Survival Struggle of British Breweries Amid Condition of Social Distancing

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Survival Struggle of British Breweries Amid Condition of Social Distancing

 Survival Struggle of British Breweries Amid Condition of Social Distancing

The Covid-19 outbreak has spread across the world, making a severe impact on the lives and economy around the globe. All the business sector has suffered due to the spread and lockdown measures used to contain it. Especially, the hospitality sector, which has been witnessing a severe financial crisis. During this, the British Beer and Pub Association (BBPA) released their Q1 2020 beer sales data, exhibiting the impact of lockdown on the brewing industry.

The BBPA reported that there had been a downfall of 7.2% in the sales of beer in Q1 2020 as compared to that of Q1 2019. In the 1st quarter of the year, only 1.5 billion pints of beer have been sold, which is the lowest the in last two decades since the records began.

Keeping in mind the safety measures, Prime Minister Boris Johnson had issued orders to close down pubs, bars and restaurants from Friday March 20th. In times of stress, beer had been a mean of relaxing and expressing one's feelings. The stressful times of social distancing and people stay at home quarantine, coupled with and bar closures, Covid-19 has almost halved the power of beer.

Since Britain is gradually easing the lockdown, the trade association has now asked the Government to give a definite pathway for re-opening the beer and pub sector from July 4th. In order to restart the operations of the industry, the association has requested the Government to confirm the same by June 13th as they will need three weeks preparation time so that breweries brew fresh beer again.

The Chief Executive of British Beer and Pub Association, Emma McClarkin said

Emma further stated that country’s pubs and breweries are badly in need of this clarity on the resumption front and the industry needs to be back in business so that pubs can be supported from closing permanently as the sales of beer declined to their lowest level in first quarter of the year.

Corona Impact on Breweries

According to the Chief Economist of the Brewers Association (BA), Bart Watson, on premises-sale of breweries, bars and restaurants are at stake but breweries which package may face a mixed short-term impact.

In the long run, if the economic conditions remain the same, it might create problems for the industry. Watson also added that beer sale has been relatively stable during economic downturns, as people want to store it considering the emergency and despite the trouble in economic trouble, it’s one of the habits which don’t die down easily.

The other major loss the breweries faced was the wastage of old stock, as due to the lockdown a lot of stock remained unsold and gallons of beer, ale, cider and other drinks with shorter shelf life had to be destroyed. It was the reason that after the announcement of the lockdown some, of the breweries started giving away beer for free, to all the takers who maintained social distancing.

Preventive Measures to be adopted by Pub Businesses after Re-Opening

  • Social Distancing- Keeping a distance of at least 2 meters would help reduce the transmission of Coronavirus as per orders issued by the Government; however, the pub owners have called the Government to half the 2-meter rule as it would result in difficulty in accommodating the customers and losing on the business. Some pubs might remain close because of the 2-metre rule.
  • Outdoor Seating- Restaurants and bars permission to operate hinges on the condition of offering table services and adopting two metres distancing norm to avoid overcrowding. In order to maintain the social distancing rule, pubs across many places have decided to make a seating arrangement in open-air or rooftops.
  • Reduced Opening- Guests will be advised to book tables in advance to avoid waiting in queues.

Let us discuss the share price performance of some Brewing Companies in the UK

C & C Group PLC (LON: CCR) - is a premium manufacturer, marketer & distributor of cider, beer, wine and soft drinks. Its financial reports for FY2020 were released on June 3rd, which indicates a rise in net revenue by 7.8 per cent and operating income by 10.4 per cent.

C & C Group PLC on 12 June 2020, last traded at GBX 215.00, up by 2.13 per cent from its previous close. The company's 52 weeks high/low range was reported at GBX 3.74 / 410.50. It was having a market Cap of GBP 655.09 million.

Fuller, Smith & Turner PLC (LON: FSTA) - Fuller's Griffen Brewery, based out of West London is a Brish brewery. It has its head office situated in London, UK. Its profit for the year ending on March 30th, 2019 was GBP 19.5 million, lower by 43.96 per cent as compared to that of 2018.

Fuller, Smith & Turner PLC on 12 June 2020 last traded at GBX 754.00, up by 1.84 per cent from its previous close. The company's 52 weeks high/low range was reported at GBX 610.00 / 1,230.00. It was having a market Cap of GBP 245.78 million.

Young's & Co Brewery Plc (LON: YNGA) - Young's & Co Brewery Plc is located in London and the South of England. It has 208 pubs of its own and 68 tenanted ones. Its 52 weeks revenue for 2019 was GBP 303.7 million which has been continuously rising in the previous five years. The company’s adjusted profit before tax stood at GBP 43.4 million, up from GBP 41.0 million in the last year.

Young's & Co Brewery Plc on 12 June 2020 last traded at GBX 1,232, up by 1.02 per cent from its previous close. The company's 52 weeks high/low range was reported at GBX 910.00 / 1,800.00. It was having a market Cap of GBP 364.49 million.

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