Wetherspoon Offers Pints of Ale For 99p As Pubs Start Selling Off Stock Ahead of Lockdown 2.0

• The second lockdown announced by the British Prime Minister has allowed the Britons to enjoy beer pints at just under £1
• Restaurants and Pubs are offering great discounts on their drinks till Wednesday as the nation will go for a second lockdown from Thursday
• Nearly 70 million pints of beer went down the drain during the first national lockdown in March

The ailing beer & pub industry is making all efforts it can to survive the catastrophic impact of the prolonged crisis caused by the coronavirus pandemic. In the wake of a second lockdown announced by the British Prime Minister, the FTSE 250 listed pub owner, J D Wetherspoon Plc (LON: JDW) announced the sale of pints of ale for just 99 pence to free up the cash locked in the inventory. The unsold stock would otherwise have to be dispose of unused and will go waste.

The announcement of the second lockdown was much anticipated, still, it came as a surprise for the restaurants and pub owners as offering takeaway sales has also been banned, and a small window from the announcement to the start of the lockdown could lead to a lot of stock ending up in the trash. According to data from the trade body, the British Beer and Pubs Association (BBPA), nearly 70 million pints of beer went down the drain during the first national lockdown in March (during the peak of unprecedented crisis). BBPA estimates 7.5 million pints of beer to be wasted with the imposition of the second national lockdown.

Also read: Pubs and Bars Call for Government Support Amid the New Social Distancing Norms

The pub & bar owners are open until 10 PM on Wednesday, after which the lockdown conditions would come into effect. It came as a surprise announcement by the British government on Saturday and could prove as another nail in the coffin for the ailing beer & pub industry.

This is the second time when Wetherspoon’ has slashed prices for its pints. The beer & pub company had earlier slashed prices of its pints of ale to £1.29 when the Chancellor of the Exchequer, Rishi Sunak announced ‘Eat Out to Help Out’ scheme in order to boost the ailing hospitality sector.

During the fiscal year 2020 ended 26 July, Wetherspoon’s Like-for-like sales were down by nearly 30 per cent. The company had never come across such kind of catastrophe since its inception in 1984. The company’s operating profit (Pre-IFRS 16 before exceptional items) was down by 94.6 per cent year-on-year to £7.2 million during the fiscal year 2020. So, it is no surprise that Weatherspoon did not propose any final dividend for 2020.

Since the reopening of pubs in July, there have been around 46 million customer visits to Wetherspoon's UK pubs, where no instances of virus transfer had been reported through the NHS test and trace system. Only 1 per cent of Wetherspoon employees have tested positive for the virus out of 43,000 strong workforces following a significant increase in testing across the UK. It has been often presumed that pubs are among the riskiest places for falling prey to the deadly virus.

Another UK based Stonegate Pub Company pegged all its cask ale beer pints at just under £1 as it announced a three-day sale from 2 November onwards until 4 November across its estate.

Also read: Performance of Pubs And Restaurant Stocks Amid Likely Total Social Lockdown Plans

FTSE 250 listed Wetherspoon's shares traded at GBX 899 on 3 November at GMT 1:51 PM +1, up by 5.15 per cent from previous day closing price level. The company has lost huge market capitalisation as its shares plunged by nearly 50 per cent in value on a year to date scale.

One of the largest pub operators, Mitchells & Butlers (LON: MAB) incurred a cost of £11 million in waste caused by extra beer in pubs ready for St Patrick’s day, which could not take place due the first lockdown induced by the unprecedented crisis in March. The restaurant and pub owners are currently offering dirt cheap deals to clear their inventory; else the stock could end up in drains, not fit to be consumed.

A sudden lockdown can lead to a huge amount of waste creation. Manchester alone could see more than 300 thousand pints going down the drain. The pandemic has weighed down heavily on the restaurants and pub industry throughout 2020. The sector has been suffering shockwaves in terms of store closures followed by travel bans and quarantine regime.

The sector was eagerly awaiting the festive season as a significant portion of earnings is made during this time of the year i.e. Halloween to New Year rush. Another lockdown could lead the battered businesses into an existential crisis or a collapse.

In addition, local lockdown rules rolled out earlier did not allow alcoholic beverages to be sold even as a takeaway. Meanwhile, Britons can enjoy their drinks at dirt cheap prices before Thursday.

FTSE 250 listed Mitchells & Butlers shares traded at GBX 161.40 on 3 November at GMT 1:27 PM +1, up by 4.67 per cent from previous day closing price level. The company has suffered a severe loss in market capitalisation as its shares plunged by more than 66 per cent in value on a year to date scale.

A lot of wastage was seen during the first national lockdown both of food and drinks. Businesses are trying to clear their stock before another lockdown by offering them at dirt cheap prices as the length of the lockdown cannot be said to be certain, and secondly, food & drinks have a definite shelf life. Also, the businesses would like to free up the capital, which is stuck in the form of inventory.