Takeaway Beer Sales U-Turn - Will it Make Much Difference to Fortunes of UK Pubs?

Summary

• The UK government has been a little considerate towards the hospitality and leisure industry and has taken a U-turn, allowing the pubs to selling takeaway beer during the latest lockdown
• The UK Government has laid out ne plans for the pubs and restaurants in England
• Permission has been granted for selling alcohol for consumption off the premises

As Britain is going into a month-long lockdown starting from today, 5 November 2020, new plans have been laid out for the post lockdown period. With Christmas round the corner, the pub owners had requested to keep the pubs open for extended hours so that they can recover the second lockdown losses.

The UK government has been a little considerate towards the leisure and hospitality industry and has taken a U-turn, allowing the pubs to selling takeaway beer during the latest lockdown. Though some chains said that they will still struggle to survive, however, the decision has been broadly welcomed by the industry.

Some criteria have been set out by the government, permitting the hospitality outlets to sell alcohol during the four-week lockdown in England. Permission has been granted for selling alcohol for consumption off the premises via:

1. Purchase of alcohol for delivery is allowed, and the different methods of placing an order include online, by email, phone, post or text and
2. Pre-order of alcohol is also allowed, and people can collect it in a vehicle. The criteria here is that they cannot enter the premises and must remain in their vehicle.

Breweries, licensed shops, off-licences and supermarkets selling alcohol, have the permission to remain open throughout. Time slot prescribed for food and drink to be collected, is between 5am and 10pm, excluding alcohol. However, customers are prohibited from entering the premises. Alcohol can only be served via delivery or drive-through after 10pm. On-premise (areas adjacent to the site and outdoor seating) consumption of either food or drink is banned.

Reactions of the Industry on Takeaway

CAMRA’s (Campaign for Real Ale) national chairman, Nik Antona was elated with the government’s decision. He added that takeaways could prove to be a lifeline for income for local pubs and breweries across England during the lockdown month.

CAMRA has been continuously urging the government to introduce a special package for supporting the ailing pubs and breweries through the lockdown. Thousands of pubs and breweries have been facing the risk of closure without a sector-specific support package.

To Know More, Do Read: Pubs and Bars Call for Government Support Amid the New Social Distancing Norms

However the chief executive of the British Beer and Pub Association, Emma McClarkin was not satisfied with the government’s decision, saying that the change to the rules was not adequate to help its members who were forced to shut down their pubs for a month.

She also expressed her grief by saying that the supermarkets and off-licences were permitted to sell alcohol, which is unfair on the part of the pubs with off-licences, suggesting the government to grant the pubs with the same ability to sell off-licence alcohol.

Scenario Before the Commencement of Second Lockdown

On 4 November 2020, a day before the imposition of second lockdown restrictions, the streets of UK were filled with people who headed out to enjoy their last trip to a pub for the next one month. Prominent pubs in England priced pints of beer for less than £1.

Before the lockdown began on 5 November 2020 at 00:01 AM local time, various pubs all over the nation had slashed the price of draught beer, with some even offering pints as low as 95 or 99 pence ($1.28). The main reason behind the sharp reduction in prices of beer was to get rid of the stocks rather than wasting and pouring them down the drain.

London-based pub chain, Wetherspoon (LON: JDW) priced pints of beer for 99 pence ahead of the second lockdown in a bid to free up stuck capital and avoid wastage.

Stock Performance

At the time of writing, shares of JDW were trading at GBX 924.50 on 5 November 2020 (at 12:31 PM), up by 0.49 per cent from its previous close of GBX 920.00. The stock’s 52 weeks low/high price was GBX 559.50/1,734.00. It had a market capitalization of £1,107.50 million.

Let’s have a look at other pub stocks and their share price performance:

Mitchells & Butlers PLC (LON:MAB)

At the time of writing, shares of MAB were trading at GBX 168.60 on 5 November 2020, (at 12:37 PM), up by 2.68 per cent from its previous close of GBX 164.20. The stock’s 52 weeks low/high price was GBX 100.80/470.50. It had a total market capitalization of £704.75 million.

Young & Co’s Brewery PLC (LON:YNGA)

At the time of writing, shares of YNGA were trading at GBX 795.00 on 5 November 2020 (at 12:41 PM), down by 2.68 per cent from its previous close of GBX 808.00. The stock’s 52 weeks low/high price was GBX 806.00/1,690.00. It had a total market capitalization of £277.87 million.

Do Read: Performance of Pubs And Restaurant Stocks Amid Likely Total Social Lockdown Plans

Conclusion

The hospitality industry is among those industries that has been calling out the government for more support, be it tax cuts for the hospitality sector, employment support or business grants. The decision of the government to allow takeaway of alcohol might be a positive approach, but more such efforts are required. The sector has already warned that almost one-fourth of the employees of the pub and hospitality industry is estimated to go out of the employment if the government does not extend helping hand towards them.