Quality, experience and localisation are all key trends driving the growth of the pub sector, Gareth Nash, insights director at MCA told delegates at the Pub Conference last week.
Data from MCA’s annual Pub Market Report, published earlier this month, highlighted that the sector is outperforming the wider eating and drinking out market, with estimated turnover of £23.3bn for 2019 – 1.9% up on last year. The overall market is estimated to see growth of 1.7%.
Nash said the growth predicted for this year builds on the successful year seen by many pubs in 2018. “Pubs are evolving and driving that success,” he said. This innovation and a focus on improving quality is helping to reduce the number of pub closures seen in the sector, with net closures estimated by MCA to fall to 0.9% this year as the market turns, with net expansion expected to be seen from 2023.
Premiumisation has been a big trend driving consumer spend, from spirits such as gin, to craft beer, and this looks set to continue, explained Nash. Premium pubs currently make up just under 7% of the total market, “and we are expecting them to make up 8.5% by 2022”. “We are also expecting to see more premium drinks in the market, whether that is craft beer or spirits, particularly in terms of gin, and soft drinks,” he added.
In terms of the type of customers driving growth, Nash said there has been a real increase in the number of 18-24 years olds, women and high earners being attracted to drink and eat in pubs over the past three years. ‘The rise of the unbranded’ pub has also been gaining traction, with Greene King’s local pubs, Craft Union Pub Company and Loungers also sitting within this category. “When you look at the top 20 pub brands in the market, we are largely not seeing growth – but where we are seeing growth, is from the more wet led, managed, but individually branded, sites,” he said.
While there are challenges for the sector, such as falling alcohol consumption, falling food-led frequencies and the rise of the coffee shop market, Nash said there was plenty to be excited about with many growth areas for operators to tap into, including experiential-led venues, apps, alcohol-free drinks and delivery.