More reason for the embattled UK pub industry to stare forlornly into its pint: Punch Taverns is offloading 1,300 more of its leased pubs, on top of around 900 it sold last year.
Core earnings at the group’s leased pubs fell by 11% in that period, thanks to the recession, beer duty hikes and the supermarkets’ cheap booze deals. Pre-tax profits came in at £131m for the year to August, almost a fifth lower than in 2009. Then there were exceptional charges, such as the disastrous £218m write-down of the value of its estate.
It’s not the best welcome for new chief exec Ian Dyson, who joined last month after being overlooked for Sir Stuart Rose’s job at M&S. He’ll certainly be wishing he was running a company that didn’t have such a stinking hangover – or at least one with a different operating model. His comparatively spritely rivals JD Wetherspoon and Mitchells & Butlers both directly manage all their pubs, giving them more control over pricing and purchasing and, consequently, a slightly better stab of riding out the recession unscathed.
You can call their approach the business equivalent of drinking sensibly, and then downing a pint of water before going to bed. Punch, by contrast, has been out on the lash on an empty stomach and been left punch drunk, blowing around £2m a month supporting its leased pubs with rent and discount deals.
Then there’s its approach to the pubs themselves. Instead of concerning itself with their performances as pubs, Punch was more interested in how the property performed, awaiting a surge in property prices. When that didn’t come it was left in the drink, having loaded its property portfolio with debt in the good years.
Such an intense decline really demands a drastic change of tack. In terms of fresh thinking it could certainly take some inspiration from brewer SABMiller. In a bid to counter predicted water and energy shortages in the future, the company behind the Grolsch and Peroni brands is now looking into the concept of ship-borne breweries.
Brewing is hugely water- and energy-intensive, and the company has sponsored research that predicts a possible 40% shortfall in global water supplies by 2030. The solution is the idea of the Waterworld-style floating brewery, able to move wherever water, crops and people are the cheapest; or even, the company says, away from extreme weather or natural disasters.
You can call it the ultimate in mobile working. Or drink-driving, depending how you look at it. Either way, Punch Taverns may need a similarly imaginative approach if it’s to survive the pub trade’s present tides.