At first glance the traditional British pub continues to be eclipsed by the trendy themed bar on the high street, but is this really the case? In fact, an ageing UK population and growing concerns about excessive town-centre binge-drinking are beginning to weigh against this type of licensed outlet. It is a market that has become saturated with increasingly tired brands. The pressure is growing on the owners of pub chains to appeal to a more mature and discerning customer group.
This year consumers will spend £2.7bn in pubs and bars on the British high street, according to Mintel - a slight decrease since the 2002 sector peak of £2.75bn. The market peaked in growth terms at 21% in 2001; growth then subsided to 11% in 2002. The number of venues also peaked in 2002, at 2850. By the end of this year there are expected to be 2700.
The dynamism of this sector of the licensed trade was most evident in the 90s, when large town centre premises were upgraded, refurbished and given new identities as closely managed, branded venues.
Traditional names such as the Dog & Duck or White Hart were ripped down in favour of an O'Neill's Irish bar or a Walkabout, loosely based on pubs in the Australian outback. Elsewhere there was an emphasis on food or creating a more female-friendly bar environment, as is the case with the All Bar One and Lloyds No 1 Bar chains.
'It was an absolute revolution in drinking habits,' says the managing director of one pub chain. 'We changed hundreds of characterless boozers into thriving social centres. Experience showed us that when a bar format worked well in one city, it could then be rolled out in any similar metropolitan environment.'
Mintel notes 'a very basic change in the style of management' of these outlets: in place of pubs run by middle-aged couples for traditional drinkers, 'young people's venues' (YPVs) sprang up to cater to 18- to 24-year-olds, including students and well-paid young employees in the thriving IT and service sectors.
Consumer research shows that half of all UK adults have visited a branded high-street bar at least once during the past year, a figure considerably enhanced by the 86% of 20- to 24-year-olds and 77% of 18- to 19-year-olds who have done so.
Fewer over-25s use town centre venues regularly, partly because they are content to entertain at home while nest-building, but also because so many noisy, smoky bars are obviously geared to the under-25s. Marketing consultants suggest a shift in appeal to a slightly older clientele to stem the decline.
Much of the traditional beer drinking associated with pubs has diverted to take-home, including cross-Channel supplies (legitimate or not), suggest CGA Centro/Mintel figures. Government statistics for consumer spending on alcohol show the off-trade grew by 5.5% in 2003, while on-trade alcohol sales only rose in value by 1%.
Analysts suggest that the market is saturated. 'It has suffered a loss of interest in the branding that characterised 90s development,' says Mintel. 'Demand and supply have returned to a more (venue-by-venue) approach.'
Despite the numbers of branded pubs and bars in the UK (including about 850 YPVs and 175 Irish bars at present), the traditional pub remains most prevalent (1100). One reason is that many town centre pubs are listed buildings; another is that the limits of tolerance for loud pubs have been reached in many areas.
The saturated branded sector is becoming dominated by a few names. The Wetherspoon chain - based on traditional designs, a ban on jukeboxes and cheap beer - has 500 high-street locations, and a 40% market share; its Lloyds No 1 cafe bars chain is now 60-strong.
Hogshead is another example of a 'modern traditional' pub chain, with an emphasis on quality beers on tap and comfortable decor in its 100 venues.
In the YPVs segment, Yates Group now has more than 100 'fun, fashion and flirting' Yates's outlets, as well as a growing number of the more restrained Ha! Ha! Bar and Canteens.
In terms of themed bars, Mitchells & Butlers (formerly the Bass estate) dominates with the O'Neill's pubs, and Scream-themed pubs in student areas.
Conventional advertising has rarely been used by high-street pubs, despite their strong branding strategies. Mintel reports that in recent years bar operators' biggest marketing weapon has been aggressive price promotion, although for more stylish demographics they employ more subtle activity such as PR and sparing use of direct mail.
Some experts believe that brands need to emphasise particular aspects of their venues, such as special events. 'Few bar brands have evolved beyond the chalk-board-and-coloured-pen approach to marketing,' says one consultant who specialises in the entertainment sector.
New licensing regulations set to take full effect in 2005 promise an uncertain future for the sector. Although the proposed relaxation in drinking hours could benefit some outlets, there is likely to be a clampdown on venues that are perceived to encourage drunkenness or the sale of alcohol to minors.
Mintel forecasts 'slight growth' at current prices to reach a value of £2.9bn by 2009, an increase of 7% from this year. The number of venues is set to remain stable, with average weekly turnover forecast to hover around the current £19,000 mark.
LEADING BRANDS BY VENUE NUMBERS, Q1 2004
Brand Venues Owner Type of venue
1 Wetherspoon 500 JD Wetherspoon Traditional pub
2 Yates's 150 Yates Group Young people's
3 Hogshead 100 Laurel Pub Co. Traditional pub
4 O'Neill's 91 Mitchells & Butlers Irish pub
5 Scream 90 Mitchells & Butlers Student pub
6 Chicago Rock Cafe 74 Luminar Late-night venue
7 Smith & Jones 61 Barracuda Group Traditional pub
8= Slug & Lettuce 60 SFI Group Young people's
8= Lloyds No1 60 JD Wetherspoon Cafe bar
10 T&J Bernard 57 Spirit Group Traditional pub
11 Litten Tree 55 SFI Group Chameleon concept
12 All Bar One 53 Mitchells & Butlers Cafe bar
13 Walkabout 49 Regent Inns Australian bar
14 Goose 44 Mitchells & Butlers Traditional pub
15 Edwards 40 Mitchells & Butlers Cafe bar
16 Bar Med 30 SFI Group Cafe bar
17 Jumpin' Jak's 27 Luminar Late-night venue
18 Varsity 24 Barracuda Group Student pub
19= Bar Room Bar 23 Spirit Group Cafe bar
19= Ha! Ha! Bar & Canteen 23 Yates Group Young people's
21 Bar Risa/Jongleurs 17 Regent Inns Late-night/comedy
BRANDED HIGH-STREET CHAINS VISITED (%)
Brand Nov 2003 Dec 2001 % point
2003 2001 change
1 Wetherspoon 41 28 13
2 Yates's 19 17 2
3 O'Neill's 11 10 1
4= Hogshead 9 8 1
4= Chicago Rock Cafe 9 6 3
6= All Bar One 7 5 2
6= Slug & Lettuce 7 5 2
8 Walkabout 6 4 2
9= Firkin 5 8 -3
9= Pitcher & Piano 5 4 1
Source: Mintel. Consumer research by NOP
Amanda Lintott Consumer analyst, Mintel
The concept of the themed pub was exploited in the 90s, but market trends have turned against it. The themed pub, like the themed restaurant, now occupies a smaller market niche, offering occasional users a different pub experience. To survive, British pubs have had to change in line with consumer expectations.
Current trends point toward the need for sophisticated outlets with neutral or muted decor that offer quality food and drink - characteristics not often found in the themed pub sector. Mintel estimates that sales through themed pubs and bars peaked in 2000, since when consumer trends have been moving away from theming ideas.
The most common theme by far has been the Irish pub, in large part due to the support of a pioneer of multiple high-street pubs and bars, Six Continents (formerly Bass). It was Bass' investment in the 'Irish' pub chain O'Neill's that ignited the trend for themed pubs and bars.
O'Neill's outlets are now more sophisticated than their original incarnations, but still represent the largest themed brand - and one many competitors have tried to mimic, but with less success.
Australian themes have proved popular, and there have been plenty of individual establishments using tropical, movie star and specific sport themes. But most pub and bar owners are scaling down investment in such areas, or channelling it into one or two large ventures.
The immediate future for the themed pubs and bars sub-sector seems to be bleak: companies are unwilling to risk their long-term viability for short-term gains. Some will try to restructure their portfolio by divesting or selling units and, at the same time, perhaps refurbishing their most profitable units.