Among the many fine presentations at the Numis Securities Travel and Leisure Conference in company’s offices in Paternoster Square in the City of London last week, one of the most thought-provoking came from Simon Emeny, chief executive of the London brewer and pub retailer Fuller Smith & Turner, which celebrates 170 years under its current ownership this years. Emeny took his audience back only ten years, to 2005, and pointed out just how much has changed in the past decade.

Tony Blair had a 157-seat majority after that year’s election: the SNP managed just four seats. YouTube was launched; Apple, “a brand barely used by any of us”, introduced the iTunes store; there was no Facebook or Twitter; only 55% of UK households had access to the internet. Today, close to 100% of customers in London and the South East have internet access, and 70% of consumers use their handhelds on the go to access the internet. We drank “a huge amount of alcohol”, with 22% of all men and 13% of all women drinking daily, while consumption was nearly 9.5 litres of pure alcohol a year. Today just 12% of men drink every day, and less than 8% of women, with an even more dramatic fall among under-25s, while we only drink 7.5 litres of pure alcohol per head, a fall of more than a fifth. There were 58,000 pubs in the UK, in every one of which you could still smoke, and we drank in those pubs 22 million barrels of beer, mostly “national power brands” such as Carling and John Smith’s. Now we have 48,000 pubs and we only drink 23 million barrels of beer in them – a fall of 38% in on-trade beer volumes over the past decade. There were 400 Costa Coffee outlets in 2005: there are now 1,800. Branded casual dining restaurants were limited “pretty much” to PizzaExpress and “maybe a tired old Cafe Rouge”. Sales in restaurants today account for £48bn a year, a figure that is going to rise by at least a further £4bn in the next two years. The population of Greater London was just over seven million, of which 4.3 million, or about 60%, were white British, pretty much the same as in 1995. That has now risen to 8.2 million, with the number of white British resident having fallen to 3.6 million, down 15% in ten years, and now only represents 44% of the population of London.

The question that brings, of course, is, how different will the world of hospitality look in 2025 another ten years from now? Emeny admitted he did not possess a crystal ball, but he did point to one potentially extremely important change: the strong likelihood that for the generation just about to become the next cohort of pubgoers, those born around the turn of the millennium, alcohol will be a much less important part of their out-of-home socialising than it has been for their parents, and their grandparents. Emeny said he has a son born in 2000, and that generation, turning 16 next year, and able to drink alcohol with meals, and becoming 18 two years after that, “do not view alcohol in the way that we did when we turned 18.” Abstinence “is quite an easy choice for children of that age,” he said – indeed, it would not be too strong to say “he warned”. All the evidence suggests that the population of the UK is turning away from alcohol: “We have Sober October, Dry for January, phenomena that have really gathered momentum, part of a healthier lifestyle that many people are choosing to adopt,” Emeny said.

Does this mean big problems for pubs? Not as far as Emeny is concerned. “The days of the habitual customer going to the pub day in and day out to consume beer, smoke cigarettes and play the fruit machine have gone,” he said. But the smoking ban “has opened up an outstanding market place for pubs. It has given us the chance, when we invest wisely, to access customers who only usually go to eat out at restaurants. What the smoking ban has done is give well-invested, really well-done pubs a really good chance of outperforming restaurants. If you look at like-for-like sales over the past two years, there is a clear segment of the market where pubs have outperformed restaurants. Pubs can cater for a much broader spectrum of occasions than restaurants. How a pub is used today is vastly different to the way it was used ten years ago – it’s changing enormously. I genuinely believe that well-run, very successful, well-operated pubs can give restaurants a very difficult run for their money.”

The advantage pubs and bars have over restaurants, of course, is their greater flexibility: occasions down the pub can be considerably less formal, more fluid (in at least two senses) than they can be in almost any restaurant. At the same time, with so many pubs having raised their game on the food front to equal, and at times exceed the offer found in most restaurants, there is no longer any sort of pressure to choose a restaurant over a pub simply because the eating is going to be better.

The ‘Big Six’ EU countries have a bigger combined population than the United States, but the spend on foodservice is only half the size, says Maria Bertoch, suggesting plenty of room to grow

How are European foodservice markets performing at a time when Britain is enjoying a solid economic recovery? The forecast for UK GDP growth was revised upwards to 2.5% for the year. But is this positive economic trend reflected in the British foodservice industry? Is Great Britain doing better than other countries? And how will Europe’s foodservice market develop in 2015 and 2016?

The foodservice industry has had a tough run since the 2008 global financial crisis. While most of the industry has become accustomed to a “new normal” of dampened expectations, there are still bright points. The NPD Group has run continuous consumer online trackers since 2005 in the Europe “Big Five”. Poland is the new addition, with NPD’s first study of this market completed in late 2014. 

These “Big Six” countries have a total population of 353 million, bigger than the United States. But foodservice consumer spending for the “Big Six” is only roughly half of out-of-home (OOH) consumption in the US. This suggests Europe still has room to grow.

In terms of market value, the British market is comparable to France, Germany or Italy, while Spain is relatively cheaper, with a lower average bill per visit, and Poland, still a young market, has much room for growth. 

The visit pattern in OOH is different. Britons make 176 visits per year per head, which is roughly between three and four visits per week. This count includes all foodservice market segments (food and beverages bought in commercial foodservice, on-site canteens, the leisure segment, transport hubs and vending). The French and Spanish eat out less often, and the frequency for Germans is lower still. There are two extreme values, for the Italians and Poles. In Italy, the foodservice market is driven by coffee consumption in the morning, with about 30% of all visits corresponding to this specific occasion. In contrast, Poland registers low visits per capita, owing to the relatively young foodservice market, with a limited numbers of outlets, a less developed habit of eating out of home and budget concerns.

How did the European market perform in 2014? Focusing on the “Big Five”, 2014 was slightly better than 2013. Total spend ended up rising 0.4%, boosted by average bill-per-visit growth of 1.1%, although visits were down 0.7% – a slower decline than the visit dip of 1.5% seen in 2013. Before we look at each country, here is some consumer confidence data from the European Commission. 

Clearly, there was improving consumer confidence in 2014 with Italy, Spain and the UK finishing the year higher than they started. In the UK, people feel more confident, so no surprise that consumers have increased the number of visits and the value of each bill per visit. The foodservice market in Britain offers significant choice in the form of new concepts and new chains. This diversity has boosted consumer interest and the willingness to spend. 

There is a different picture in Germany, where the foodservice market has only been able to grow because of an increased average bill per visit, stemming not only from price increases but also from consumers choosing higher value segments or products.

Looking at visits in 2014, only Britain shows an increase of 1%, representing about 100 million additional visits. However, France registered a 1% loss in traffic while Germany was stable. Southern Europe is still struggling with visit declines in Italy ( down 2%) and Spain (down 1%). 

But there are certainly bright spots. While Britain leads in terms of foodservice growth, Poland represents the highest potential for future development. Home to 38 million people, Poland is the sixth largest EU nation in population terms, with a prospering economy and a very young and modern population. All of this makes it a profitable option for foodservice operators and manufacturers. NPD has just released its first study on this rapidly developing market, which is dominated by QSR concepts. 

It is easy to split Europe into two groups: “chain-dominated” or “independent-dominated”. The first group includes Britain, France and – perhaps surprisingly – Poland. Why Poland? The market is still quite young and as chains open they are drawing traffic and consolidating the market. Independents are becoming less numerous and their market appeal is also declining. 

The “independent-dominated” markets are Germany, Spain and Italy. In all cases, chains are performing better than independents in visit terms; the “Big Five” show an increase of 3% in visits for chains in 2014 against 2% losses in traffic for independent concepts. The NPD Group expects this trend to continue, especially with new chain concepts crossing borders into new markets. 

While lunch is the biggest foodservice occasion in Europe, it has been quite stable. In contrast, breakfast is seeing growth. In the five years after 2009, breakfast has increased 4% in traffic terms in the “Big Five”. What is behind this trend? First, more outlets are offering breakfast as well as coffee to take away. Another reason for the growth of breakfast is the rise of single households in Europe. This trend is seeing active young people choose OOH outlets for their cup of coffee and some food before going to work. Single breakfasts are also growing, because of the “home-office” trend, with people working from a cafe and having breakfast there too. 

What are the growing concepts in Britain? QSR is doing well thanks to major players extending their stores, and on the back of sound marketing and communications, as well as consistent product innovations. In addition to classic burger, chicken and pizza players, the developing concept of the bakery cafe is creating some buzz. Strong players include Gregg’s as well as many smaller brands promoting the quality of their bread or pastries, which are usually accompanied by coffee. The bakery businesses Paul and Patisserie Valerie are adding a French touch to the local market. The coffee shop segment is also a winning player in Britain, as are those chain pubs that have developed the broadest possible customer appeal. The retail segment, where NPD tracks ready-to-eat beverages and food for immediate consumption, is also doing well. In the full service segment, the key trend is that people are being more and more demanding in terms of quality of overall experience including food, service and atmosphere. This consumer trend is paying dividends in the casual dining segment, which is enjoying a boost in the number of visits.

The UK market is often seen as a flagship for European foodservice, as many new trends and concepts first take root here before being adopted by other markets. While France is less dynamic in visit terms (down 1% in 2014) compared to the UK, there are still some clear winners. The coffee shop segment (where we include only “modern coffee shops” such as Starbucks or Costa but not traditional “brasseries”) is still relatively small in France, but is doing well in answering key needs for socialising and high quality specialty coffees. The retail segment in France is offering more and more food-to-go, and this will only increase, as there are now several Marks & Spencer stores in Paris, copying successful UK food strategies.

In Germany, while classic burger concepts suffered in 2014 in the face of strong awareness of healthy eating among the German population, bakery concepts are doing quite well. With a formula of a bakery counter, an all-day foodservice portfolio as well as attractive interior design, bakeries such as K&U Bäckerei or Steinecke have won the hearts (and stomachs) of Germans. It also seems that the trend of moving from a “beer country” to a “coffee country” has come to Germany as well. The retail segment is growing alongside new healthy-to-go options. In the full service segment, the casual dining trend is definitely gaining share, with Vapiano and L’Osteria. 

In Italy, despite overall 2% losses in visits in 2014, burger concepts, still small in this country of pizza and pasta, grew rapidly. Full service brands also did well and include players such as Roda Grill, Rossopomodoro and Old Wild West.

With a 1% fall in visits in 2014, Spain is still doing relatively better than before when compared to its 3% drop in visits in 2013. The important chain QSR players from the burger segment and the sandwich bakery segment (such as Granier Bakery) are recording positive growth in visits. Tapas chains such as 100 Montaditos or Lizaran (brands that are part of Spain’s leisure segment) were able to grow their visits in 2014 strongly due to aggressive promotions and outlet expansion.

Finally in Poland, QSR concepts are booming, as they attract more than half of total market visits. Burger and chicken concepts dominate in visit share, followed by take-away pizza brands, street kiosks, petrol stations, as well as some sandwich/bakery concepts. Another Polish peculiarity is that the retail and gas station segments are quite well developed. The petrol station segment also competes with QSR restaurants, especially during snacking occasions. Petrol station concepts include Stop Cafe (more than 600 outlets) and Wild Bean Cafe (more than 400 outlets), followed by Shell and Statoil. Coffee shops – known as cukiernias in Poland – continue to grow share. Today, going out to a café to meet friends or to work on a computer has become a fashionable trend, as has “coffee-to-go”. 

Despite local differences, therefore, there are clear trends. Busier lifestyles and increased mobility are making coffee shops increasingly popular as a place for a morning booster or afternoon treat. Across the Big Six, retail outlets are now typically offering ready-to-eat meals, such as sandwiches or other meals. This was not the case in past years, except perhaps in the UK. This means consumers in Europe can choose a sandwich from a bakery or a sandwich from a supermarket.

Bakery cafés seem to be a pan-European phenomenon, uniting a love for a coffee and a good freshly baked sandwich or pastry. Lastly, there are more and more “frontier” concepts, positioning themselves between full and quick service. This “fast casual” approach often includes suppressing table service, but keeping high standards for quality of food and beverages, often prepared in the open kitchen in front of the customers. Special attention is also paid to the interior design and atmosphere. 

What will the future bring?

We can estimate future market development based on external economic data and on our own internal insights. Recent forecasts (March 2015) for GDP growth during 2015 show that all the Big Six countries are doing better with Poland showing the best increase. 

The economy in Poland has performed well over the past five years and in 2015 GDP growth is expected to be 3.5%. The growth of the foodservice industry in this young market is assured, with new brands and outlets opening. 

Looking at Spain, the predicted increase in GDP is also impressive. Our own data shows that Spain’s foodservice market showed the first positive signs of improvement in December 2014. Unemployment is still a big issue in Spain, at 23%, more than double the 9.8% rate for the EU as a whole. But if the morning meal (mainly driven by coffee) and evening dining (tapas) improve, the market will improve. Street food is also developing in Spain, where you can now taste Japanese ramen or Peruvian snacks on the streets of Madrid. 

British consumers, increasingly confident, have started to eat out more. We are forecasting that the foodservice market in Britain will grow by 1.1% in 2015 and 1.5% in 2016. Momentum is well under way after the 0.9% growth in out-of-home (OOH) foodservice visits in Britain in 2014, the first rise in many years. We see three key important consumer trends impacting the foodservice industry. First, thanks to a brighter economy, consumers are looking to treat themselves and their children. Second, they want more choice and diversity and are much more willing to try something new. Third, when consumers go out to eat, they want a full experience and the sense of a social or family occasion. These trends will impact on foodservice channels in different ways with the branded channels enjoying better growth potential than the independents. 

For Germany, there is likely to be a low level of visit growth for 2015, but further growth for 2016, so the market should slowly improve. In addition, the average spend trends will continue to grow as long as there are no surprises in the German economy.

The foodservice market in France is a more complicated story, due to a difficult economy and declining consumer confidence. The market has been hit by a traffic crisis, especially following the January terrorist attacks in Paris, which affected restaurant visits. So 2015 will potentially end “in the red” for French foodservice.

As for Italy, the country is moving slowly towards a more positive economy. Italy’s foodservice market will recover in 2015 and do better than 2014. While it’s too optimistic to say that the market will be growing, it could well register a 0% change (instead of -2% in 2014), which would be a great result for Italian foodservice.

The aftermath of a general election provides the opportunity for a bit of special pleading. So here are my ten pieces of advice to the Secretaries of State and civil servants of all those government departments whose remit impacts on the licensed retail sector (Treasury, Home Office, Health and BIS at least):

Dear Minister/Sir Humphrey

1.  When considering policy proposals, please bear in mind the distinction between real ‘public health’ (scientific medicine, sewage disposal, refuse collection, clean drinking water, hygienically produced food and the like) and the ideology of ‘healthism’ (puritanism, nanny-statism, coercive lifestyle regulation, enforced product reformulation, sin taxes and a general tendency towards world domination).

2.  When so-called ‘evidence-based’ alcohol and food policy proposals are put to you, don’t confuse ‘evidence’ with ‘eminence’. The two words sound the same, but they don’t mean the same. ‘Evidence’ is real science from which policy recommendations flow. ‘Eminence’ is cited in support of junk science for a pre-determined policy proposal – to which a spurious authority is lent because it’s publicised by someone who says “Don’t you know who the bloody hell I am?” Minimum pricing and Professor Sir Ian Gilmore comes to mind.

3.  When considering ‘research evidence’ in relation to the alcohol we drink, don’t confuse ‘causation’ with ‘correlation’ or ‘association’. Example: smoking tobacco causes lung cancer. It is also highly correlated with drinking beer because a lot of people who like a fag, like a pint. Therefore beer drinking is ‘associated’ with lung cancer. The deliberate conflation of causation with correlation is what enables healthists to make exaggerated claims about alcohol-related health-harms.

4.  Please recognise that healthists can and do pluck facts and figures out of thin air. The ‘sensible drinking’ limits and the BMI cut-off points for ‘normal weight’, ‘overweight’ and ‘obese’ are salient examples. And if you are a civil servant, please try and persuade ministers not to say “Alcohol abuse costs the taxpayer/NHS/society £21 billion a year and leads to 1.2 million hospital admissions” because neither of these numbers are true, and anyway the minister quoting them doesn’t have a clue where they come from.

5.  Please bear in mind that it isn’t the availability of alcohol that makes people drink it. So healthist policy proposals that seek to reduce availability (close pubs) will not impact on harmful consumption. If there is a high-density of licensed premises in a given area, that’s because there are lots of people who like a drink living in, or resorting to, the area concerned. Demand begets supply, not the other way round.

6.  Please understand, that with the exception of new product launches, advertising beverage alcohol products (or any product), does not drive primary demand, it facilitates brand or category switching. So, please recognise that proposals to restrict the advertising of alcohol are about de-normalising drinking, not “protecting children”.

7.  As a matter of priority you should stop the public funding of anti-alcohol political lobby groups, such as Alcohol Concern, by government departments and quangos like Public Health England – who recently gave AC half a million pounds to fund its latest failed campaign – otherwise known as ‘Dry January’.

8.  Recognise that claims such as “the binge-drinking epidemic, and the obesity time-bomb” will “bankrupt the NHS” if not tackled immediately by sin taxes, is rubbish.

9.  And in conjunction with the point above, please recognise that the notion that sin taxes will make people more virtuous is a fundamentally improbable proposition. Actually, all sin taxes do is distort markets and disproportionately impact upon the poor. So, no sugar or fat taxes please!

10.  Recognise that ‘healthism’ is the ideology of ‘the health of the nation’; it is dogmatic and totalitarian. If you’re unsure if a policy proposal is healthist or not, just ask yourself whether Andy Burnham or Dianne Abbot would be likely to support it, and if they would – don’t do it!

I make the special pleadings above more in hope than anticipation, because the healthist fifth column has infiltrated not just our healthcare system, but our medical research establishment and the neo-Trotskyite World Healthist Organisation – sorry ‘World Health Organisation’. “Health in every policy” is an iniquitous credo that seeks to assert that populations must be governed in a way that subordinates all other considerations, such as jobs and investment, to a narrow, dogmatic, coercive notion of public health that nobody has voted for.