From the Wall St Times
Beer consumption in UK pubs was down 9.9% in December 2008, according to the British Beer and Pub Association, and UK pubs sell 6.7 million fewer pints per day than they did 10 years ago.
As cash flow from their UK pubs has dwindled, the debt accumulated by pubcos Punch Taverns and Enterprise Inns has become problematic. These days, the UK pub companies are relying largely on proceeds from pub sales to pay down billions in debt.
Though the two UK pub companies’ shares have risen slightly in recent weeks, their stocks are still down sharply from a year ago, Punch’s by 82% and Enterprise’s by 69%.
Punch Taverns and Enterprise Inns have £4.5 billion and £3.7 billion in debt, respectively. Both UK pub companies aim to sell more than 200 pubs this year, significantly more than analysts had expected last fall.
The UK pub companies will continue to shed a similar number next year, the analysts believe, though that will hinge on how much cash they receive from the sales.
The pub sales come amid general alarm in Britain about pub closures. In recent weeks, the UK pub industry has frequently cited a statistic indicating that 39 pubs are closing a week as the recession picks up steam. About half of those closings involve pubs that are independently run, while 40% or so come from pub aggregators such as Punch Taverns and Enterprise Inns.
New figures from the GMB union show that 1,131 pubs with freeholds owned by seven UK pubcos have closed within the last three years. These pubs, run by tenants tied to the landlord, are owned by seven pubcos – Admiral Taverns Ltd, Enterprise Inns, Fuller Smith & Turner, Greene King, Marston’s, Punch Pub Company, and S & N Pub Enterprises.
GMB has said it wants the government to break up pub company cartels charging pub tenants up to 80 pence over the wholesale price of a pint of beer and to stop them driving uk pubs out of business.
In West Midlands 232 pubs closed making the region the highest in Britain for the number of these pubs closing. It was followed by South East, North West, Yorkshire and Humberside.
In a statement the GMB said: “The ‘pubcos’ have been driving up wholesale beer prices for their tenants by as much as 8% each year. In the first months of this year, with inflation falling rapidly, Enterprise Inns increased their prices by a further 6%.
“The two main ‘pubcos’ owe more than £8billion in debt and their accounts show that they need £700million every year, or over £50,000 per pub to service that debt with much of that money going offshore.”
Paul Kenny GMB General Secretary said “An unintended consequence of legislation to loosen the tie between breweries and pubs to free up the market for the benefit of consumers has been the growth in pubcos who are operating as a cartel in the industry.
“These pubcos, which own 25,000 pubs, are piled up with billions of pounds worth of debts. They are overcharging pubs by up to 80p a pint to pay the interest charges. It is this overcharging which is killing the pubs and driving them out of business. The ‘pubcos’ are blaming everyone else for the problem and not looking at the damage they have caused through their own greed.
“Britain’s pubs survived two world wars. They cannot survive being made to be cash cows to pay off the debts of the property companies and brewers that so clearly don’t have the interests of pubs and consumers at heart.” Steve Corbett, a tied publican who is a member of the Fair Pint Campaign, said: “Publicans tied to ‘pubcos’ are suffering badly from a combination of high rents and outrageous wholesale prices charged by ‘pubcos’. This is causing pubs to close and jobs to be lost at a rate that it is totally unacceptable.
“It was never intended that half of the countries pubs would end up in the ownership of such a small number of property companies. For too long there has been no one standing up for the interests of individual publicans and pub users and the voice of the sector has been dominated by trade associations representing the property companies and the brewers.”
Pub licensees trying to sell their pubs are putting themselves at risk of a fine of up to £5,000 for not having secured an Energy Performance Certificate (EPC), industry figures have warned.
The deadline for obtaining an EPC, which measures the energy efficiency of a building, passed on January 4. It is now illegal to market a commercial property without one.
However Andrew Whelan, director of EPCforProperty, a specialist business designed to assist vendors and landlords with obtaining an EPC, and Roger Lawrie, a partner at energy compliance firm Envitae, have warned that properties are still being marketed without them.
“There is no doubt that some people are unaware that if they are to sell their property, they will need an EPC certificate,” said Whelan.
“If agents are now marketing commercial properties without EPCs in place, then you, their client, could be liable for a fine,” he said. “Penalties range from a minimum of £500 and are capped at a maximum of £5,000. In addition this will prevent or delay the sale or letting of a property.”
He also warned that Trading Standards, which is charged with enforcing the legislation, will soon be looking to contact vendors to make sure they have an EPC in place.
Lawrie added: “Owners or their managing agents risk fines, damaging their green credentials and miss the opportunity of making their property more appealing for sale or rent.”
Mark Greig, managing director of licensed property sales agents Paramount Investments said: “We anticipate that the January 4 deadline will cause some problems, although we think these will be temporary and minor.
“There isn’t a great deal of awareness of the law relating to EPCs. So far, given the deadline has only recently passed and that local authorities have not been assiduously enforcing the legislation, it has not affected us.”
He added that many pubcos, such as Admiral Taverns and Enterprise Inns, are helping their licensees obtain EPCs themselves, or are employing outside firms to assist them.
JUST seven weeks ago, owners of the historic Ilfracombe harbour-side pub the Royal Britannia said they were looking for a new landlord — but this week they told the Journal that the pub and its sister in High Street are for sale.
Admiral Taverns announced in November that 200 of their freehold properties were up for sale. But this week, they have announced a further 27 of their pubs are to go on the market, including the Royal Britannia and the Prince Albert in High Street.
The pub chain has put the Royal Britannia on the market for £500,000 with Paramount Investments of London, while the Prince Albert has a price tag of £205,000.
The sales are being viewed with cautious optimism in Ilfracombe, where regeneration is the current buzzword.
The Collingwood Hotel is currently under development by Wetherspoons, who are looking for a partner to buy and develop the hotel accommodation side of the business.
The Capstone Restaurant in St James’ Place has been snapped up by two London businessmen who hope to turn it into a stylish coffee bar.
The old Granville Hotel has been redeveloped into high class apartments with stunning sea and town views.
And pub giants Whitbread have indicated that their subsidiary, Premier Inns, is looking for a site to develop in Ilfracombe.
John Kinsey, of King Sturge property consultants in Exeter, is under instruction from Whitbread to scout for potential sites in the town.
But he said: “I am familiar with both these pubs, but neither would be big enough for Premier Inns which is looking for somewhere they can put in about 60 bedrooms and a pub-restaurant.”
Town councillor Rod Donovan, chairman of the council’s planning committee, said that it is all good news for Ilfracombe.
“This may be a tongue-in-cheek suggestion, but perhaps Wetherspoons could swap with Premier Inns. The Royal Britannia would be perfect for what Wetherspoons want to do and the Collingwood would suit Premier Inns,” he said.
Mark Greig, managing director of Paramount Investments, said: “Both pubs were released for sale as part of a group of 27 pubs put on the market by Admiral Taverns on Monday.
“We can’t comment as to why Admiral chose to put them up for sale but speculation about their recent performance is bound to arise simply by the fact of their appearance on the market.”
Admiral are believed to be in talks with Enterprise Inns to purchase about 300 of their pubs.