Trade news – September 2020

FULLER’S (PUBS) NEWS

Fuller’s took a cautious approach to reopening their pubs in central London. A number of them, including the Harp and the Star Tavern, did not reopen until 2 September while some of their pubs at railway stations remain closed. There were early reports that the beer range was limited, sometimes to just London Pride and Dark Star Hophead, although news of guest beers came shortly after. It is understood that the brewery, now, of course, a separate company, have been brewing most of the full range.
Despite this year’s problems, Fuller’s continued with their ‘Shakespeare in the Garden’ project for the ninth year. During September there were 21 performances of The Tempest in the gardens of fourteen pubs across Fuller’s estate, staged by the Open Bar Theatre Company. The events were, of course, subject to the COVID regulations with tickets having to be bought in advance through the company’s website.

Fuller’s CEO Simon Emeny (Photo: Fuller’s)

At the end of July, Fuller’s issued their financial results for the year ended 28 March 2020. It was a busy year. As Chief Executive Simon Emeny commented in the Morning Advertiser, “It is easy to forget the financial year started in April 2019 with the sale of the Fuller’s Beer Business to Asahi Europe for an enterprise value of £250 million but we would never have anticipated that we would end it in March with the whole hospitality industry in a state of closure and with no income stream.” Prior to the COVID lockdown, which was estimated to have cost the company £10 million, the company had performed well. Revenue from operations increased by 3% to £333 million giving a profit before tax of £166.2 million. As to the future, Mr Emeny added, “While we are prepared for business, particularly in London, to take some time to return to normal, we are well placed to satisfy the uptick in demand for staycations as many customers holiday closer to home – an opportunity we are supporting with marketing activity for our Beautiful Bedrooms. We continue to focus on minimising cash burn and returning to profitability. During August, we will gradually reintroduce rent for tenants, but on a tapered basis to help with their own return to sustainable trading levels.” He concluded, “We are proud to be 175 years old this year and with our balanced and well-invested estate, prudent approach to finance and amazing team of dedicated people, we will still be here for generations to come.”

YOUNG’S NEWS

Torquil Sligo-Young

Torquil Sligo-Young, nephew of John, is retiring as Young’s Information Resources director on 30 September. He will then become a non-executive director and also join the company’s audit and remuneration committees. Chairman Stephen Goodyear said, “I am delighted Torquil has agreed to remain on the board as a non-executive director and continue as chairman of the trustee company that manages our final salary pension scheme. He will also remain as chairman of the long-established charitable trust set up by one of the founders of the business and, importantly, will continue to liaise with members of the Young’s family who, as major shareholders, are so supportive.” We are grateful to Torquil for formally presenting the John Young Memorial Award shield to successive annual winners.

WETHERSPOON’S NEWS

In the first six weeks after reopening 844 of its 873 pubs, sales of both beer and food were down 17%. Sales were helped however by the Eat Out To Help Out scheme, which the company is continuing with modifications, and being able to provide additional outside seating at some pubs. Overall, the company says that it is in a ‘sound financial position’. In August the company announced that it was considering making redundant 130 out of the 417 staff at its head office in Watford. No final decision has yet been made. JDW are still investing in new pubs however. A new pub in Leeds, the Charles Henry Roe, opened in July and they are building new pubs in Northallerton, North Yorkshire, and Headingley, also Leeds, which will open in March and April next year respectively. Coincidentally, BrewDog have announced that they are also opening a bar in Headingley. I believe that it is a university district so no doubt, in due course, there will be plenty of custom. There will also be a new hotel in Dublin, called Keavan’s Port, costing almost £19 million.

In recent editions of the Wetherspoon’s magazine, Chairman Tim Martin has complained at length (and with examples) about inaccurate reports in the press on both the company and him personally. No doubt I will be branded a ‘Wetherspoon’s apologist’ for saying so, but I think he is entitled to complain. I am well aware that Mr Martin has his detractors but there is no justification for spreading falsehoods. In any event, with Mr Martin, the truth is usually entertaining enough.

GLOBAL MUTUAL (TAVERN PROPCO)

In 2019 this investment fund purchased around 370 freehold pubs from the Ei Group (Enterprise Inns as was). They sold some ten pubs the same day which might indicate their primary interest. The pubs are operated by a subsidiary, Tavern Propco, registered in Jersey. Tavern Propco are, I am sure, not the only pub owning business (POB) which is in dispute with its tenants over rent accrued during lockdown but they are the only one that has sparked a public demonstration. On 9 September the Global Mutual Tenants Association, a group formed by the tenants of 202 of their pubs, marched on Whitehall to deliver a letter to Paul Scully, the MP for Sutton and Cheam, who is the Parliamentary Under Secretary of State in the Department for Business, Energy and Industrial Strategy (and Minister for London). Mr Scully’s portfolio also includes responsibility for the Pubs Code, although Tavern Propco are not subject to the Pubs Code because they own fewer than 500 pubs. The GMTA maintain that Tavern Propco is insisting that their tenants pay rent for the lockdown period. Prominent pubs campaigner Dave Mountford, speaking on behalf of the Association, said, “We believe that the behaviour of Global Mutual makes it clear that the Pubs Code should include any business that owns pubs, however large or small, as it is clear to us that one of the unintended consequences of the legislation was the sale of large groups of pubs to property companies who only interest is the sale of the pubs for maximum return, which would always be alternative use as a pub.” On the way, the group stopped at the offices of Global Mutual to formally hand over a letter on behalf of all the tenants affected, once again requesting some form of rental relief.

In July, Tavern Propco made a long statement to the Morning Advertiser explaining that it understood the tenants’ problems but noting that some of them had ‘received varying levels of Government support during the pandemic’ and saying that, “our pub specialists are liaising with each tenant on a one-to-one basis, to reach personalised solutions and recovery plans.”

PUBS OF DISTINCTION

We understand that this company has now gone into voluntary liquidation and the lease of their one remaining pub, the Old Red Cow in Farringdon, is up for sale. The pub is currently closed.

STONEGATE

Following the integration of the Ei Group, Stonegate will be moving into Ei Group’s former offices in Solihull because the lease on their own offices In Luton expires at the end of this year. Stonegate, now the UK’s largest pub company with 4,730 pubs, will however retain what they call a ‘satellite hub’ above one of their pubs in the town. Inevitably, ‘synergies’ have come into play and around 300 of the current combined staff of around 15,000 will be made redundant.

In an interesting move, Stonegate are closing one of Ei’s managed operations projects, the Bermondsey Pub Company and taking its 65 pubs into their managed estate.

LION SALE BLOCKED

Kirin Biru, the Japanese brewery, have been blocked by the Australian government from selling the Lion Brewery in Australia to China’s Mengniu Dairy. The Treasurer (their Chancellor of the Exchequer), Josh Frydenberg, said that the £330 million deal ‘would be contrary to the national interest’. Mengniu Dairy are part owned by the Chinese government. Lion own two breweries in the UK, Fourpure (Bermondsey) and Magic Rock (Huddersfield), as well as the Little Creatures brewpub in King’s Cross.

BUDWEISER BREWING GROUP

BBG, the UK and Ireland division of AB InBev has appointed a new on-trade sales director. Ryan Fritsch, previously the country manager of Luxembourg, comes from St Louis, Missouri, the original home of Budweiser and served in the US Navy as an Explosive Ordinance Disposal officer. His first project here is the launch of Corona on draught. He told the Morning Advertiser, “the new fonts feel very unique and luxurious and it’s made the beer more of an occasion.

SMALL BREWERS’ FORUM

A group of small brewers have launched this new representative body with the aim of campaigning for locally brewed beers to be sold in all local pubs and stopping the big pub owning breweries from supplying their pub tenants with only their own beers. The forum is connected to the existing Forum of British Pubs. Membership is open to brewers who produce up to 10,000 hectolitres per annum. They will also be campaigning against the Government’s changes to Small Brewers Duty Relief under the banner ‘Small Brewers, Fighting for Fairness’.
Compiled by Tony Hedger