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Morning Briefing Strap Line
Fri 17th Dec 2021 - Friday Opinion
Subjects: The covid hokey-cokey, a recurring nightmare, let’s hear it for cask ales, merging people and tech, why the on-trade needs to invest in a premium line-up
Authors: Paul Chase, Mark Wingett, Glynn Davis, Katy Moses, Jean-David Thumelaire

The covid hokey-cokey by Paul Chase

As the song goes: “You put your left foot in, your left foot out, in-out, in-out, shake it all about – you do the hokey-cokey and you turn around, that’s what it’s all about!” This neatly sums up the government’s response to the new Omicron variant. Having learnt nothing from the experience of the past 20 months, the government appears to be repeating all its past, failed policies to control the spread of covid but expecting a different result. This is the definition of madness.

If the size of the backbench rebellion on Tuesday is anything to go by – 101 Tory MPs voting against the government – it seems almost a third of Tory backbenchers recognise we cannot reintroduce restrictions every time a new variant appears in a never-ending stop-go cycle. To do so will render large sections of the economy uninvestable. Businesses in the licensed retail and hospitality sectors look to Christmas to get them over the dry months of January to March. But the travel industry, public transport and city centre high street retailers are all suffering too because of this knee-jerk response to the Omicron variant.

This rebellion is not just about opposition to the vacuous policy of vaccine passports, but to a feeling summed up by the phrases “slippery slope” and “a bridge too far”. As well as the civil liberties argument, there’s a feeling among some MPs that extra restrictions cannot be the default response to every variant of concern. As former chief whip Mark Harper put it: “We can’t respond every time by immediately going into emergency mode and shutting down large chunks of the economy.”

So, what is the rationale behind the government’s move to “Plan B?” And why introduce it now, having repeatedly said that the vaccination booster programme was our best line of defence? I can’t believe that moving to “Plan B” in the immediate aftermath of “Partygate” was a mere coincidence. A “dead cat” distraction designed to divert attention from the mantra “one rule for us, another for them” clearly became a political imperative. The government has known since the infamous Barnard Castle incident involving Dominic Cummings that this is a narrative that really lands with the public. So, “Partygate” opened the Overton window, and suddenly the persistent public health call for more restrictions became politically expedient.

But does the public health argument for more restrictions make sense, even in its own terms? On 8 December, when Boris Johnson announced “Plan B”, the Daily Telegraph ran this story: “Omicron cases could exceed one million a day by the end of this month, on the current trajectory, the health secretary has said.” My first thought was the Telegraph journalist had misunderstood, and that Sajid Javid had said we could have had a million cases of Omicron in total by the end of the month. He surely couldn’t have said something as nuts as one million infections per day. But, no, it seems he reported it correctly, because Javid went on to say the following:

“Although there are only 568 confirmed Omicron cases in the UK, we know that the actual number of infections will be significantly higher. The UK Health Security Agency (UKHSA) estimates the number of infections is approximately 20 times higher than the number of confirmed cases, and so the current number of infections is probably closer to 10,000. UKHSA also estimates at the current observed doubling rate of between two and a half and three days, by the end of this month, infections could exceed one million.”

What? This is a crazy projection! If there were one million infections per day in the UK, the daily infection rate would be 14,700 per million. I’m not an epidemiologist, but has there ever been a disease that spreads this quickly? Certainly, covid never has. In January 2021, case numbers peaked in the UK at 900 per million. Because testing detects about 50% of cases, infections would therefore have peaked at around 1,800 per million. So, “Plan B” has been introduced on the basis of a combination of political expediency and junk modelling.

In South Africa, a recent study that looked at 78,000 Omicron patients has shown that the overall risk of hospital admission is 29% lower for Omicron than Delta; that hospitalised patients are less sick, and the proportion of them needing intensive care is just 13% compared with 30% for previous waves. Some commentators say it’s not a valid comparison because, unlike the UK, South Africa is not a nation of fatties. Apparently, they’re all fit and as slim as racing snakes! Not true – the population obesity rate in South Africa is 28%, the same as it is here.

It does have a younger population, although Omicron appears not to have moved from the younger generation into the older, more vulnerable demographic. Professor Chris Whitty dismisses the South Africa comparison, saying the rates of serious infection can’t be compared with the UK because “South Africa has a higher rate of natural immunity”. Oh, and why is that? Well, it’s because only 25% of their population has been vaccinated, so they’ve developed natural immunity by catching covid and surviving. And it appears that infection-acquired immunity is more effective and lasts longer than the protection afforded by vaccination that wanes over a period of months. Well, gosh, who knew?

Which brings us back full circle to the UK government’s response. The government needs to answer only two questions: Firstly, will the restrictions of “Plan B” and the advice to work from home be sufficient to deliver the desired benefit of slowing down the rate of transmission of Omicron? And secondly, will these restrictions impose costs – economic and otherwise? The answer to the first question is an emphatic “no”. On Wednesday, 15 December, there were 68,710 positives out of 1.3 million tests – a huge jump from the day before – so current measures aren’t slowing down the velocity of transmission. The answer to the second question is emphatically “yes”. “Plan B” is estimated to cost £4bn a month in lost business – and all around us, we see how this is decimating Christmas bookings for licensed hospitality businesses.

So, what can possibly be the justification for a policy that imposes costs but doesn’t deliver benefits? Inevitably, this will lead to calls for “Plan C” – a full lockdown to give us three weeks to flatten the curve and get more jabs in arms. But three weeks to flatten the curve is something we’ve heard before, and we know where it leads. In any case, the government cannot afford the financial support that would be needed to implement a full lockdown. And then what? During the last lockdown, we had the imminent prospect of the vaccine cavalry coming over the hill to save us. Vaccines have greatly weakened the link between infection, hospitalisation and deaths, but nobody anticipated waning efficacy and the prospect of people getting vaccinated three or maybe four times a year in perpetuity?

As of 15 December, there were 6,246 covid patients in hospital in England – 56% lower than on the corresponding day in 2020. One in four are in hospital “with covid” rather than because of it. In other words, they were admitted for other reasons and acquired covid in hospital. Only 5% of general and acute beds are occupied by covid patients, but apparently, our £200bn-a-year NHS can’t cope with a couple of thousand extra admissions a day without being swamped.

We need, finally, to recognise that whole-population, non-pharmaceutical measures to control covid have growing costs – both economic and health-wise – but diminishing benefits. Vaccination is an important part of the strategy moving forward, as are the increasingly effective anti-virals that are now available. But we must learn to live with covid and move away from the whole-population restrictions. Government should have stuck to “Plan A” and not given into the demands of the zero-covid fanatics who would keep us in thrall to covid forever.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

A recurring nightmare by Mark Wingett

The problem with firewalls is that if you want your email to actually go into an inbox and not spam, you mustn’t swear. And how I have wanted to swear in print over the past 20 months – to use the full range of profanities to describe the ineptitude of the government’s handling of the pandemic, especially when it comes to its treatment of our sector. Just when you think it is safe to go back into the water, Boris and co will find a way to throw a few more sharks the sector’s way. Depressingly, this week has been no different. We’ve been here before, lessons still not learnt. The sector is again dealing with the hangover from a party (or should that be parties) it never went to as a “lockdown by stealth” takes hold. As serial sector investor Luke Johnson tweeted recently: “In many ways, the battering industries like travel, hospitality and live performance are suffering now is worse than before. There is no government support like furlough, many companies have more accumulated liabilities, and no end in sight to the restrictions.”

So, “Plan B” is with us. That it was rushed through came with the obvious consequences – mixed messaging and rules that contradict each other. For some city centre businesses, it will feel like a lockdown by another name. Cancellations have ensued, and although some operators saw trading initially hold up to a degree last week, that trickle became a flood as Boris Johnson repeated his trick from last March of telling people they could still go out, but best not to if you don’t have to. The sense of déjà vu is depressing and heart-breaking. And have we not learnt yet that if you are going to restrict the ability of businesses to operate to their full capacity, that you have to have support measures in place to protect them from further damage? Yet none have so far been lined up or seem forthcoming. I’m looking at you, Mr Sunak. As The Sun’s political editor Harry Cole tweeted on Wednesday night: “All eyes on Rishi Sunak, then. Morally wrong for PM to host a presser unsubtly-hinting-but-not-quite-saying don’t go out on the town in the run-up to Christmas, but then deny support for pubs, restaurants, theatres, cinemas etc. Parliament should force the issue.” Sunak’s video message last night (Thursday, 16 December) was woefully inadequate and insulting. 

And yes, we are an industry that has been supported more than many over the past 20 months. But also, we have arguably suffered the most, along with the travel industry. We don’t want handouts; we want to be able to stand on our own two feet. The talk of possible further restrictions has already started, but the damage has already been done. It seems the prime minister is determined to make good on what looks like an increasingly empty gesture – that this Christmas will be better than last – before the possibility of further restrictions in January.

The least the government could do is push out the reduced VAT rate past the end of March to later in 2022, and perhaps look at suspending business rates for the first quarter of next year for the whole sector. Then there is the possibility of a return of the furlough and direct grants that supported the hospitality sector earlier on in the pandemic. In that way, they could provide some confidence/reassurance to a sector that again feels like it has been hung out to dry, although how much more debt many in the sector could take on is questionable. As one sector leader said to me: “It is interesting that hospitality is being shielded from face mask wearing and Boris et al have actively said go out and celebrate Christmas. This could be because they recognise the damage the sector has endured, and they want to protect hospitality. Of course, it could also be a way of wriggling out of the need to provide fiscal support to the sector!” 

That we are back in this position at such a crucial time of year, on the back of unclear evidence of what the full impact of the new Omicron variant is, has only heightened the sense of frustration and anger coursing through the sector. We are again faced with a government needing to be seen to be “doing something” but not sure what that something is, or whether it has any relationship with common sense, while the hospitality sector and the ecosystem around it – suppliers, recruitment agencies, communications firms – is decimated.

The optimism of what 2022 could bring has for now, I fear, been extinguished. For many, investment, acquisition and growth plans have been pushed into the second half of the year and survival will again be the overriding aim. And who will want to go through it all again? Covid fatigue has already crept into the sector. How many more operators will look to cash in their chips early next year before that choice is taken out of their hands? Could you blame them? 

And what of silver-linings? Well, the sector is now battle-hardened, more adapted to new routes to market and operating more efficiently than it ever has. But really, these are crumbs of comfort this morning as operators look at their increasingly empty booking forms. The government has a week to provide something for the sector to cling onto – some substantive support, a plan, anything to ease the anxiety over the festive season, to give people hope. At the moment it is ushering more towards the exit, repeating mistakes you would have thought it would have learnt from by now. This is unsustainable, but the silence on support is deafening. There isn’t a swear jar big enough.
Mark Wingett is Propel group editor. An earlier version of this article appeared in last week’s Premium Opinion

Let’s hear it for cask ales by Glynn Davis

Something very unusual happened at my local pub, The Great Northern Railway Tavern, this week. Among the constantly changing 20-plus beers on draught, the two most interesting brews were rarely available hand-pulled cask ales from London-based Signature Brew and Deya from Cheltenham.

In the four years since Fuller’s purchased the pub it has been fully gung-ho for keg ales, with cask only available on four of the lines, and this week’s interesting pairing very much goes against the grain for the venue. Let’s be clear that this in no way reflects any sort of resurgence in cask. In fact, the situation is quite the opposite as cask ale has probably never been under greater pressure and is arguably fighting for its survival.

Sales of cask beer in pubs was down a hefty 40% between pubs reopening in April 2021 and July 2021. During this period, 113 million pints of cask beer were sold in pubs, compared with 189 million during the same period in 2019 before the pandemic hit, according to the British Beer & Pub Association.

Things were already looking pretty dire before covid-19 came along and, for intermittent periods, closed off the channel to market for cask – namely pubs and the rest of the on-trade – with cask sales falling by 17% between 2014 and 2019.

Much of this beer is consumed by the older demographic, as shown by Fuller’s, where only 9% of its cask sales are purchased by customers aged under 34. Cask has been unable to shake off its reputation as the domain of the older beer drinker. This means it has been dealt a double blow by covid-19 because it is this older grouping who are the most cautious about returning to their former habits – including regularly frequenting their local boozers.

This is being felt most acutely at JD Wetherspoon, whose customer base skews strongly to the older demographic. The company has, not surprisingly, found demand for drinks preferred by this cohort suffering badly – with cask ales down by around 30% during the 15-week period to 7 November compared with 2019.

In an attempt to kick-start things and get the cask ales flowing again, Wetherspoon reduced the price of some of its beers, including Greene King IPA, to a mere 99p in November. Recognising the severity of the situation, the promotion was quickly extended to the end of February. Sadly, the pub company’s actions are now being offset by the new Omicron variant and the government’s introduction of new regulations, which Tim Martin, chairman of Wetherspoon, has described as “lockdown by stealth”.

The problem for cask ale in this much broader narrative is that, yet again, the answer to selling more of the beer is solely down to reducing its price. Despite the various attempts by the brewing industry to inject some premium qualities into the cask category and notch up the price points, it has invariably failed against wider market forces.

The fact it is priced well below comparable keg beers is perverse because the product is much tougher to brew and keep in good condition, because of its live nature in the barrel versus pressurised keg products that are much more robust and have a significantly longer shelf life. Cask is only good for a couple of days once on the bar whereas keg has many weeks of shelf-life. This, therefore, leads to the potential for waste, or a poor-quality cask ale being sold to customers, many of whom have sadly switched over the years to the guaranteed freshness that comes with keg products.

What’s also needed is decent training in the cellar to handle cask. Needless to say, covid-19 has wreaked havoc on employment in the hospitality sector and boosted staff turnover rates, thereby planting yet another potential nail in the coffin of cask ale. What makes this situation so disappointing is that when pubs have reopened after the various lockdowns, the beer that many drinkers have sought out first has been cask because of its unique nature and its umbilical cord-like link to pubs.

It’s also the beer that visitors to the UK invariably want to try because it is not available in any other county around the world. You don’t need me to tell you there have not been many of these tourists around over the past 18 months. Although this has made very little difference to cask sale volumes, it does highlight just how important cask ale is to the UK and its place in the world of beer.

Few things have escaped the impact of the pandemic, and although cask ale is only one very small piece of the overall hospitality puzzle, its accelerated demise represents a sad situation for the industry as it’s part of the fabric of the British pub. I’m hoping the Great Northern Railway Tavern and other pubs champion more cask ales and that I’m not alone in being increasingly thirsty for this unique product before it becomes another victim of covid-19.
Glynn Davis is a leading commentator on retail trends

Merging people and tech by Katy Moses

When “order-and-pay-at-table” first entered our worlds, after the first lockdown, Mr Katy and I visited Vagabond in London Victoria. A great time was had by all except for one little mishap. Our first order, done on the new app, ended up at Vagabond Charlotte Street – something we only realised after half an hour of waiting for our drinks. I think the issue is now resolved, but a word of warning to operators: customers like me are far more stupid than you think, please make sure your tech is seamless!

Our latest research highlights the critical importance of the human touch in hospitality. But also that, far from it being a case of “the robots are coming for our jobs”, with current staff shortages and industry challenges, our industry needs tech to deliver against modern customer expectations. This is only going to accelerate in 2022. The desire for a human touch and connection is still absolutely at the heart of a memorable customer experience, and has in fact grown in importance post-pandemic, even in a quick service restaurant (QSR) environment. More than 40% of customers say staff friendliness and knowledge is even more important to them now compared with 20 months ago.

However, not all customers are desperate for service with a smile. More than one in ten just want to be left alone while in a QSR venue, for example, with minimal contact with staff. Research shows that the level of desired staff interaction varies based on time of day, occasion and customer type (and a million more things, to be honest!) Customers who want the most interaction from staff are women, those with children and, perhaps surprisingly, Generation Z. Only 7% said they prefer to be left alone while in-venue, compared with 17% of over 55-year-olds.

Generation Z and younger millennials also have higher expectations when it comes to staff knowledge about the food on offer, where it is sourced and allergens. They are also more likely to ask staff for personal recommendations compared with older customers. Generation Z are most likely to desire a fast, efficient, and frictionless customer journey, but it’s clear they also crave a connection with frontline staff while in venues. Despite the growth in technology within the customer experience, there is still a firm place for service with a smile, even with this tech-led generation.

The key is clearly for tech and staff to work in harmony. The research suggests, however, that many venues are having tech teething problems, with more than one in three frontline staff saying problems with tech had caused customer service issues in the last three months. We still have a long way to go as we navigate this new era of customer experience.

I think very few people will argue with the idea that technology will clearly play a critical role in the future of success for our industry, and it will benefit both customers and staff. The research identified, for example, that two in three customers are currently noticing staff shortages and say service levels are slipping, while one in five said they’d waited longer to be seated and served than normal. Staff are beginning to feel the strain too. The knock-on effect of shortages is leading to an overload of work on existing staff and subsequent stress and dissatisfaction, with an alarming 64% of those interviewed saying that working in hospitality is less enjoyable now than it was pre-pandemic.

Staff obviously only have a finite amount of time, so it’s critical they are focused on the areas which will deliver the greatest return. Quality and relevant training, great leadership and company culture, as well as emerging technology, are all critical enablers here. And far from feeling threatened by technology, 94% of hospitality staff are confident it can help them do their job, while 64% say their venue embracing time-saving technologies would improve their job satisfaction.

One of the biggest consumer trends to have been fast-tracked by the pandemic is the proliferation and acceptance of the digitalisation of order-and-pay across the hospitality industry. What was seen as ground-breaking 18 months ago is now considered a normal aspect of the customer journey. It didn’t surprise me at all how open customers of all ages are to this new way to pay – more than two in three customers welcome the ability to order and pay on a digital screen in a QSR, for example. Operators are reaping the benefits of digital order and pay too. Healthy, fast-food brand Abokado recently introduced an innovative self-service kiosk concept in their venues which has resulted in an increase in their average transaction value, all due to a faster turnaround and the kiosk’s upselling feature.

I think the key is implementing technological solutions that solve problems without creating new ones. The optimal customer experience should be frictionless. Frictionless technology and design are, in essence, about reducing the energy required by an experience. In other words, the customer experience would be improved without the customer having to do anything more and, in some cases, even doing less. The same can be said for staff too. The technology should save time, save money or add value above and beyond what is reasonably expected of the human staff.
Katy Moses is managing director of KAM Media, which carried out the research in partnership with PointOne

Why the on-trade needs to invest in a premium line-up by Jean-David Thumelaire

The premium beer category has long been going from strength to strength, but this has been cemented by covid-19. While pubs and bars were closed during the pandemic, many consumers sought to replicate the on-trade experience at home. Many chose to splash out on premium alcohol brands, with 52% willing to pay extra for quality when buying alcoholic drinks to have at home.

We are seeing this preference for premium continue now that pubs and bars have reopened. In the on-trade, the value share of premium options has grown (up 0.5 percentage point) from standard lager (minus 1.7 percentage point) compared to 2019. It’s significant that, for the first time ever, the premium and super-premium category is the biggest in absolute volume and makes up 40% of total beer consumption in the on-trade compared to core lager (31%) and ale and stout (27%).

We’ve seen this replicated in the success of our portfolio of premium beers. For example, sales of Stella Artois grew 15% compared to 2019, and Budweiser has driven 23% of total premium lager growth. However, it’s not just lager that is benefitting from a consumer shift to premiumisation as IPA now has 39.3% value share of the craft beer category in the on trade (up 8.6 percentage point versus last year). This is contributing to the success of Goose Island, which has the highest awareness level of any international craft brand.

Within the premium and super-premium category, we are seeing huge growth of world beer, which gained 1.8 percentage points value share compared with 2019, making it a must-stock for publicans. Corona, for example, is the number one most popular beer in the world. The beer brand claims a 5% higher price point than most world lager and has seen a 25% growth in rate of sale in the last few months. The popularity of world beer presents a unique sales opportunity for retailers, with two thirds of world beer spend coming from consumers with two or more beers in their repertoire.

The trend towards premiumisation is also replicated in the no-and-low category. The premium no-and-low beer category grew 23% year on year as consumers look to treat themselves while moderating their alcohol consumption. Brand is the most important factor for pub-goers when deciding which no-and-low product to buy – ahead of calories, ingredients, taste claim and ABV – cementing the opportunity around premium no-and-low options.

So, what can pubs and bars do? Brits love the pub, and the pandemic has made us realise just how important our local is for our communities. Beer is a clear winner in the overall alcohol category, bought by 67% of households. And since the on-trade reopened, we have seen beer volume bounce back quickly while gaining a share of the alcohol category.

So, optimising draught beer line towards the growing preference for premium is a sure bet for pubs. Prior to covid-19, the traditional bar had two core lagers on draught, four premium beers, three ales, one stout and two cider options in its portfolio. In the wake of premiumisation, we’re recommending pubs and bars now offer one core draught lager option, six premium beers, two ales, one stout and two cider offerings.
Jean-David Thumelaire is on-trade sales director at Budweiser Brewing Group

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