Monday, February 25, 2013

Comment on the Red Corner

A UK Portfolio

An aside topic wise but very UK centric question: Do you have a view on the market for UK pubco's.

I am not an investor.  I'm an ex publican lobbying the government for removal of the beer tie. And I'm working on setting up a substantial mutually owned, sustainable, crowd funded pub company.

My view is that pubco's are only making profits by sweating their assets which are mostly exhausted i.e. they are squeezing all their individual pubs so much that the pubs no longer make the profits they need to reinvest, repair and maintain the buildings and for the businesses to innovate - so while the pubco's are still making profits the pubs are failing in ever increasing numbers.

A number of myths keep this situation going for the time being - the popular views among non publicans on why pubs are closing appears to be those promulgated by the British Beer and Pub Association (entirely funded by pubco's and family brewers) which is:

Beer duty and the escalator is making the retail price of beer too expensive for punters
There are too many pubs (which serves the pubco's need to sell off freeholds because there are no lessees coming into the market)
Demographic change - people are using coffee shops now. This is true - there has been little innovation in pubs - see above - and they are not fit for purpose as they have been run down through the asset stripping process.

There is more.

Just interested to know if this is an area of interest to you - or other readers of these pages.

Best Wishes

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