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Morning Briefing Strap Line
Fri 10th May 2013 - Friday Opinion
Subjects: Advice for a successor, the battle for the pub sports pound and minimum pricing
Authors: Nick Bish, Paul Charity and Paul Chase

An open letter to David McHattie by Nick Bish

Dear David,

About 22 years ago I was asked to set up and run a trade association for multi-site companies in the pub trade. I suspect they had no idea what success looked like; I certainly didn’t. But over the next twenty years we have together created something that is very special – now a champion for the member companies and a voice for the industry at large. The fact that we have not had to change ALMR’s name nor indeed the core objectives or membership structure is tribute not only to the vision of the founding members – including Peter Salussolia, Chris Hutt, Chris Holmes, Gerald Richardson - but also to the fact that evolution generally creates more hardy structures than constant chopping and changing. Succeeding chairmen have understood this and given me and the team the room to deliver on their vision – that’s a privilege and a responsibility.

I am impatient with the siren calls for a single organisation to represent ‘the industry’. This was Michael Heseltine’s requirement but it was only so he could dismiss reasonable business proposals and then claim he had consulted all the stakeholders. Much more sophisticated is our ‘many voices – single message’ approach. This requires intelligent and genuine cooperation with other organisations - and it worked brilliantly with the recent success on the duty escalator. It also allows mature and thoughtful disagreement on intractable issues. The Pubco Code is the outcome of exhausting and exhaustive work to reconcile polar differences and the government may yet find that its recent intervention is not the panacea it hopes.

Every pub is a managed pub. And by extension all companies, however grand and successful, can be expressed as multiples of a single site. That’s why big companies learn from little companies; small, new and entrepreneurial businesses can change the direction of the industry supertanker. Didn’t the first Pitcher & Piano on the Fulham Road launch the high street bars format? Would M&B have reinvented itself as the food-led powerhouse it is without the energy of Project Orange and Paul Salisbury’s one-by-one invention of mainstream gastro’? Individuals have influence and reputation out of all proportion to their size and helping them succeed is a huge privilege for the ALMR.

Having established that retail is the essence of the business it’s important to understand what distinguishes our Retailers. These differ by type, style and size and be they food-led, wet-led, entertainment-led, or none or all of the above, they each have their own business model and each need to be cherished for what they are and what they do. The importance of their particular issues ebbs and flows with the political and economic climate, and at any given moment one or other will require your undivided attention, sometimes at the expense of others taking a back seat. But whatever the hot topic of the day all retailers share the fundamentals of operating in this sector – people, permissions, planning, property – and plumbing! These are the bedrock of the business issues that they all face and which underpin the essential advice and representation that they must routinely get from their trade body.

You will certainly know that government is made up of the civil servants who do things and the politicians who, democratically elected, decide the direction of travel. The importance and relevance of each depends on what’s happening – policy and manifestos or regulation and implementation. In either case government is bigger than we are so we should pick our fights very carefully and campaign accordingly. But remember that every decision made by ALMR should be tested as to whether or not an action or a policy is good for members’ business.

By and large seek to make friends. Officials need reliable data and industry information. We may well know more than they do and so we should share generously and establish good relationships so that we are on the inside track and influential when things get torrid. If the government of the day is set on a manifesto policy or tabloid appeasement, then you are not easily going to stop it in its tracks but the business downsides can be moderated, amended or nudged to our advantage. Make sure you have earned their help when you ask officials to support your case.

Most politicians are in it to make the world a better place but they do rather like to take the credit for doing so. Their sympathy and support can also be earned by investing time and attention in their ambitions and the concerns of their constituents; ‘the pub’ is wonderful context and a touchstone of common interest in achieving that. In government politicians have to take responsibility for the big and difficult decisions that affect us all – and it’s not an enviable place to be. Persuading politicians of the rightness of our cause is one of the cleverest and most important skills you will be able to demonstrate.

Can you have two USPs? My English teacher would be outraged that I should think so – but ALMR has. The supplier members’ category idea was an outstanding contribution by Peter Martin when we launched. The suppliers may ostensibly be in it for the contacts they make, and that’s true to an extent. But what they actually do is add material support, influence, experience and information to what might otherwise be a rather self-absorbed retailers’ organisation. We may not represent them, but the suppliers provide balance and ballast to what we do and it would have been a very different ALMR without them.

And the events. I have been constantly amazed and gratified by the members’ generosity of spirit – in time, thought and effort to help colleagues and competitors alike. It is a good business to be in because it’s got such good people in it. They are gregarious and sociable and can only be sustained so far by newsletters and websites – they actually like to get together, and that’s why our programme of events works so well. From the high protein business workshops to the prestige conferences and Christmas lunch via an assortment of ski, golf and other more social occasions there is a programme for everyone to exchange views and improve our world.

ALMR is their organisation but it’s greater than the sum of the parts and that’s why you will do more than support the members and champion what they do; you have been entrusted with a leadership role.

And last but not least, I am very pleased to be handing over a first-rate team. The ALMR staff, in the form of office staff and loyal outriders, have a wonderful understanding of the sector – and put in the hard yards to deliver on our objectives. It simply doesn’t work without them.

Good luck – and enjoy!

Best wishes,


The battle for the pub sports pound by Paul Charity

It’s still slightly peculiar to think of BT as a major television broadcaster. But then again it would have been equally left-field to suggest a few years back that Sky would become a major UK broadband and Wi-Fi provider. It is the dynamic development of Sky as a telecommunications service provider that has forced a radical shift in BT’s business model. No longer is it enough for BT to provide telephone and broadband services in a world where Sky is snaffling customers by offering a wider range of bundled services and content at a discount. Sky is a broadcaster that developed into a telecommunications company. BT has moved to replicate the business model by becoming a telecommunications company that has developed into a broadcaster.

Yesterday, I journeyed to the Olympic Park to witness the official unveiling of BT’s three planned sports channels. It has three new broadcast studios due to be ready for use in July ahead of August’s big launch. And yesterday, too, it unveiled a raft of new content and new big name signings for its various commentary teams. But most interesting of all came the pricing strategy that it hopes will entice pub customers. Naturally enough, BT is seeking to be as disruptive as possible. So for all its domestic broadband customers, this means making the BT Sports channels free. This is the first time in history live Premiership football games will be available for free, one BT executive reported yesterday. It’s intended as a major incentive to retain existing BT customers – and a carrot to attract back those it may have lost to Sky. In the pub market, too, BT price-point is aimed at maximising disruption. At 22% of the average sum each pub spends on a Sky subscription, BT is hoping to pick up many of the 24,000 pubs that show free-to-air sport and much of Sky’s existing subscriber base looking to bulk up its sports coverage. Overall, BT hopes it will have more, many more, subscribers than Sky based on pitching its prices so low. It’s removing as many obstacles to sign-ups as possible with sweeteners such as three free months in an annual subscription and a free box and installation. And, interestingly enough, it’s clear that BT will flex to grab business. Historically, Sky declined to offer discounts for multi-site sign-ups. An Orchid Pub Company, for example, a company that shows a lot of live Sky Sports, paid the same as the landlord of The Dog and Duck.

BT is keen to book business and its director of commercial services Bruce Cuthbert, a former Sky executive, made it clear to me that current discussions were being conducted on an, er, open basis. The overall price equation for those looking to sign up to BT and Sky Sport will not be known until the latter declares its hand. Sky current pub sector income is likely to be around £125m if BT figures are right – around 16,000 pubs are paying an average of £7,716 per annum. This is wonderful high margin business overlaying its domestic subscription income. Sky will not be expecting to charge the same next season. In fact, The Financial Times suggested recently that it was already offering key customers a 30% discount. If these figures are right, it might not be unreasonable to suggest that avid sports pubs might be looking at a 10% discount on current costs it they buy both packages. For now, though, we’re still in the realm of guesswork.

Sky has had its critics for pricing policies in the pub sector but there’s no doubting that it’s done a formidable job of raising standards in sports broadcasting. And now it has a deadly serious rival with deep pockets. As tends to be the case with increased competition, customers are the beneficiaries. It was likely to be the thought of a price war and escalating sports rights costs leading to lower margins that sent both BT and Sky shares down yesterday.
Paul Charity is managing director of Propel Info 

Minimum unit pricing: the long haul by Paul Chase 

Last Friday (the 3rd May) the Scottish Court of Session ruled against the SWA’s legal challenge to the Scottish Government’s alcohol minimum pricing law. The court found that the Scottish Government had the right to legislate on such matters and that minimum unit pricing (MUP) was not incompatible with EU law. Personally, I found this judgment completely unsurprising, except for the speed at which it was reached. As I have previously written in this column, it is unlikely that any domestic court will overturn the decision of an elected domestic parliament unless that decision was floridly unlawful. Clearly there is a plausible legal case to be argued by both sides, but in fact the legal arguments are surrogates for the moral and policy arguments. I am opposed to MUP because I regard it as a misguided policy, not because I think it is unlawful. If the European Court of Justice (ECJ) eventually rules that it is unlawful, then from my standpoint that would be helpful!

I suspect that is the fear of those campaigning in favour of MUP in Scotland: Witness the morally indignant call of Alcohol Focus Scotland for the SWA to now abandon its intention to appeal the decision. Their chief executive Dr Evelyn Gillan said: “The Court of Session has issued a clear, unambiguous judgment, and finds no grounds for the drinks industry’s action against the Scottish Government. In light of this, we call on the Scotch Whisky Association to drop any further legal action.” Likewise, Dr Peter Rice, chairman of Scottish Health Action on Alcohol Problems (SHAAP), said: “We urge the Scottish Government to move quickly to implement this important legislation. In parallel, the alcohol industry needs to desist from efforts to block the implementation of this evidence-based policy.”

Well, they would say that, wouldn’t they? But if the decision had gone the other way, would the Scottish Government have abandoned its intention to appeal? Actually, both sides had announced in advance that they would appeal the decision if it went against them, so this is just morally self-righteous, political posturing. There is a reason why we have rights of appeal in a country, and indeed a continent, whose political decision-making is subject to the rule of law. How many times have we seen the decision of a learned, highly intelligent and experienced judge overturned on appeal by another equally learned, highly intelligent and experienced judge? And then a further right of appeal ensures a final safeguard. The point of an appeal’s system is not to enable the arguments to be endlessly rehearsed, or to afford delay, but to provide for the rigorous examination and re-examination of the thinking and logic of the parties to the dispute, and the judges who have previously ruled on the matter.

Of course, we also see the stereotyping of the industry position as being about ‘Big Alcohol’ putting profits above public health. The suggestion is that the SWA’s actions are a delaying tactic, much like the action taken by the tobacco industry to ward off the anti-smoking laws. I don’t think this is a ‘delaying action’. I think the SWA and its allies believe that MUP can be defeated, not just delayed. I hope and believe they are right. The European dimension to this is of key importance. Whether or not we remain in the EU we have to take account of our trading partners’ ability to access our market, if we want continued access to theirs.

The SWA’s Gavin Hewitt said: “We are disappointed our petition for judicial review has been refused. We are surprised at the ruling in light of 30 years of European case law on minimum unit pricing. We will be appealing against this decision and we remain confident of our position. The view from Europe is very different to that expressed by the court and we are not alone in having concerns about the legality of MUP.”

Without rehearsing all the arguments for and against, I remain convinced that once the principle of MUP is established for the off-trade, the practice will be extended to the on-trade; it is only a matter of time. To paraphrase the words of libertarian Conservative Christopher Snowdon: The proposition that the best way to defend our sector against the attacks made on it by the public health lobby is to “feed their crocodile in the hope that it will eat you last” is not a strategy that commends itself to me.
Paul Chase is a director of CPL Training and a leading on-trade alcohol policy commentator

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