower margin than drinks so pubs would have to sell more of it to make the same amount of profit.

“The additional problem for pubs is that their kitchens and layout often make it difficult for them to grow their food sales without a major investment. The current prediction that 1,500 pub will close per year could be under estimating reality.”

While the pub sector has been able to offset a 20-year fall in beer sales with rising sales of other drinks categories, in 2007, for the first time, this was insufficient to overcome the effect of the smoking ban and low price supermarket beer, the report says.

The result was a decline in overall sales – not only in inflation-adjusted prices but, for the first time, in current prices too.

“As pubs compete more fiercely for declining food sales we are likely to see prices lower, and therefore margins reduce,” Backman said. “This puts further pressure not only on the pub sector, but on restaurants and quick service outlets too.”

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MPs call for ban on pub happy hours and cheap supermarket booze >>

Three-quarters of Punch licensees now serving food >>

No margins for errors >>

By Daniel Thomas

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