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Greene King warns of a difficult year ahead but eyes food market

City A.M. Reporter
GREENE KING may have managed to weather the worst of January’s snow storms, but the integrated pub and brewery giant expects the rest of 2010 to prove even tougher.

For the 38 weeks to 24 January 2010, the Suffolk-based pub chain yesterday reported an overall 4.3 per cent growth in sales, despite a three week dip in sales as a result of adverse weather conditions.

Charles Stanley leisure analyst James Dawson said Greene King still fared better than most of its competitors. “The trend had been a seven per cent dip in sale during the storms but Greene King’s were only down three per cent.”

Greene King’s success during the bad weather was down to its local and destination pub bias.

Dawson said: “High street chains such as JD Wetherspoon rely on people popping in during their lunch hour or after work, with a large number of people staying at home Greene King benefited because people were staying at their local.”

But with this month’s VAT increase, as well as an expected hike in personal taxation Greene King is expecting, like its competitors, things to get tough in 2010.

“One of the outcomes will be that people will spend less on pub-based drinking,” added Dawson.

Instead, the Suffolk-based company is hoping to capitalise on what it does see as a potential growth market, food-related drinking. Last year, Greene King raised £207.5m through a rights issue in order to acquire pubs from struggling rivals. Yesterday it announced it had bought eight freehold, food-led managed pubs from Punch Taverns in a £15.9m cash deal. In 2009 like-for-like food sales growth remained very strong and its brewery arm also increased volumes by 7.2 per cent over the same period.