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Tue 14th Jul 2020 - Update: JD Wetherspoon, Fever-Tree
Wetherspoon rebuts CAMRA and SIBA criticism: JD Wetherspoon has rebutted a number of claims by CAMRA and SIBA in relation to its VAT reduction to customers. A joint statement by Tom Stainer, chief executive of CAMRA, and James Calder, chief executive of the Society for Independent Brewers (SIBA), said: “A recent promotional poster from pub chain JD Wetherspoon has made it necessary for us to clarify that the Chancellor’s temporary VAT reduction only applies to food served in pubs, and excludes alcoholic drink sales which many traditional local pubs rely on for survival. Like all pubs, Wetherspoon will not be able to benefit from a VAT reduction on beer sales and it is disappointing to see them potentially mislead customers into believing cheaper beer prices are as a direct result of the Chancellor’s measures. It’s likely JDW can only offer these prices if it subsidises beer from increased profit on other revenue streams. Sadly, this is a strategy many independent, wet-led pubs do not have open to them. We’d hope consumers do not mistakenly believe CAMRA or SIBA have endorsed this marketing approach – which we believe is unhelpful for the pub industry as a whole and masks the truth that this VAT reduction will not directly result in cheaper beer prices and does little to help a large proportion of Britain’s pubs and brewers.” A statement from JD Wetherspoon said it is “untrue” that the VAT reduction only applies to food. “The reduction applies to soft drinks, coffee, tea, snacks, crisps and cakes which are sold in almost all pubs. Wetherspoon’s biggest draught product for example is Pepsi, a soft drink, and this is true of many pubs. In addition, the vast majority of pubs sell food. It is true that the Chancellor’s measures do not directly lead to lower beer prices .However publicans can choose to reduce prices for food, soft drinks and coffee et cetera or they can choose to keep those prices the same and reduce the prices of alcoholic products such as draught beer. Wetherspoon has chosen to apply about one third of the tax reduction to meals and about two thirds of the tax reduction to draught beer. Individual publicans can make their choice and most are aware that supermarkets have used their tax advantage over pubs(i.e. they pay no VAT on food sales) to reduce the price of beer, wine and spirits. The main effect of the historic tax inequality in respect of VAT on food has been that the price disparity between supermarkets and pubs in respect of beer has widened inexorably. In Wetherspoon’s opinion, sensible publicans will ignore CAMRA/SIBA and seek to close the gap in beer prices.” CAMRA and SIBA argued Wetherspoon’s marketing approach is “unhelpful for the pub industry as a whole (and) will not directly result in cheaper beer prices”. JD Wetherspoon responded: “The Chancellor’s tax cut will directly result in lower tax prices for every pub, since all pubs sell soft drinks and snacks, at least. It will be up to individual publicans to choose whether they use the tax cuts to reduce the price of a pint.”

Ten-pin bowling and trampoline parks press to re-open: Ten-pin bowling businesses have joined forces to campaign for the reopening of bowling alleys. Unlike other leisure venues that have started to reopen, the government has ruled they must remain closed. Namco Funscape, together with the Ten Pin Bowling Proprietors Association (TBPA), UKHospitality and other bowling business owners, are urging the government to reconsider their position before it causes ‘critical damage’ to the industry. Namco, which has 335 employees and seven entertainment centres across the UK, had already implemented extensive government guidelines to ensure the centres were safe and ready to welcome back customers. But, whilst other indoor hospitality and attractions opened their doors on the July 4, the bowling sector is yet to be given government permission to open in England. Gary Brimble, general secretary at TBPA, said: “Bowling centres have been closed for more than three months and fully expected to be reopening with other hospitality and leisure businesses on the 4 July. Our covid-safe measures allow for a safe environment for both our customers and staff and our spacious layouts are easily adapted for social distancing. Let’s get bowling again, bring some fun back for our customers, protect the jobs of the 8,000 staff and prevent the closure of many bowling centres.” Meanwhile, Trampoline park operator Rush has set out plans for reopening the business on Saturday, 1 August despite saying the sector had been “overlooked by the government”. The company, which has sites in Birmingham and High Wycombe, said it was preparing to limit capacity at the two parks. This will allow the venues to accommodate about 80 jumpers per session and up to 80 spectators. Phil James, group head of operations at Rush, told The Business Desk: “We know indoor gyms, gymnastic facilities, fitness and dance studios, and indoor sports venues and facilities are able to open on 25 July but there has been no indication as to whether this includes trampoline parks. We have contacted the government for clarity but have been passed to the sports and enquiries team with no response as yet. Rush was one of the first trampoline parks to voluntarily close its doors due to coronavirus and the business is struggling. It’s imperative the government provides us with this clarity on when we can reopen so the business has a chance of surviving.”

Fever-Tree buys German sales agent: Fever-Tree, the supplier of premium carbonated mixers, has bought Global Drinks Partnership “GDP”, the group’s sales agent in Germany. The company said: “GDP is a well-established sales agent and importer of premium drinks, with a strong track record of growing premium brands in a complex, fragmented market. The acquisition consolidates the strong partnership that Fever-Tree and GDP have developed over the last seven years in Germany, during which GDP has enabled Fever-Tree to establish a growing brand presence in the on-trade and a strong footprint across national and regional retailers in the off-trade. The German market represents a notable opportunity for the group. It is one of the largest mixer markets in Europe and is underpinned by emerging premiumisation trends evident in both the mixer and spirits categories. The acquisition of GDP, with established management, distribution relationships and sales channels already in place allows the group to accelerate the strength and depth of its presence in Germany much faster than could have been achieved by building the same capabilities from scratch. Alongside Fever-Tree, GDP also distributes a portfolio of complementary premium beer and spirits brands, which generated €10 million of sales in 2019. This portfolio approach is highly suited to the size and outlet fragmentation of the German market, and the group looks forward to continuing to work with these brands in the future. The total consideration for the acquisition comprises €2.6 million cash, plus a c.€5 million consolidation of historic balances owed to Fever-Tree by GDP at completion. Alongside this, Fever-Tree has agreed to fund the repayment of €1.9m of shareholder and other third-party loans owed by GDP.” Tim Warrillow, chief executive of Fever-Tree said: “The completion of the GDP acquisition is an important step as we execute our growth plans in Germany, providing us with an ideal platform to take advantage of the opportunity within the German market and accelerate our growth. I have worked closely with Morgan Zuill and his team at GDP since we first entered the German market and have been impressed with their approach and expertise in growing the Fever-Tree brand, so I am delighted that they are joining the Fever-Tree team.” On trading, Fever-Tree stated: “We had a solid start to the year with group trading in the first two months in-line with expectations. From March onwards, trading across our regions has been dominated by the impacts of covid-19, leading to widespread closure of the on-trade alongside a consistently strong performance through our off-trade channels. In the UK, positive momentum in both the spirits and mixer categories in the off-trade during lockdown has continued, with Fever-Tree’s off-trade sales for the last 12 weeks to 14th June increasing 34% year-on-year as the popularity of long mixed drinks as an everyday affordable treat continues to resonate with consumers. The group’s off-trade sales have grown very strongly in the US, where the increasing popularity of the Fever-Tree brand is driving category growth. Nielsen data, which covers just under half of Fever-Tree’s US off-trade sales, has reported 89% year-on-year sales increases for the last 12 weeks to 13th June, reflecting the increased at-home consumption during lockdown, as well as the benefit of incremental distribution that was secured over the course of 2019. We have also been encouraged by the successful implementation of the pricing and format optimisation, gradually introduced on-shelf between March and June 2020. In Continental Europe, while off-trade sales have been robust across the region, the impacts of covid-19 have been more significant in the south which is more reliant on the on-trade relative to Northern Europe. The increased uncertainty during the last few months has led some of our importers to de-stock, which has impacted our European sales over the first half of the year. However, we are confident that our prevailing brand strength will support our growth in the region as countries continue to emerge from lockdown.”

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