Tough years ahead as UK economy forecasted to enter into a recession. The Bank of England (BoE) raised interest rates last week to 1.75%, the largest hike in 27 years, in order to offset soaring inflation which the BoE expects to reach 13.3% this autumn, remaining above 10% for much of 2023. The likelihood is that the nation will enter into recession, returning to mild growth in 2024. As a result, consumers will see the largest two-year fall in real household disposable income on record. The ONS suggests that consumers are already turning to debt, with 6 million more people using credit than usual, a figure that might increase as typical household energy bills are predicted to soar to £4,420 next April. Overall, this means discretionary spending is likely to fall, particularly among the bottom 10% of earners whose median wage has only increased 1% vs 11% of the top 1% of earners according to CEBR. In the hospitality trade, confidence has dropped significantly with the latest CGA data showing only 23% of leaders are confident about the next 12 months, down from 65% in March 2022. As the sector tries to recover from the pandemic, the rise in interest rates coupled with talks of recession is likely to discourage drinks consumers from spending in the on-trade dampening recovery efforts. While tough years lie ahead, current BoE forecasts are based on there being no change to fiscal policy. There are hopes for fiscal easing once the nation has a new prime minister come autumn. Source: BBC, Propel, Financial Times, UK Hospitality, The National, The Guardian, The Morning Advertiser, CEBR. |
Pubs and restaurants launch community-focused initiatives. Renowned chef and hotelier Raymond Blanc has partly funded a new Oxfordshire bus route that passes his Michelin-starred restaurant and hotel. The no. 46 is a joint community initiative between Blanc and the County Council, running hourly from Oxford through villages neighbouring his Le Manoir aux Quat’Saisons venue in Great Milton. The deal has secured the service for at least three years and enables rural residents on the route access to jobs in Oxford while providing a sustainable commute for Blanc’s staff living in the city at discounted fares. The forthcoming expansion of Le Manoir drove Blanc to reduce the impact of extra traffic that planned additions of a spa and hospitality training academy would incur. However, the neighbouring community has welcomed the service ahead of hotel development as passenger numbers exceed expectations. Initiatives like Blanc’s are not only helpful in attracting and retaining staff but are also manifestations of PROOF’s ‘Local Love’ drinks trends, whereby businesses are expected to give back and benefit the community. The Horse & Jockey pub in Melling was one example, leading 50 volunteers to cook over 15,000 free hot meals and deliver those with care packages and medication to vulnerable and shielding local residents during the lockdown. The owners created a permanent community kitchen post lockdown to continue helping those in need, with PubAid awarding the licensees and staff the Community Pub Hero Award in 2021. The awards, sponsored by Matthew Clark and supported by the All-Party Parliamentary Beer Group, recognise pubs that have gone the extra mile to support their local communities. Source: Propel, On-Trade Progress, PubAid |
High ABV craft beers winning in the USA. The American craft beer market has seen a significant shake-up in recent times. Traditionally, craft’s most popular beers have been easy-drinking, with the majority sitting in the 4-6% ABV range. However, these “industry building” beers have seen a decline in market share in the past 4 years, whilst beers above 8% ABV have grown their market share by 5%. One example is Voodoo Ranger Imperial IPA, which redesigned its packaging to more prominently display its 9 percent alcohol content, and subsequently became America’s best-selling IPA, according to Nielsen data. USA bottle shops are reporting higher demand for IPAs over American pale ales. On the other end of the spectrum, non-alcoholic beers have grown significantly in the USA whilst remaining a small section of the market. Since 2019, the sub-category has increased its retail sales in chains by 27%, leading to a 1% share gain across beer. Last year, Athletic Brewing Co. – who solely produce non-alcoholic beer – were confirmed as the 27th largest brewery in the USA, as companies invest in the future of the category. Source: Beer Institute and NielsenIQ, National Beer Wholesalers Association, ABC News, Washington Post For more information on Craft Beer, register your interest here in PROOF’s upcoming Craft Beer Report. |
Investments, Mergers & Acquisitions
Sources: Big Hospitality, Propel, Langton Capital |
Drinks Product Launches & Campaigns
Sources: The Morning Advertiser, The Drinks Business, Drinks Retailing, Kam City |