The disparity pub sales in supermarkets has been highlighted by Wetherspoon chairman Tim Martin, says that pubs have lost half their beer trade to supermarkets since 1979 .
In 1979, when Wetherspoon first opened its doors, pubs accounted for around 90% of all beer consumed in the UK.
In those far-off days, few people drank at home and pubs were the UK’s main social melting pot.
Surveys showed that 50% of people met their partner, husband or wife in their local- hard to imagine today. Pubs have a lot to answer for, you might say.
Fast forward to 2019 and things had changed. Even before the pandemic hit, pubs had lost half their beer trade to supermarkets.
And the pandemic, of course, accelerated the trend. Supermarkets, which stayed open during the various national and regional lockdowns temporarily grabbed 100%, more or less, of beer sales.
We humans are creatures of habit, of course, so once we’d got used to drinking at home, on the beach, in the park or in a pal’s garden, it was far harder to persuade people to return to the pub than most imagined- especial given the whopping price advantage that supermarkets have.
But what had caused the revered institution of the British pub to suffer such a catastrophic loss of trade, year after year, long before the pandemic?
Tax is the simple answer. In 1979, pubs sold relatively little food, so few people noticed or complained, when VAT, then 8% , was charged on food bought in pubs, whereas food bought in supermarkets was VAT-free.
However, food sales in pubs, reflecting an international trend towards eating out, gradually increased at the same time as VAT rocketed to today’s level of 20%. So , in effect, the tax break which benefited supermarkets, became bigger and bigger.
With food at about a quarter to a half of total sales in most pubs, but still zero in supermarkets, pubs had no alternative but to charge customers more, for both food and drink, than supermarkets.
The reality has been that supermarkets have been able to subsidise the selling price of beer, using their VAT advantage.
And, as if that we’re not enough, pubs also pay far more business rates per pint than supermarkets- around 25 pence a pint in pubs versus about 2 pence in supermarkets.
To be fair, the pub industry hasn’t much helped itself. Instead of campaigning for tax equality with supermarkets- fairness and equality are sound principles of taxation- the big pub companies, over the decades , have only campaigned for temporary help when the going gets tough, as it undoubtedly is today.
But when the going gets tough, it’s tough for everyone, so the public sees requests for favours in downturns as unjustifiable special pleading. Instead of campaigning for temporary help, the big pubcos should campaign for equality, something that everyone understands.
Let’s not beat about the bush. If pubs are to survive and thrive in the future, generating a huge number of jobs as well as vast funds for the Treasury, they have to be treated fairly. Fairness means tax equality with supermarkets. Anything short of that means continuing decline for a once-great British institution.