Craft beer pushes up sales at Marston's community pubs but prices will increase again next year

Alys Key
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Traditional pubs are getting a new lease of life as consumer knowledge increases (Source: Marston's)

Craft beer enthusiasts helped pub company Marston's to push up sales at community pubs in the year to 30 September, but the group will still need to push up prices in 2018 in line with inflation.

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The figures

In a trading update released this morning, the pub group said sales had grown across its different pub formats.

For destination and premium pubs, which includes gastropubs, like-for-like sales rose 0.9 per cent. Despite strong inflationary pressures on food and drink, the group said it had controlled costs so its margins were only slightly below last year's levels.

In taverns, a category which comprises drinks-focused pubs, like-for-like sales were 1.6 per cent above last year.

For leased pubs, like-for-like profits are estimated to be up one per cent.

Meanwhile in the company's brewing arm, the acquisition of Charles Wells Brewing and Beer expanded the business' reach. Own-brewed volumes increased six per cent.

The group said it had identified £5m in cost savings for the coming year, mostly from a reorganisation in its pub structure, but also due to some renegotiated supply contracts.

Shares in Marston's climbed 4.8 per cent to 109p.

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Why it's interesting

Since the smoking ban of 2007, commentators have been gloomy about the state of "wet-led" or community pubs, which focus on drinks rather than serving food.

But Marston's has today signalled something of a renaissance in this area, which chief executive Ralph Findlay told City A.M. is at least partly down to the higher consumer interest in different types of beer.

"We have definitely seen a younger profile in terms of the demographics of people coming to those community pubs, and more female customers who are as interested in what's happening in beer as men. That's a positive change."

He added that the reduction in the number of wet-led pubs since the smoking ban has allowed Marston's to invest in its own taverns and capitalise on the lack of competition.

Despite its gains in this area, Marston's still expects to put up prices in line with inflation next year, having done the same this year.

What Marston's said

Chief executive Ralph Findlay told City A.M. this morning that the company would be cautious with price increases.

"Customers are clearly under pressure and that makes us careful," he said "Broadly speaking we did put prices up roughly in line with inflation last year and given where we are in the market, I think we've still got the capacity to do that in 2018."

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