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18th June 2007, Oxford
Ahead of the July 1st smoking ban in England, reporting by market research company Nielsen, has identified that the On-Trade is likely to see a marked decline in alcohol volume in the coming year. Analysis of a year’s worth of sales data from Scotland following the ban there last March has identified that volume in licensed premises had fallen some 5%. When compared with trends in England and Wales over the same period, the numbers suggest that the majority of this decline (4%) can be attributed to the smoking ban.
Graham Page, Consultant at the Nielsen Company commented, “The On Trade is already under intense pressure with the number of pubs visits falling and aggressive Off Trade pricing continuing to take trade. The introduction of the smoking ban will put even more strain on this sector.” He continued, “Some optimism can be found from Scottish consumer opinion, with a sharp jump in the number who (six months after the ban started) claimed they were more likely to visit a pub if it was non smoking than in the previous year (57% up from 45%). However alcohol volumes do not seem to be supporting this with a notable decline in the Scottish On Trade 12 months into the ban.”
Not surprisingly volumes have been worse hit in the winter months when smokers are less inclined to stand outside in order to have a cigarette. Nielsen data also highlighted that beer was the category taking the biggest hit with Scottish volume down some 7% (36 million pints) in the 12 months to the end of March 2007. Page explained, “Beer volume is already under pressure South of the border with volume down 4% year on year. If we see a further 4% decline via the smoking ban this would equate to a 200 million pint fall out of the market.”
He Continued, “It’s not all doom and gloom and indeed some categories have performed well since the ban with Wine maintaining a healthy 3% volume growth year on year. This suggests a shift in the type of consumer frequenting the on trade and an opportunity licensees need to grab.”
“Furthermore, premises which focus on food will likely fare better as this has the double whammy effect of increasing sales through food and increasing sales because meals are often accompanied by wine. Indeed analysis from our Pub*Track service which tracks managed houses shows that in the year to March 2007 Scottish Managed houses outperformed the market showing a 14% increase in main meals served while in England & Wales growth here is behind at 10%. Now that pubs will have a smoke free atmosphere, the family market would be a logical sector to target.” added Page.
In addition, a recent Nielsen consumer survey highlighted that, when questioned, the AB socio-economic consumers said they would be more likely visit an outlet if they knew it was non-smoking.
“This is a key opportunity particularly to attack the 50+ market where a lot of high disposable income resides” added Page.
Page went on “The trade in England & Wales have had more time to prepare for the ban and it is also more oriented to the Multiple Groups so investment in outdoor facilities should be in place to help minimise any potential impact. It will probably take until next Spring before we can assess the impact of the bans now in place in Wales and imminent in England as the winter will be the real test. However the on trade will be bracing itself as in 2006 we had the benefit of the World Cup and the summer was a belter weatherwise.”
“The one real unknown and potential benefit”, he added,” will be any medium term benefits, 2 - 3 years on, for pubs and other On Trade operators, as the current 76% of people who are non smokers, may find smoke free atmospheres in pubs, clubs, hotels and bars much more attractive and it could result in much need increases in weekly visits”!
NOTES
The Nielsen On Trade Audit measures Retail DRINKS sales in Great Britain in Pubs, Clubs, Bars, Hotels and Restaurants, via a structured sample of 3300 On Trade outlets, weighted to represent all GB On Trade Licensed outlets, including managed, tenanted/leased and independent pubs.
The Nielsen consumer survey referred to in this document was polled 8 months after the Scottish smoking ban was enforced, in November 2006 through the Nielsen Homescan Panel of 10,000.
Pub food data was sourced from Nielsen’s Pubtrack service which measures sales in over 8000 managed multiple pubs through EPoS inputs.
About The Nielsen Company
The Nielsen Company is a global information and media company with leading market positions and recognized brands in marketing information (ACNielsen), media information (Nielsen Media Research), business publications (Billboard, The Hollywood Reporter, Adweek) and trade shows. The privately held company is active in more than 100 countries, with headquarters in Haarlem, the Netherlands, and New York, USA.
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