Are reports of the death of beer and pubs exaggerated? That was the question posed at a packed meeting last week organised by the British Guild of Beer Writers in The White Horse, Parson’s Green, West London, one of Mitchells & Butlers’ flagship outlets. The conclusion: if you’re a wet-let community boozer unable to adapt to changing circumstances, then yes, your life expectancy may well not be much greater than the mufflered and cloth-capped old gentleman silently sitting in a corner of your bar with a half-pint of bitter, watching the racing on Sky Sports. If, however, you’ve realised that the competition you face is not the pub down the road, but the coffee shop opposite, and you have adapted accordingly – not just by serving excellent coffee yourself, and boosting your food offer past stale pork pies, but by installing free Wi-Fi, for example – then yes, you should be in a position to survive and thrive.

   

The speakers at The White Horse were Graeme Loudon, an account director at CGA Strategy, the market research agency, and Chris Holden, director at Ashdale Business Consulting, and a former chair of the BBPA’s statistics panel. Holden gave a quick trot through the past six decades of pub history, showing just how much the industry has changed during the reign of Elizabeth II, with upheaval almost once a decade, from the mass brewery mergers that began in the 1950s through the rise of the supermarket off-trade, inflation and changing tastes, the Beer Orders, the rise of the pubcos and massive recession. Louden then looked hard at the current scene – a scene that, for certain sections of the industry, is extremely tough.

   

Currently, Loudon said, for every one community wet-led pub that opens, nine others close. Since 2008, 12,000 outlets have left the on-trade. But the closures have been hardest in one particular sector. Between June 2008 and March 2013 there was a 17% decline in the number of outlets whose focus was on drinking. At the same time the number of pubs dedicated to eating remained relatively static. Among closed outlets, LADs – long alcoholic drinks – accounted for roughly 60% of volumes. Among outlets that were opening, the share of LADs was much lower, at 40%.

   

However, Loudon said, “it’s less the death of the wet-led pub and more the death of the poor operator.” At Amber Taverns, for example, profit per pub has increased by a 1,000% since 2007, and not one of the company’s pubs is loss-making. “What that says to me is that there is always going to be room in this market for a good operator, and if you’re a good operator, you can make a success of a wet-led pub,” he said.

   

All the same Loudon cautioned, over the past five years, “there has definitely been a social shift in the way people interact with the on-trade.” The main reason for people to go to the pub remains the social aspect, getting together with friends. But a quarter of people go to the pub now to eat. “That demonstrates to me that food has become an increasingly important footfall driver for the pub, and even wet-led pubs need to have some sort of food offer.”

   

The change in the consumer interaction with the on-trade has driven a change in the actual make-up of the on-trade itself, Loudon said. “Pub openings today are dominated by cafe-bars – during the day you could probably take your laptop in, have a coffee, stay for lunch, stay all afternoon, have a nice meal there in the evening. But in the later evening, the emphasis would change to cocktails, premium spirits, they would have probably have micro-brewed cask brands.”

   

CGA divides the pub market into four categories, depending on their level of offer, Loudon said – bronze, silver, gold and platinum. The top end, “platinum” outlets are growing quite quickly. But instead of the “bronze” outlets at the very bottom of the market growing, he said: “It’s the next level up, the ‘silver’, value-offering outlets that are growing. However, they may be a value offering, but they will still have a world beer on the bar, they will still have cask ale and know how to do it, and they’ll probably have premium spirits on sale as well. The closures are coming from the ‘bronze’ sector of the market, outlets which aren’t adapting to the change in the market.”

   

Between December 2012 and March 2013 the number of community wet-led pub closures was over 900. Dry-led pubs were also closing, “but to me these were pubs that had previously been in that community wet-led channel that had really come on tough times, thought, ‘What can we do now a lot of our old customers aren’t coming in? Let’s go for a food offer,’ gone for a food offer without necessarily really having the skills to do it well, and subsequently closed,” Loudon said.

   

CGA’s prediction is that those closures are going to continue, Loudon said, with 8,000 fewer on-trade outlets by 2018 – a closure rate of almost 40 a week. “The closures will continue to be driven by wet-led pubs, the free trade will continue to shrink and managed pub growth will continue. We’re also going to see the continued growth of food within the market,” he said.

   

Overall, Loudon said, with that number of closures – around one in six of current pub stock – reports of the death of the pub are “probably not exaggerated, for bad pubs and bad beer. The poorer-quality pubs in the market are probably going to be the ones that over-index in the closures over the coming years.” But for good pubs, he told The White Horse audience, “the death reports are exaggerated. For me there’s always going to be a future for good pubs, and good beer, because people still need a place to come together in a community environment and drink good beer.”

   

Let’s hope he’s right.

   

We have all seen those headlines about the declining nightclub sector and, whilst the market as ever is evolving and changing, it seems to me that these are just eye catching headlines. True, the sector has seen many changes in the past 15 years or so from the liberalisation of licensing laws in 2005, which allowed pubs to stay open into the traditional nightclub space, to the smoking ban which affected nightclubs disproportionately as ‘smoking solutions’ were harder to find and a greater proportion of young people who smoke, to the overall economic climate and the increase in student tuition fees.

   

All sectors in an economy evolve – of course driven by supply and demand. Look at the number of petrol stations or pubs – both have been in decline based on numbers alone. There are currently about 25% of the number of petrol stations that there were in 1970 but the ones that remain have evolved to be larger with a greater service offering and of course many are now on the site of supermarkets. The pub sector has been declining for as long as I care to remember and there are still around 25 closures per week but the better sites, those well invested managed or independently run remain, and new builds are still economically viable to provide a service to new centres of the population. No one is saying that the pub is dead, its role in society has evolved with food playing a much bigger role together with higher standards that are expected by a more discerning consumer. The night club sector is no different, yes there were external factors that provided a shock to the system, but the biggest own goal was the lack of investment over a number of years.

   

The fact is that until the next generation of 18-year olds that come through do not want ‘their moment in the sun’ and the chance to party, then there is a place for the nightclub; it’s just that it needs to evolve and change as other forms of entertainment do. We need to ensure that we are credible and fresh for the customers of today and again in the future for the customers of tomorrow. We have to be prepared to invest appropriately to create a special environment that is of course safe but also aspirational, sexy and modern. Of course we need to have the right standards of service, I take that as a given, but it’s sure easier to deliver in a club that is recently refurbished than one which has not seen a new carpet for over seven years. At Luminar, we recognise this and are getting on with putting our estate in order with refurbishments opening in Leeds tonight then Brighton and St Albans in the next two months, with more to follow in the summer.

   

The market has changed and nightclub operators did not change fast enough. Not all clubs will survive and the poorer operators will fall by the wayside but it was ever thus and not just in nightclubs. We have to be sure we are located in the right areas and be prepared to take the tough decisions when we have to, if a club does become unsustainable. But for sure the beauty of our sector is that the next generation of 18-year olds is already here and ready to party.

   

The future is loud and now but you have to invest and be prepared to evolve your offer to be credible. The young people of today still want a great night out and so will the young people of tomorrow. Here at Luminar we are about making that happen.

   

We need to continue raising the bar to an ever more discerning consumer from premium branded drinks to better sound and light shows, from credible DJs to VIP booths with table service. It does not stop there either – consumer communications are changing and you have to be part of that, so our investment is not only in the infrastructure of the clubs but also in social media in our app, in our culture and in our people – in short in everything we say and do. Now does that sound like a company who thinks the doors are closing?

   

The essence of the good customer experience is the fulfillment of expectation. In a pub this could be characterised as a good pint at a sensible price served amiably in agreeable surroundings. The example could be extended infinitely; the retail skill is to improve on the customers’ core experience to the extent that they are delighted, and return and return. It is of course pretty important that the business pays its way and returns a profit, and the customer understands that, tempering their expectations according to the perceived offer. But in 99 cases out a 100 that’s the full extent of the customer’s insight into the business; they have no interest in what goes on behind the scenes and no appreciation of the strenuous paddling underneath that produces serenity on the surface.

   

Our industry is not monolithic. It is many industries and then sectors and sub-sectors that manoeuvre and re-form in a kaleidoscope of activity. At any given moment we, Propel’s readership, could be in any of the hospitality, retailing, brewing, tourism, alcohol, pub, hotel and restaurant industries. It is simplistic to assume that they are all different words for the same thing; they are not. These descriptions are about emphasis of activity – hotels, pubs, restaurants, or the political audience to be impressed – tourism, retailing etc; and hospitality is one of several words to connect the disparate elements. This real segmentation is illustrated by considering the trade bodies that represent them – British Retailing Consortium, British Beer and Pubs, British Institute of Innkeeping, British Hospitality Association, Association of Convenience Stores, Wine and Spirit Trade Association and the Association of Licensed Multiple Retailers.

   

Michael Heseltine, rather grandly as the President of the Board of Trade, once declared that he preferred there should only be one trade body per industry. He was of course speaking from self-interest, being able to say he had consulted that industry – before doing what he planned to do anyway. But that hope has even been expressed by those within the industry, hoping for a united voice and effective influence in government, the media and elsewhere. I suggest that hope is as simplistic as the customer who looks no further than the bar counter in their assessment of the pub business. The various trade bodies have the same job as the pub – to look after their own members [customers] and give them the best possible deal, exceeding their expectations whenever and wherever possible.

   

But while we cannot expect the customer to be much concerned about the complexities of the kitchen or the cellar, it’s right that we should understand and appreciate how the trade associations actually achieve what they do in the political jungle and lobbying undergrowth.

   

The principle of ‘one message, many voices’ applies and works a treat with civil servants and politicians who need coherent and concerted information and advice in what they do. And conversely, if they are disinclined to do something, they like nothing more than exploiting any apparent differences they perceive. The trick is to make sure that the various elements of the industry organise themselves to identify the relevant campaigns and sustain the constant messaging. An example of this would be licensing where the EMAROs and Late Night Levies are being resisted by a cohort of trade bodies skillfully led, in this case, by the ALMR. The campaign against the Beer Duty Escalator was successfully marshalled by the BBPA, itself supported by CAMRA, the BII and the ALMR. Other topical issues don’t command this sort of unity and trade groups must agree to disagree, but not fall out with each other.

   

Beyond this tactical campaigning there is a consistent need to maintain the reputation of the industry in its widest definition and resist unfair attacks on it by those against licensed retailing in general and alcohol consumption in particular. There are at least 20 active groups that work at particular solutions to these issues. The better known are; Drinkaware, National PubWatch, Best Bar None, the Proof of Age Standards Scheme, Community Alcohol Partnerships, PubAid, Perceptions Group, Pub is the Hub and the All-Party Parliamentary Groups. Each of these groups focus keenly on a particular issue that needs to be resolved or an opportunity to promote good things. Their success is evident. Responsible alcohol consumption is informed by Drinkaware; and Pubwatch and BBN are regularly quoted in government circles when the industry’s positive approach to responsible retailing is debated.

   

Many of these groups are formed of individuals and those delegated from the trade associations. Their constant grind at the reputational coalface and their considerable successes are seldom recognised for what they are – evidence of the co-operative effort that delivers the CSR agenda of the companies and their trade bodies.

   

This effort does not come for free and it might come as a revelation to some that it’s only the generous cash support of some of the major companies – Diageo, Molson Coors and Heineken lead a long and honourable list – that enables this work to be done at all by the skilled and committed people who often volunteer their own time working under the radar to improve our business world.

   

In the past few weeks I’ve listened to a number of self-professed social media experts speaking at various conferences in this sector; each preaching the importance of the industry getting to grips with this trend. Speaking to many of our clients at Elliotts and other conference goers, they are often impressed by the stats and still confused with what to do in this space.

   

I’ve got some really great news for those of you that think you’re behind the eight ball in this area, you are not alone. Even better news is that this is not some new-fangled uncontrollable type of media that requires ongoing agency management to control. In fact, this is not new at all. Social media has been around for more than a decade, with the original sites like MySpace starting back in 2003. Facebook joined the race in 2004, building real momentum in 2007. Even YouTube, as somewhat of a latecomer, arrived in 2005.

   

Businesses have been using these sites for nearly as many years as the sites have existed, both as a way of connecting with consumers for new insights and research as well as to actively promote products and brands.

   

Fundamentally social media is another set of channels to deliver a message and connect with your customers. Unlike many traditional channels it changes the rules by amplifying the opinion of your customers. For old fashioned marketers this is scary. It is no longer about you creating a brand and pushing this message to your potential guests. By giving diners the opportunity to openly criticise or commend your brand, social media is giving them the power to actively shape it. In some cases this may be to the detriment of the brand values you’ve got stored away in a folder somewhere at head office. Respectively, in many cases, this social engagement can be vital to the success of a brand.

   

For me, one thing is certain, social media is bringing us back to basics. The importance of good service, great food and a superb experience is back on top. No matter how much you spend on nifty advertising, if your product or service is failing, it’s unlikely you will succeed. I think this is a good thing, it keeps us honest and encourages us to concentrate on what is important; the customer.

   

To this end, in recent years my work around social has turned from people wanting to join the hype, to far more advanced work considering social media as a core part of both the customer service and marketing strategy. In most cases this involves helping companies make this transition back to basics, often turning to look at how robust the brand is, and of course, the operational delivery. Central to all of this is people. Finding the stories that will make engaging content to share on social media and through your other channels is key. This shows your brand is far more substantial than the logo above your door and the design of your menus. Authenticity is paramount to succeed on social media. I don’t believe in finding a corporate voice, because your company already has a voice, in many cases, thousands. They are the people that welcome guests into your front doors every day. It’s about putting these people at the front of your business and letting them shine and represent you.

   

If you were wanting to jump on the bandwagon of the social media revolution, I’m afraid that’s long gone. What you can do, however, is use social media as a central mechanism in making a revolution in your own company. One where you think more locally, listen to customers more, put operational excellence centre stage and let the teams in each of your outlets drive change and your brand direction, not one manager midway up the hierarchy, or even worse, a creative agency.