Pub revenue is set to rise marginally this year but will take a tumble in 2008, the first full-year of UK-wide smoking bans.

A report by analysts Key Note forecasts revenues for UK public houses will rise 0.9% in 2007 to £16.5b.

In 2008 the firm expects revenues to drop by 3% as the full effect of the smoking bans in England, Wales and Northern Ireland hit.

But Key Note said warnings of a dramatic downturn in trade once the bans were introduced were wide of the mark, citing the experience in Scotland where pubs performed well during the summer and autumn 2006.

However the research group said revenues in Scotland took a downturn during the winter when smokers were forced outside into the cold weather.

Key Note believes food sales will off-set declines in beer and fruit machine income post-ban as since 1990 the share of average pub turnover taken attributed to food and soft drinks has risen from 10% to 25% and will continue to grow.

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By Christopher Walton

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