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Morning Briefing Strap Line
Fri 2nd Jun 2017 - Friday Opinion
Subjects: Supporting the industry regardless of who’s in Number 10, the alcohol harm paradox, the blurring of the work and social space, and profiting through better beer quality
Authors: Kate Nicholls, Paul Chase, Glynn Davis and Steve Alton

Supporting the industry regardless of who’s in Number 10 by Kate Nicholls

As the nation gets ready to go to the polls (yet again) next week, the Association of Licensed Multiple Retailers (ALMR) has been using the campaign to strongly press our case for targeted industry support regardless of the outcome on 8 June. Eating and drinking out is one of Britain’s most dynamic, innovative and resilient sectors. It has created one in seven of net new jobs and has grown by more than 6% per year since 2010. Businesses in this critical sector have driven a renaissance across high streets, yet are squeezed by legislative pressure and increasing financial burdens.

Our sector has the potential to be one of the great success stories of a post-Brexit Britain. We have a clear vision of the future of our sector and the significant part it has to play in the country’s economic and social well-being. We are a powerful engine of growth. With the right tax and regulatory conditions in place we will able to deliver even more – sales growth of more than 5% per annum, an additional 23,000 new jobs and 150,000 new apprenticeship starts, increasing inward investment, placing hospitality at the heart of the UK’s tourism strategy, and providing safe and healthy social experiences for consumers.

To achieve this, our members need support from both national and local government if they are to continue providing jobs and investment. Pubs, restaurants, bars and clubs are vital social hubs and fantastic employers – but they need an environment in which to continue to fulfil their enormous potential. Our asks to government, of whatever political persuasion, are framed around three principles:
– Promoting free, fair and flexible markets by reforming legislative regimes and levelling the playing field for hospitality
– Reducing the unnecessary costs of doing business by tackling punitive measures that discourage growth
– Unlocking and incentivising growth and investment in our people and communities

A first day priority for the new government is the wholesale review of the business rates system – something for which we have long been calling. Despite the small wins on rates in the Spring Budget, it is absolutely vital more fundamental reform gets under way to ensure jobs are protected and to secure the ongoing competitiveness of pub, restaurants and other hospitality venues.

The current rates regime is rigged against hospitality businesses as it penalises growth and investment as higher turnover invariably leads to higher rates. The issue is exacerbated by the move of retail to online platforms, benefiting virtual businesses at the expense of bricks and mortar ones. Our sector is also at a clear disadvantage when compared to supermarkets. A pint sold in pubs, bars and restaurants will attract 18p in business rates, as opposed to 4p for a supermarket. This is patently unfair.

It is therefore encouraging to see the ALMR’s long campaign for reform starting to bear fruit with the main parties identifying it as a priority in their manifestos. We will keep up the pressure for meaningful change. When it comes to access to labour, the sector desperately needs clarity. Despite some assurances there is still uncertainty among the existing workforce as to what their employment status will be post-Brexit. It is estimated nearly 200,000 employees are from EU member states – some 11% of the total sector workforce. In most metropolitan areas, this figure will be much higher. There must be a continued right to work for existing employees and we call on the new government to make that pledge to guarantee their rights as soon as possible. The sector is committed to working with home-grown talent, providing skills, training and a long-term career, but there is a need for overseas staff so a cliff-edge must be avoided.

Another area of vital importance is maintaining the independence of the Low Pay Commission (LPC) to set national living and minimum wage rates. Our fear is a politically-set wage target could see many businesses struggle to afford the increases. Any uplifts should only be done with the recommendation of the LPC and take into account economic conditions.

The rate of VAT for the hospitality sector in the UK is among the highest in Europe, leading to higher costs for eating and drinking out. A modest cut in VAT could lead to substantial increases in eating out – boosting jobs and economic activity. Our recent report on the benefits of low VAT across Europe provides powerful evidence on how reducing the tax will encourage growth in employment. The election gives us an opportunity to push the case further, and we strongly encourage our members to get behind Tax Equality Day in September, which is another powerful way to demonstrate the impact of lower VAT.

Our manifesto includes many other sensible and pragmatic measures that can further unlock the potential of our sector. These include:
– Abolishing National Insurance Contributions for under-25s and establishing a fund for workforce skills development
– Reforming commercial leases to prevent unfair practices that are distorting high streets and leading to inflated rental levels
– Implementing the recommendations of the House of Lords licensing committee alongside freezing the annual licence fee
– Further supporting voluntary partnerships to encourage healthier lifestyles

Whoever gets the keys to Number 10 next Friday has a golden opportunity to support our vibrant and valuable sector. We stand ready to play a positive role alongside them, to improve the economic fortunes and social life of the UK.
Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers

The alcohol harm paradox by Paul Chase

In a new study of drinking in Scotland published in the medical journal The Lancet, "Public Health" takes a fresh look at an old subject. The so-called “alcohol harm paradox” basically states people living in socially deprived areas are more likely to suffer alcohol-related harms than those living in more affluent circumstances – even though the more affluent actually drink more alcohol. Why anyone with the smallest understanding of the complexities of health inequalities or drinking cultures should find this paradoxical I really don’t know, but apparently, some do.
So, what added value does yet another trot round this well-worn path give us? Well, temperance organisations the Institute for Alcohol Studies and the UK Alcohol Health Alliance (AHA) both like this piece of research because it concludes targeting policies and intervention at heavy drinkers in low socio-economic groups with a view to reducing their consumption is unlikely to be as effective as whole population measures. Yes, you guessed it, minimum unit pricing, reductions in alcohol availability and advertising and marketing.
Study co-author Dr Elise Whitley said: “Heavier drinking is associated with greater alcohol-related harm in all individuals. However, our study suggests the harm is greater in those living in poorer areas or who have a lower income, fewer qualifications or a manual occupation.” Responding to the study, Professor Sir Ian Gilmore, chair of the AHA, said: “The findings in this study are worrying if not altogether surprising. It is clear the way alcohol is being sold and promoted in Scotland and elsewhere in the UK is harming some of the most vulnerable people in society.”

Now conceding, as the study does, the poor are likely to suffer more ill-health as a result of other factors associated with poverty – lifestyle, diet, and so forth, it is something of a stretch to reach the conclusion the alcohol harm paradox is all the fault of how “big alcohol” markets its products! In the introduction to this study, the authors make this, rather telling, observation: “Efforts to target alcohol consumption by socio-economic status are unlikely to be successful in reducing health inequalities, unless drinking cultures in the most disadvantaged populations differ systematically from societal norms. Interventions seeking to reduce consumption across the whole population are more likely to result in greater reductions in absolute health inequalities than previously thought.”
The key assumption here is targeting alcohol consumption by socio-economic group is unlikely to be successful “unless drinking cultures in the most disadvantaged populations differ systematically from societal norms”. Societal norms? The main societal norm is moderate drinking. But we don’t have one single drinking culture in the UK, or even in Scotland, and I for one believe differing drinking cultures are the real drivers of alcohol-related harms.
I believe once we understand the central importance of culture to drinking behaviour then we can begin to untangle the reasons why people drink at different levels, sometimes harmfully, in different ways and for different reasons. Let’s start off with a rough-and-ready definition of culture: “Culture is what me and you get up to round here.” Put more formally, sociologists refer to “cultures of intoxication”, which is an understanding that places alcohol use into a modern context – one that recognises the plurality of drinking cultures and sub-cultures; that acknowledges in addition to alcohol a whole generation of people now find it socially acceptable to take a range of other, illegal, intoxicants as part of a night-out. And that specific cultures of intoxication drive not only the quantity people drink, but the speed at which they drink it; whether they drink with food or on an empty stomach; what else they take; and whether they drink in safe places and social surroundings or dodgy bars and late-night party-pads.

When we look at the way in which alcohol health-harms are socially distributed we can clearly see the impact of the plurality of cultures of intoxication and the simplistic nature of the whole population approach. In 2010 the North West Public Health Observatory published a series of reports that break down drinking patterns and alcohol problems into different population segments.

By using the UK government’s Index of Multiple Deprivation, the reports showed people living in the poorest fifth of the population are five-and-a-half times more likely to find themselves in hospital with “alcohol-specific mental and behavioural disorders” than those living in the richest fifth. People living in the poorest tenth are seven-and-a-half times more likely to end up in hospital because of alcohol than those in the richest tenth. People living in social housing are eight-and-a-half times more likely to have an alcohol-related disorder than a “career professional” and those classified as “vulnerable disadvantaged” register 13 times more alcohol-related hospital admissions than “affluent families”.
Social class, prosperity or the lack of it, and a range of other social circumstances determine what your drinking culture is likely to be, and the extent to which your life revolves around a culture of intoxication. But rather than calling for policies that tackle endemic poverty, ideologically motivated academics prefer to interpret data in a way that supports their preconceived whole population measures. All roads lead to minimum pricing!
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy 

The blurring of the work and social space by Glynn Davis

Christmas has always been my favourite time of the year – partly because it is a great opportunity to go on a no-holds-barred food eating and drinking spree for a number of weeks. However, one of the guaranteed downers on my spirits during the festive period used to be when there was an announcement the company Christmas party was to be held in the office building. This was mainly in the days when offices were pretty stark places – none of the table football, pool tables and other adult toys that seem to proliferate in the modern day workspace. The reality was that there was a very clear delineation between the work and the social space.
Never the twain shall meet was my view and also that of the company management unless it found it needed to cut corners and the only way to really show it was skint was to cheapskate the Christmas party by bringing it into the office. What could be more depressing was my thinking – but how times have changed. The work and social space is becoming increasingly blurred. This has been most prevalent in the shared workspaces such as WeWork that have sprung up to accommodate the growing number of small startup businesses and freelancers now in the market place. These locations invariably have craft beer on tap throughout the day and cocktails served at the end of proceedings. Some even have live music and DJs brought in to really crank things up later in the evening.
While this might be seen as just a youngsters’ phenomenon it looks like it is spreading across the office food chain. A new £100m development in London set for completion next year will have “Press for Champagne” buttons installed in the offices of the building’s occupants. The tenants are expected to be hedge fund types who won’t need to pop to the bar for a celebratory glass of something fizzy when they’ve just done a deal but will simply summon it up to their offices by a mere button press. They will also be able to order cocktails and caviar from the restaurant on the ground floor of the building. 
This sounds like yet another rather ominous sign for restaurants, bars and pubs that are battling hard to attract and retain customers. Some are clearly up for the fight though and have taken the view if the office providers are stealing their diners then they will need to muscle in on the office space. First out of the block is London-based Bluebird restaurant that has brought in a hot-desking initiative. Through co-working members’ club Workologie, people can book a dedicated seat at the restaurant between 9am and 5:30pm in order to undertake some work ahead of, or after, their lunch appointment.
A similar scenario is being seen over in New York City where work sharing startup Spacious is enabling restaurants to have their dining rooms turned into makeshift work spaces at times when they are not being used for service. The upside for restaurant operators is they will attract remote workers into their venues, rather than have them automatically frequent coffee bars, and they will also potentially act as a draw for early-lunchers and happy hour customers.
If it all sounds rather haphazard and disjointed between the working elements and the socialising aspects then that just might be the reality of the way more people are choosing to live their lives. What is clear though is that restaurateurs will have to be increasingly flexible in the way they use their space and recognise the rigid trading times of old look to be disappearing.
Just as in the way consumers are embracing through-the-day grazing and snacking as the preferred way to consume food, they are also taking a more relaxed approach to the way they define their working space. Although it would still grate with me, it seems likely the idea of consuming festive drinks in the “work” environment would be significantly less divisive today than it would have been years ago. The way we eat, drink and work is constantly changing and all stakeholders need to adapt accordingly.
Glynn Davis is a leading commentator on retail trends 

Profiting through better beer quality by Steve Alton

It was fascinating at the recent Association of Licensed Multiple Retailers conference to hear directly from some of the trade’s leading operators about the challenges facing their businesses both this year and in the future. It’s clear the wall of costs facing the sector, specifically around additional employment regulation, as well as the substantial hikes in business rates, is putting profitability under pressure like never before.

While there are justifiable complaints around these additional costs and the ensuing pressure on margins, my view is simple – a significant proportion of operators are ignoring thousands of pounds of unrealised profit from their draught beer performance. This is a key area where even the best pub operators could be running better businesses. At Vianet, we passionately believe in providing our customers – from large managed multiples through to leased and tenanted and independent pubs – the actionable insight that will help drive their businesses forward.

This spring, we again partnered with Cask Marque to produce the Beer Quality Report – an in-depth study that reveals a definitive picture of beer quality across the UK on trade. It clearly shows the opportunity available to retailers of an insight-led, systematic approach to quality management. For this year’s report, we again analysed various critical quality measures from more than 220,000 Vianet devices in pubs and cellars across the country. That data is then informed and validated by quality scores from Cask Marque’s annual visits to more than 22,000 pubs, and reveals the industry as a whole is losing a staggering £709m a year in profit through multiple issues around poor quality.

The figures come from a combination of pouring loss – simply, beer not making into a customer’s glass – along with missing cash from the till, over-ranging of taps and low throughputs. Then you can add in lost sales through a combination of poor line cleaning and cellar equipment failings affecting the quality of beer served to consumers.

This headline figure equates to 5.8% of total UK on-trade beer sales, based on CGA Strategy figures for 2016. At an industry level, the report estimates an average profit opportunity of more than £14,600 per pub per annum. At higher-volume pubs the opportunity is even larger – for a pub trading at 500 barrels per year the profit potential is about £28,000 per annum. So, while the report lays bare the profit opportunity to be grasped by retailers regardless of whether they run managed, tenanted or independent outlets, what the findings also clearly demonstrate is consistency when it comes to keeping and serving beer remains a challenge for a significant proportion of pubs.

Given the current tough trading environment, there can’t be many operators that can afford to lose customers so it’s imperative the industry seizes the opportunity at hand to drive up quality and retail standards. Not only will this increase profitability, it will also help safeguard the future of the beer category and keep pubs attractive to consumers. Research consistently points to the fact consumer curiosity around new, exciting beer styles and provenance remains high. However, there is a real risk the category’s ongoing health could be threatened by sub-standard quality.

Industry reaction to the Beer Quality Report has been fascinating. While there are lots of businesses that see the opportunity and are ready to engage and act, there are others who, for whatever reason, seem happy with the status quo. As long-standing champions of beer quality, we are in no doubt at retail level, as our report clearly shows, the industry can do better. The rewards are clear to see – a superior product, greater profitability and happier customers. Yes, there are headwinds, but as ever quality will shine through. Readers can download a copy of the Beer Quality Report here.
Steven Alton is managing director of Vianet – driving real business change by transforming data from business assets into unparalleled insight and actionable information

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