Greene King boosted by demand for Belhaven Best

BELHAVEN Best was a strong performer for Greene King in its first trading half, the pubs and brewing group revealed today as it claimed that a “voucher culture” for food was now taking hold in Britain.

Greene King's Finance director Ian Bull (left) and Chief Executive Rooney Anand. Picture: PA

Rooney Anand, Greene King’s chief executive, told The Scotsman: “Our core brands did well in the latest period, and Belhaven performed very well.

“Our Scottish pubs did well, particularly in the conurbations around the likes of Edinburgh, Inverness, Glasgow and Stirling.

“But other [less built up] areas in Scotland suffered, sometimes where the government is the biggest employer and extra hours have been knocked on the head.”

Anand said the squeeze on household income, despite the economic upturn, meant that a “voucher culture” of affordable deals was here to stay.

“People have chosen to be much more careful about spending money since the autumn of 2008. There is much greater use of digital information and comparison websites to get meal deals. I don’t think that is going to change in the short to medium term,” Anand said.

GK’s pre-tax profits slid 20 per cent to £65.6 million in the 24 weeks to 13 October. However, stripping out a £7m hit from losing a Court of Appeal battle with HM Revenue & Customs over VAT on gaming machines, group profits rose 5.7 per cent to £85.6m.

Anand said: “While trading through the first half of the year and since the period-end has been strong, and the economic outlook looks to be improving, customers remain careful with their money, particularly outside London and the south-east of England.”

Like-for-like sales in GK’s managed business – whose pubs, restaurants and hotels include the Hungry Horse and Loch Fyne brands – were up 3.5 per cent.

Value initiatives included a “Two for £3.99” offer for over-60s and weekly offers at Hungry Horse sites, as well as the launch of gift cards.

GK continued to dispose of tenanted, franchised and leased sites in its Pub Partners division, with 59 sold and 11 transferred to retail, leaving 1,218 sites – down from a peak of 1,700.

“We have some very vibrant tenanted pubs, but some are in tough, competitive locations,” Anand added. “We are pruning the bottom end of the tenanted estate to recycle the money in our large managed pubs.”

These closures meant revenues were down 4.7 per cent to £70.4m for the division, though revenue per pub was up 3.5 per cent on more volumes of beer and higher rental income.

Revenues from ales including Greene King IPA, Belhaven Best and Old Speckled Hen rose 3 per cent to £84.9m, though operating profits fell due to ongoing cost inflation and the mix of its sales.

Volumes were up 1.7 per cent ahead of a shrinking market. Keith Bowman, an analyst at Hargreaves Lansdown Stockbrokers, said: “Expanding food sales remain a key ingredient, whilst GK’s offering of premium ales has again contributed.”