Recession makes us drink less?

That's according to nightclub operator Luminar. You'd think it might be the other way around...

Last Updated: 06 Nov 2012

Luminar, Britain’s biggest nightclub operator, said today that its like-for like sales were down 3.3% in the 18 weeks to July 2 – largely because it’s been making a lot less money selling drinks. With so little to shout about at work, we're not entirely surprised that people are still going clubbing at the weekends – indeed, they’ve been hitting Luminar’s 80-odd clubs in greater numbers lately, possibly in an attempt to cheer themselves up. But they’ve clearly been a bit more reluctant to shell out for the pricey booze, even if they have got sorrows to drown...

Luminar, the owner of the Liquid and Oceana chains, actually seems to be faring reasonably well in the recession. Many people thought that nightclubs would see their profits plummet as cash-strapped punters decided to stay in with a crate of alcopops and Annie Mac’s Mash Up, as opposed to spending a small fortune on getting to, into and from some over-priced 'nite-spot'. But Luminar said today that footfall has actually inched up 1.2% in recent weeks, boosting admission revenues by 0.7%. And even this overall drop in sales is actually slightly smaller than the previous period.

Of course this is partly because Luminar’s typical crowd – mortgage and commitment-free twenty-somethings happy to fritter away some cash on a Saturday night, or the ‘weekend millionaires’ as CEO Stephen Thomas calls them – are more immune to the recession than most. But it clearly hasn’t passed them by completely, because they’re not buying drinks in the same quantities. With competition fierce in this market, Luminar has been forced to push prices down to keep sales up: a happy development for thirsty ravers, but not for Luminar’s profit and loss account.

However, the good news for Thomas is that prices appear to have stabilised – and are now back on the rise, which should mean that Luminar’s revenues do the same. The CEO has also promised that he won’t be going in for massive discounting, as some of his rivals are doing – his company’s focus will be on emphasising the experience available in its clubs, as opposed to the cheap booze (which is probably a much safer approach from a PR point of view too). And judging by the group’s 10% share price bounce this morning, investors seem to approve.

So what do we conclude from all this? Well, the obvious point is that the recession has made us Brits much less inclined to go out drinking. The meltdown in the pub industry is ample proof of that. Admittedly this doesn't necessarily mean we’re drinking less – we may just be drowning our sorrows in the comfort of our own homes instead. But if clubbers really are starting to drink in greater quantities again, perhaps it counts as another economic green shoot?


In today's bulletin:
Battered BA seeks £600m cash after record loss
Editor's blog: It's no time for a lynch mob
Recession makes us drink less?
Why disengaged employees are costing UK plc billions
Coping under pressure, with YouTube

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