Guest Post by John Watson
Condemned to death on the 7th of July 2007
Those who follow share prices on the BBC will know that the Pubco’s were a regular feature on the shares scene. They were up there with utilities as a ‘reasonably safe bet’ profit maker for those who speculate on the stock market. Today the BBC are no longer showing the plummeting share prices of two of the big Pubco’s Enterprise Inns and Spirit (Punch Taverns).
Looking at the figures below even a layman can see that they are in serious trouble, and if the truth be known the fact that the share prices began falling immediately after the introduction of the Health Act 2006 in England during July 2007.
The BBC Financial News no longer display share values for…. Enterprise Inns and Spirit (Punch Taverns) which is not surprising given the latest figures:
Enterprise Inns….July 1st 2007.…689.34p October 3rd 2011.…33.25pPunch Taverns….July1st 2007.…1230.0p October3rd 2011.… 11.24p
Even the breweries are not immune to serious drops in their share prices:
Marstons Shares....July 2007,,,394.00p.........NOW 89.00p
Mitchel and Butlers July 2007....879.00p.........NOW 235.00p
No one is suggesting that the recession that began around six months after the introduction of that act has not had an effect, and it is difficult to lay the blame entirely on either event.
Historically though the Pubs managed to survive the great crash of 1929 and depression of the 1930’s in far better shape than they are weathering the current recession. Even Göering’s Luftwaffe could not close them down despite their efforts to demolish London, the South East and Coventry.
Their survival in part was due to the fact no matter what the country’s finances were doing, no matter how bad the Blitz got people still used the pubs, they were for the people a refuge as they have always been, a refuge from the stresses of work, home, unemployment and to a degree even the Second World War .
So what is the difference today, well we do not have a world war to win, we do have a recession which is not even close to the Great depression of the 1930’s. Income is far greater today than it was then, beer prices rose accordingly along with the price of everything else, and of course, every year the Government have taken an ever-increasing cut via taxation.
Granted the Pub scene today is different to what it was then, Pubs became less of a refuge from the Mrs and kids, the job, somewhere to discuss the issues of the day. Pubs developed into family eateries, departments of companies found often on a Friday lunchtime socialising before the weekend bringing work with them and so the refuge was gone. Even those changes did not greatly affect the profitability of the pub; business was good and even in 2007 about 60% of pub patrons was still smokers.
At a stroke in 2007, pubs suddenly lost the majority of their patrons. Smokers who grumbled about the price of a pint were content to pay, who still socialised with their peers and would drink three or four pints in a session and were forced to smoke outside, treated by the law of the land and a small number of anti smokers like lepers.
When businesses treat their core customers as second-class citizens, even when forced by legislation to do so they suffer for it. It is then little wonder that smokers now prefer to buy cheaper drink from supermarkets, that they are more likely to go to ’Smokey Drinkies ‘ around their friends houses where they can smoke, drink and socialise with their peers while feeling welcome.
So there it is, a ‘perfect storm’, recession , bad legislation that removed the pubs core customers, the price differences between pubs and supermarkets, over taxation combined with the ’denormalisation’ of first the smokers and now the drinkers themselves all adds up to the death of the pub and indeed the death of the Pubco’s.