Marston’s had a strong start to the year, but-like-for like growth has been hampered in recent weeks by the freak comparative of last year. Following a trading update CEO Ralph Findlay talks to MCA about why the pubco is putting its £70m new-build programme on ice, investing in its premium and wet-led estate, and what he calls a lager summer.

Last summer, it was estimated a quarter of a million pounds worth of beer were in the air at any one time, during wild goal celebrations amid England’s World Cup run.

The colourful reference, cited by Marston’s chief executive Ralph Findlay, is a powerful illustration as to why the company achieved such strong sales for its premium lager brand Estrella Damm – and also the comparatively diminished like-for-like sales this time round.

“Last year was to some extent what I call a lager summer,” Findlay says. “The hot weather is perfect for lager. We have a very big brand in Estrella Damm, which had a great summer last year. But it’s been tougher this year.”

Yet despite the tough comparative, there is no doubt about the strength of the Spanish brand.

“It remains one of the fastest growing premium lager brands in the world beer category,” Findlay says.

If the World Cup weather is beginning to sound like a familiar refrain in trading updates, that’s because it is.

The pefect combination of heatwave and football last year led to what Findlay reported was “modest” like for like growth across its pub estate, during the 42 weeks to 20 June 2019.

Managed and franchised pub sales increased by 0.5%, Destination and Premium sales were 0.1% ahead of last year, while Taverns were 1.1% up.

The pub group had a good first half, with a good April and Easter trading, but this was followed by a weaker may, with poor bank holiday weekends, and a wet June, which Findlay says was “indicative of market as a whole”.

Generally speaking, the wet-led business has outperformed the food-led parts of the pub business, in line with market trends, he says.

Meanwhile, having made a good start to its target to reduce net debt by £200m in 2020-2023, which was well received by shareholders, the group has halted its £70m new-build programme for the next three years.

This amounts to around six new-builds a year, already a reduction on targets from two or three years ago – not including the eight or nine already opening this year.

Findlay told MCA they would revisit the programme after three years, and test the political and economic climate – but said it was currently too uncertain to be sure.

“It seems to us with the prioritisation of debt reduction, and the overall political and economic uncertainty, it was a sensible thing to consider doing,” he says.

“So we’ve put that on ice for the moment. Will we come back to it? We’ll see what the market looks like in two or three years’ time.”

Aside from the uncertainty, Findlay believes there is still demand for new-builds.

“At the ones we’ve opened this year, our trading performance has been really strong. From a business success point of view, we’re very happy. But in context of the overall strategy right now, it’s something that will have to be deferred.”

Doing less on new builds means Marston’s will have more cash to spend on its core estate.

“The return on capital after investing in our core estate has been consistently good and strong, so from that point of view it makes sense.

“Our investment will be more focussed on wet led and premium than it has been – consistent with trends in the market.”

With weather such as a defining factor in like for like sales, could the current heatwave lead to an uptick?

“It’s too soon to say, because the good weather only just arrived in the Midlands yesterday!” Findlay adds.

“We will wait to see what the impact is. But if we have a sustained period of good weather that will make a huge difference to our business.”

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