GREENE King, the pubs and brewing group that is buying rival Spirit Group for £774 million, was nursing a Hogmanay hangover yesterday after it revealed that tougher drink-driving laws in Scotland had hit its sales.
Those stricter limits, introduced early last month by the Scottish Government, cost Greene King about half a percentage point of same-floorspace sales at its main managed pubs business in the six weeks to 11 January.
Excluding Scotland, like-for-like sales rose 0.6 per cent, but including revenues north of the Border, sales were flat against the same period a year earlier.
The performance improved in the key two trading weeks over Christmas and the New Year, when like-for-like sales rose 2 per cent, but this compared with a 6.4 per cent lift a year ago. On the same basis, sales rose 0.6 per cent in Greene King’s financial year to date.
Rooney Anand, group chief executive, said: “Sales were encouraging in our retail business over the two important weeks covering Christmas and the New Year, despite a very tough comparative from last year and softer trading in Scotland following the introduction of tougher drink-driving laws.
“Outside of those weeks, trading was more volatile, with the weeks before Christmas slightly down on the previous year and soft trading since the New Year.”
The new drink-driving law in Scotland has reduced the limit to 50mg of alcohol in 100ml of blood, while the limit in the rest of the UK remains at 80mg. Holyrood justice secretary Michael Matheson has claimed the move showed that Scotland was leading the way in UK road safety, although campaigners have called for even tougher limits.
Greene King, owner of Dunbar-based brewer Belhaven, has taken over pubs including Doctors and Milnes in Edinburgh now the Spirit deal has been voted through by shareholders, making it the third-biggest pubs business in the UK, with 3,100 outlets.
The company, which also owns pub restaurant brands including Loch Fyne and Hungry Horse, warned in early December that although it had seen a 7 per cent rise in Christmas bookings, its leisure spend tracker survey showed people expected to splash out less on eating and drinking over the festive period. This was borne out, with Greene King saying yesterday that its leisure tracker showed an 8 per cent fall in household leisure spending in November.
However, the group still enjoyed record managed pub sales of £3.4m on Christmas Day, and saw sales of prosecco jump 78 per cent over the two key weeks of the festive period, “indicating that value remains a key consideration for customers”.
Greene King’s brewing arm saw sales rise 5.2 per cent over 36 weeks, with growth slowing to 3.7 per cent over the past six weeks.
“Growth continues to be driven by our take home and export channels, and by Old Speckled Hen, the UK’s biggest premium ale brand,” the company said.
Analysts at N+1 Singer said in a note that the broker was retaining a “buy” recommendation on Greene King’s shares despite the “soft” trading update, but added that it had thrown the rationale of the Spirit deal “into sharper focus”, and that management had to show momentum had been revived in the core business.
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