Real ale is making a comeback as pub drinkers turn to quality to soothe the impact of the downturn in the economy, said Burton-on-Trent-based Punch Taverns.
Regional director Alan Kennedy said the Staffordshire group was enjoying an upturn in sales of real ale as drinkers savoured the “premium product.”
“Despite the downturn in the lager and beer markets, real ale has shown a revival. It’s a premium product, the quality is excellent and the knowledge of the people behind the bar who keep it and serve it is better than ever,” he said.
Mr Kennedy said long-established ales such as Marstons and Adnams were proving popular despite the difficult trading conditions in the aftermath of the smoking ban and the credit crunch.
“With any downturn in the economy, people’s disposable incomes are affected and going to the pub is less of a habit than it used to be. But there are some pubs doing extremely well and that is down to the standards of customer service and understanding what people in that catchment area want from their pub,” he said.
Britain’s biggest pub operator, today reported a decline in full-year earnings, reflecting a seven per cent reduction in the size of its estate following the disposal of less profitable pubs.
The group, which has 8,424 pubs, reported a pre-tax profit of £262 million for the 53 weeks to August 23, down from £282 million last year.
Mr Kennedy warned the tough economic conditions were likely to continue for up to 18 months – but predicted successful pubs could still ride out the storm.
As well as a looming recession, the group has been coping with the impact of the English smoking ban, two poor summers in a row, as well as rising costs for items such as food and fuel.
This has put increasing pressure on its army of licensees and the group paid out £14 million in concessions to help struggling tenants over the year.
“We are very much aware of the challenges that our licensees are facing in the short term,” Punch said in a statement.
Despite the problems, Punch continues to invest on improvements and has spent £133 million on more than 1,000 pubs in its estate.
The group scrapped its full-year dividend payout to shareholders in September to conserve cash, but said it had maintained “significant headroom” with its banking covenants during the “exceptionally difficult” climate.
The firm has made moves to reduce debts since the year end, but still has borrowings of more than £4 billion and it paid out £322 million in interest alone last year.
Numis Securities analyst Douglas Jack cut his forecasts the firm for the current year. He said: “The credit crunch is not over, pub assets values and tenant viability are in question, and no dividends are likely before 2011.”
Also in the pub trade, JD Wetherspoon showed it was weathering the economic downturn yesterday after it revealed a slight pick up in its trading performance.
The group, which has nearly 700 pubs, said like-for-like sales increased 1.5 per cent in the 13 weeks to October 26, an improvement on the 1.1 per cent increase seen in the first five weeks of the period. Total sales rose 6 per cent.
