HIGH PEAK BUSINESS CLUB
Meeting with Chris Jeffrey of CGA by NielsenIQ on pubs
17 February 2023
“The off-trade has stolen our business!” wailed Tim Martin of J D Wetherspoon, claiming that 50% of the trade has shifted since he started his pubs business 40 years ago. But is this right? And how would you find out? We read headlines like this every day, yet it’s not often we hear how the data is collected or analysed and how forecasts are built on it.
Chris Jeffrey is a Scouser whose grandfather was Superintendent of Liverpool Docks – a stressful job by any definition. After Durham University he worked for Enterprise Rent a Cars as a graduate trainee, but soon moved to CGA in Stockport, a boutique research agency founded 30 years ago as the pub industry underwent massive upheaval. Last autumn the mighty international business Nielsen took them over, so CGA is now part of NielsenIQ.
In 1989 the Monopolies and Mergers Authority (as it then was) ordered the Big Six pub owners to divest themselves of hundreds of their premises to other proprietors, in the interests of increased competition, space for small brewers and driving down prices. Originally CGA simply kept a list of all pubs, but today’s managers work with a broad client range to track business right down to the level of individual locations and products. Data can be cross-referenced even to the level of an individual post code. How do they do it?
It’s as comprehensive an operation as human ingenuity could devise, for drinks suppliers, wholesalers, retailers and operators, along with investors and financial institutions. You’ve used this data, almost certainly without knowing it. Firstly there is Nielsen’s Retail Measurement Service (RMS) called “Scantrack” from almost every retailer from Tesco to the Co-op, from Bargain Booze to a rural garage. That’s supplemented by a Consumer Measurement Service (CMS) provided by households, 30,000 of them in the UK and a quarter of a million globally, who provide details of their purchasing in return for shopping vouchers (I’ve done one of these for IPSOS – and filling in the app every 30 minutes can be .. challenging).
CGA focusses on the food, drink and hospitality brands, from Brewdog to Five Guys to Gusto, Nando’s and beyond. Client businesses sign up for both data collection and for the analysis they require. It’s a massive numbers exercise – but that’s only the start of the story of identifying trends.
CGA look at consumers and retailers, specialising in the on-trade. Tills send EPOS (electronic point of sale) information in real time. The on-trade includes restaurants, nightclubs, sports clubs, but is still mostly pubs and bars – the hospitality industry which was so hard hit during the pandemic. Altogether CGA provides the most comprehensive sales tracker on the GB on-trade with a turnover of £12bn; outlet-level data comes from 90% of licensed sites in the country.
Then they start answering questions such as – Who are your customers? Is that market growing? If not, where are their eyes turning, and why? Analysis can go down to the level of a single post code – what are people in this area buying, from who, how, when…? Who are the people – what kind of consumers? How does this change over time? Do they switch between brands – who really are your competitors?
We asked Chris about how this astonishing stream of knowledge is monetarised. One member present (who runs a successful Buxton pub) asked in incredulity – “You get businesses providing the info for free, and then you charge them for the results…?” “It depends on the contract,” was Chris’s enigmatic reply. Some clients get the data back free too, but most are paying for the service they require.
We asked about the potential for bias this sophistication can introduce or intensify – when big brand names squeeze out the smaller suppliers and outlets both in attention and in fact. That’s a problem exacerbated by access to capital, which has left many independents floundering after Covid. But CGA’s job is not to make recommendations (unless they are asked to do so, for example for a possible site acquisition); their job is to ensure that the information is as accurate and timely as possible. In recent years it’s HM Treasury, licensing authorities and local planning committees who influence prices and practice, and who can decide what is sold where, or not: ask Jeremy Clarkson. In any case, “There’s a real opportunity for independents – they’re more likely to understand their local market,” said Chris. Look at Buxton, where Pizza Express is empty but the local independent restaurants are busy, especially at weekends.
We came to the question I had posed to Chris, “Will the pub survive..?” From 2008 to 2020 over a quarter of all licensed premises in Britain shut their doors – over 37,000 sites have been lost (-26.9%). That includes the years of the banking crisis and austerity, but perhaps it’s no coincidence that Netflix arrived in the UK in 2012 and Amazon Prime in 2014. In that number are over 9,000 lost pubs, that’s one-fifth (-20.2%) of the pub trade, so a noticeably smaller proportion, leaving us with about 39,000 pubs. The majority of pubs serve food of some kind, though staff pressures have shifted that recently, too.
The picture gets really uncomfortable since Covid hit. 3,423 of these closures happened between March 2020 and Dec 202. Worst affected are the leased pubs (2,234 closed, -12.3%) and independents (1,549 gone, -11.8%) while the managed pubs have actually increased in number (+360, +4.3%). In Whaley we lost the White Hart quite suddenly (it was selling without a licence, allegedly!) and the White Horse is still boarded up waiting for conversion into flats. However, growth is returning, as hope springs eternal in licensees’ breasts; Christmas trade saw a strong pickup in wet-led pubs despite dire predictions. The British still enjoy a night at the pub as a great celebratory treat, despite the average draught pint being 8.6% more expensive than the year before. Weekday visits are well down but Saturdays are up; customers are being choosy, with premium brands holding up well, although the after-work drinks gathering has not returned. Instead a third of customers are visiting a pub at lunchtime. Some urban pubs are making the most of these shifts, with activities attracting young mothers with children who might otherwise be home all day.
If publicans are imaginative about their offering they are doing well, Chris told us. Enticing events during quieter days of the week? That’ll bring them in. Gin and cocktails? Then provide snacks to complement the drinks; upgrade the menu, make this a special occasion every time. And nostalgia is selling well, apparently.
The High Peak has taken a slightly bigger hit than the country average since Covid (maybe because we have an older population?). Most nightclubs in the area have shut, albeit small in number anyway. As of December 2022 there are 250 licensed premises in the whole area, a fall of 13% since March 2020. Our towns have been impacted, particularly Buxton where 17% of all licenced premises have closed; in Glossop, a bigger catchment area which was busy during the Staycation summers, it’s a drop of 14%. However, we have more cafes, often in old licensed premises, and in Chris’ estimation “central Buxton is bouncing back.” That’s good news.
To close, Chris led us through a delightful Whaley Bridge study (our neighbours are “carefree dolce vitas” and “sparkling socialisers” – who knew?). The town has an unusually long tail of better-off households in comparison to the High peak average but a dearth of premium outlets, so in his view there’s scope for a new smart eatery or wet-led pub with a good menu. Hmmm.. I wonder. Many of those better-off households are pensioners, less likely to go out at night especially in the winter. Whaley is too small to be of interest to big name multiples, which explains why we have mostly independent or tenanted outlets, but such independents should be very cautious. There’s a minimum number of customers needed to pay the high costs of running premises and employing staff now, and Whaley, which doesn’t have much passing trade, has broken the hearts of several dedicated restaurateurs.
If you’d like to know what kind of consumer you are, you can go to the CGA website and take a test: https://cgastrategy.com/consumer-research/what-type-of-match-consumer-are-you/
Bottoms up!