Pubs group chief calls for freeze on beer duty

ONE of the drinks industry's most influential figures has called on the government to bring in a five-year freeze on beer duty to encourage drinkers back into Britain's beleaguered pubs.

Tim Martin, founder chairman of JD Wetherspoon, made the call yesterday as his pubs group added to the gloom enveloping the sector with a 12.7 per cent slide in pre-tax profits.

Martin, whose company has 700 pubs across Britain, said increases in excise duty on alcohol, minimum wage-related costs, and increased statutory holiday entitlements would cost the firm an extra £16 million this year.

He said: "We've already got the highest excise duty in Europe for beer. I want a moratorium for five years. No more tax increases until we're on a par with other countries."

The pub industry says it has been hit by a damaging cocktail of last year's extension of the smoking ban from Scotland to England and Wales, rising food and utility costs, declining consumer spending and cheap alcohol in supermarkets.

Wetherspoon's pre-tax profit fell to £54.2m (£62m) in the year to 27 July. Like-for-like sales fell 1.1 per cent, with a 4.3 per cent slide in bar sales outweighing a near-8 per cent rise in food sales.

The group is freezing the total dividend at 12p. Earlier this week Punch Taverns, Scotland's biggest pubs group, scrapped its final dividend altogether as it revealed difficult trading.

Total sales at Wetherspoon, which has about 40 pubs in Scotland including The Standing Order in Edinburgh and The Foot of the Walk in Leith, rose 2 per cent to £907.5m.

More positively, same-floorspace sales recovered somewhat in the first five weeks of Wetherspoon's new financial year, adding 1.1 per cent.

Martin said like-for-like growth might be easier now that the anniversary of the extension of the smoking ban to England and Wales had passed on 1 July this year. He said: "It's easier but not guaranteed. Non-smoking has been quite traumatic for the pub industry.

"As that effect wears off, people who were used to having a fag in association with a pint will slowly adapt and start coming back to pubs."

Food sales now account for 29 per cent of Wetherspoon's revenues, compared with 17 per cent a decade ago and 5 per cent on flotation in 1992.

Including bar purchases made with table meals, food customers generate around two-thirds of all sales and produce average weekly food sales per pub of about £8,800.

Keith Bowman at Hargreaves Lansdown, said the results "may not provide investors with significant optimism near-term, but some element of reassurance regarding the group's long-term desire to remain a key player can be taken..