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Morning Briefing for pub, restaurant and food wervice operators

Fri 30th Oct 2015 - Friday Opinion
Subjects: The power of positivity, the untapped coffee market and the age of unreason
Authors: Philip Kolvin, Glynn Davis and Paul Chase

The power of positivity by Philip Kolvin

Let me ask a question. What does your dentist see when you walk in the door? Does he notice the happy spring in your step, the nice tan you picked up in Miami, the Mulberry handbag? Maybe in passing. But what he really spots is cavity lower right seventh, tenderness to percussion upper right five. It is exactly the same with the regulators of the leisure industry.

Ask a local councillor what they think of the night time economy. They will probably tell you about the violence, the binge drinking, the health effects, the no-go areas, the hot spots. They won’t tell you about an industry that generates £66 billion for our economy, 1.3 million jobs, 80% of which are held by young people, the regenerative impact, the importance to local supply chains, the tourist draw, the spawning ground for new talent in music, fashion, entrepreneurship and the arts. It is not because councillors are bad people. It is because, like your dentist, they only see the patient when something has gone wrong, when a review or a closure notice has been issued, or someone has been stabbed, disturbed or roused to complain.

The police don’t help in this – often presenting figures without context: 20 mobile phones “stolen”, five assaults, three sightings of drunkenness, sometimes just forgetting to mention that these are not bad figures for a building which admits 200,000 people a year. And the Press loves nothing more than a picture of a youth passed out or peeing in the street. And so the vicious cycle of negativity continues, impacting on policy-making (what will follow the EMRO do we suppose?), regulatory decision-making and, to a large extent, the image of the leisure economy among its potential customers.

In Bradford, Aaron Mellor, of Tokyo Industries, is almost single-handedly regenerating the night time economy with an entertainment-led redevelopment of some derelict heritage buildings. Where he goes, restaurants, bars and boutiques will follow as the town centre reconstitutes itself. Small entrepreneurs have made Brixton one of the coolest places in the capital, bringing a defunct arcade back into use as “Brixton Village”, with other businesses springing up all around it.

If you don’t like the conversation, start a different one. The industry – not just the leaders but every bar operator, every nightclub owner, every restaurateur – should be an ambassador, proclaiming the benefits which their vibrancy and creativity brings. Retail is receding from town centres. The night time economy is the bulwark against decline, the herald of a town centre renaissance, not only in Soho and Camden, but Wigan, Stoke and Hull too. It is crucial to the future sustainability, perhaps even existence, of town centres themselves.

It is up to all of us working in this industry to convince politicians, the Press, policy makers, police, regulators and, most of all, the public, that the night time economy is at the heart of our modern civilisation, the safest place for a drink, the bringer of delight to communities, a location for conversation and celebration, the backdrop against which we develop friendships, relationship and social networks. This is not to say that there is never a debit side on the balance sheet, only that the credit side is often ignored when decisions are made, and it is high time for this to end. Proclaim the positive. That is my call to arms.
Philip Kolvin QC is a licensing barrister and head of Cornerstone Barristers

The coffee market’s untapped potential by Glynn Davis

In 1995, Ally and Scott Svenson set up the Seattle Coffee Company on these shores to replicate the experience they had enjoyed in their home city of Seattle in the US – the birthplace of Starbucks. What they hadn’t anticipated was that no manufacturer in the UK at that time made the domed plastic lids for the take-out cups that are now a ubiquitous sight on every high street in the country.

They were clearly in at ground zero of the uprising of branded coffee chains in the UK and so it did not take too long for Starbucks to come knocking on their door (with a sizeable $84.6 million) and they were bought out in 1998, by which time they had grown to 56 outlets.

They spotted a gap in the market that looked like it would be quickly filled following the Starbucks deal – especially since the company had plans to open 500 units in Europe. They were joined by the likes of Coffee Republic, Caffé Nero and Costa (under Whitbread ownership) that also recognised the potential and set about expanding rapidly.

The interesting thing is that the gap has still not been filled. The UK consumer has such an insatiable thirst for coffee that it has fuelled growth in the sector for the past 20 years since the Svensons pioneered the branded coffee chain concept. Many times during the early years the headlines would read ‘froth to be blown off coffee market’ as the expansion of the chains looked to be creating an unsustainable bubble.

Those sorts of stories have not appeared for some time as the media long ago acknowledged that the Rubicon had been crossed and we have become a fully signed-up member of the club of coffee drinking nations. The fact is UK consumers drink as many as 70 million cups of coffee every day – worth around £730 million – according to a study by Buddy Loans.

If further proof were needed of our taste for the caffeinated beverage then consider the Allegra World Coffee Portal report for 2015, which forecasts 27,000 outlets will be selling coffee by 2020 – up from 18,800 at the end of 2014. This will generate revenues of £16.5 billion.

The growth in the early days came predominantly from the chains who gave comfort to those unaccustomed to the quality coffee habit (they helped wean us off instant). They now represent 31% of the market in terms of number of outlets and they continue to race ahead. Costa currently has around 2,000 outlets and has plans for 220 new units this year. This is on top of its aim of also having 8,000 Costa Express units in place by 2020, compared with the present 4,700.

Across all the branded chains the numbers of outlets is predicted to grow to 7,870 by 2020. But whereas they largely had things all to themselves for some years, it is now very different scenario as the market has matured. As well as the chains in the middle ground, the coffee market now also encompasses the two extremities. At one end are the non-specialists and at the other extremity the independent artisans. Such is demand that all parts of the market continue to grow at a healthy clip.

The more price-focused non-specialists include the pub companies, book shops, garden centre chains, and sandwich shops that have grown their share of the coffee market to 37% in terms of outlet numbers – up 2% during 2014 to 7,000 units.

Meanwhile, the independent artisans have focused very much on high quality coffees and such has been the traction they’ve enjoyed that some of these have grown into small chains – including Taylor Street Baristas, Allpress, Caravan, Climpson & Sons, Coffee#1, Department of Coffee & Social Affairs, and Fernandez & Wells.

They have found to their delight that a certain amount of price elasticity exists in the market as discerning drinkers have been more than willing to pay a premium for their preferred blend. They are also willing to wait in line too. Monmouth Coffee in Borough Market has waiting times running to at least 45 minutes at some peak times for a take-away cup of its artisan coffee.

The Svensons will no doubt be interested observers of the UK coffee scene having played an instrumental role in introducing the country’s consumers to the idea of the branded coffee chain that provided a superior cup of coffee to the one that we’d been accustomed to. And in doing so brought in the domed plastic tops for our take-away cups that ensure our cappuccino foam stays intact.

So what have they done for an encore? They have struck upon the idea of made-on-delivery customisable pizza – MOD Pizza – and having set-up the business in the US they are now bringing it to the UK. As revolutionary as these pizzas are, it would take a miracle for them to have the same sort of impact as the Seattle Coffee Company. We’re still feeling the tremors 20 years down the line.
Glynn Davis is a leading commentator on retail trends

The age of unreason by Paul Chase

“Government Must Act Now to Save Our Children” read a recent headline in the Times. The reference was, of course, to the demand that government introduce a sugar tax of between 10 and 20% on fizzy drinks. I’ve written about this issue before, but it does seem to me that it now has all the hallmarks of a classic moral panic. It’s almost as if health campaigners have given up on minimum pricing for alcohol, and this is the next ‘big thing’ for them to obsess over. But actually it’s just top of a very long list of things that they think need taxing or banning – and the list gets longer and more absurd by the day.

It’s not that taxing sugary drinks wouldn’t reduce consumption, it would. Use taxation to raise the price of anything and consumption of it will fall, more or less, depending on the price-elasticity-of demand for the product concerned. The point is that the effect will be utterly trivial in terms of its impact on obesity. There are many, many products that contain added sugar, and a recent article in The Sunday Telegraph looks at how many ready meals sold in our major supermarkets contain much more added sugar than fizzy drinks. Should we tax or regulate to reduce sugar in them all? Health campaigners would say yes – the taxation and mass reformulation of products is exactly what they support; it’s all part of their mad plan for world domination – otherwise known as regulating capitalism out of existence!

The impression given by health activists, and much of the media, that sugar consumption is out of control is simply wrong. Reports from DEFRA and from the National Diet and Nutrition Survey show that sugar consumption is lower than it was 40 years ago; but when a moral panic sets in it’s a case of “never let the facts get in the way of a good story”.

Before we ask government to intervene in free markets we should first of all establish whether there has been a market failure that justifies such intervention. One of the most intriguing statistics I’ve read on the subject of sugar and non-alcoholic drinks came from JD Wetherspoon’s Tim Martin. Writing in Propel he disclosed that in the previous week ‘Spoons had sold 580,000 Pepsi products on draught and that 197,000 of them were Diet Pepsi and therefore sugar-free. That’s just over a third. In addition, Martin wrote, ‘Spoons sold a million cups of tea and coffee that were served without sugar. So when we talk about all non-alcoholic drinks and not just fizzy drinks, it is clear that customers were already, overwhelmingly, choosing the sugar-free options. This may not be a scientific survey, but it’s a highly indicative snapshot of the choices people are now making, so where’s the evidence of market failure? And what a brilliant baseline of free choice on which a successful public education campaign could build.

But back to alcohol. According to the press, Public Health England has said there is no safe level of alcohol consumption in terms of the risk of developing Alzheimer’s disease. Now, whilst there is a specific form of dementia called Wernicke-Korsakov syndrome that arises when you pickle your brain in copious quantities of alcohol over a prolonged period of time, the evidence for a causal link between low and moderate alcohol consumption and Alzheimer’s is very weak indeed. But Public Health England say just because there is no evidence that alcohol is implicated doesn’t mean it isn’t; so, apply the precautionary principle and say until there is evidence that it is safe let’s assume it is unsafe and advise abstinence. What reason! What impeccable logic!

All of these public health campaigns are really predicated on a fear of death. But according to Professor Westendorp – a leading expert in human ageing and longevity – life expectancy is going up in the West faster than we can adjust to it. Every week we get an extra weekend of life-expectancy; every day we gain six hours: “The first person to live to 135 has already been born” he states (The Times, October 22nd 2015). Dementia, the bogeyman of the present, is also in significant decline according to Professor Westendorp. A large-scale population study in the UK reported a 30% drop in the risk of getting dementia over the past 20 years. And heart disease and strokes are also on the decline. In the first half of the 20th century, half of the population died of cardiovascular disease; that has now dropped to a third and heart disease continues to fall.

The doom-mongers of the public health racket never give up though. As reported by Chris Snowdon on his blog site Velvet Glove, Iron Fist, a recent report by Dr Neal Barnard, president of the Physicians Committee for Responsible Medicine is concerned about the health aspects of cheese. There is a reason why pizza is such a successful food product. It contains an addictive substance. Dr Barnard believes cheese to be as addictive as morphine because it contains “casein-derived, morphine-like compounds” which become super-concentrated during the cheese-making process. And so cheese might as well be called “dairy crack” he declares.

And, hot off the press, a World Health Organisation report has just been published that classifies processed meat as carcinogenic – alongside arsenic and asbestos. Less than one sausage a day increases your risk of developing cancer by almost a fifth.

I am utterly speechless!
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

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