Raising the Bar To Meet The Challenge
Ways and means of improving business levels also figured strongly at the conference with VFI Secretary Michael Fitzgerald pointing out that while the video and DVD could have had the potential to ruin the cinema industry, by moving with the times and improving its offer, the cinema – as in the greyhound racing industry – had improved the entire experience for its customers and so survived.
According to outgoing President Val Hanley, the biggest problem for the trade remained the availability of cheap alcohol.
“It’s an ongoing battle with the Government,” he told conference, “We’re still waiting for the Government to do something.”
The Irish trade will be looking to Scotland on the possible development of minimum pricing with its proposed minimum unit price legislation, after which the Irish trade would be “…. in like Jack Straw…”.
Other than that, publicans needed to look at such things as water and splits in terms of giving the customer a good experience and value-for-money.
Other items to figure at conference included a warning from Val Hanley to be aware of the high running costs associated with iced countermounts.
“There’s a cost involved in having the ice countermount which can be as high as €2,000 to €3,000 per year in extra electricity if you’ve five or six countermounts,” he claimed, “Others coming onboard for this idea should consider all this.”
VFI President Gerry Mellett subsequently confirmed that costs to the publican run at around €600 to €700 per year per tap.
However he also pointed out later to Drinks Industry Ireland, “In fairness to the Budweiser countermount, it is driving sales. They are aware of our worries in relation to the cost of that countermount but they also reckon that the sales you will derive from it will more than offset the cost”.
But he added, “Heineken are going the same way with Heineken and Coors Light as are Harp in NI. If they all go that way, unless someone comes up with an ingenious way of doing it more cheaply, then there’s going to be a problem there”.
VFI calls on Government help for trade
The condition of the Irish pub trade continues to worsen with at least 3,000 jobs having been lost in the trade over the last six months alone, according to research commissioned by the VFI.
With this in mind, at its recent AGM in Ennis, County Clare, the Federation made four specific demands to Government to protect jobs in the pub industry:
* Introduce specific employment incentives to those working in the hospitality sector to help protect
* Introduce measures to prohibit below-cost selling and irresponsible marketing and promotion of
alcohol in supermarkets
* Halt any move to reduce the current blood alcohol levels for drivers from 80mgs of alcohol per 100ml
of blood to 50
* A 25 per cent reduction in rates back to 2002 levels, in line with the current cost of living.
Along with Chief Executive Padraig Cribben the new President Gerry Mellett called on members to remain positive despite poor trading conditions and called on the Government to assist the Federation to protect jobs in the pub industry.
Representing nearly 4,500 pubs in 25 counties, the incoming Carlow-based President underlined the fact that the pub trade is experiencing an extremely difficult period and that more action needs to be taken by both VFI members and the Government to help prevent more pub closures and the inevitable job losses.
Despite cutbacks, price reductions and cost-saving measures, pubs are still closing and jobs are being lost.
Drinks Industry Group of Ireland research published in March 2010 found consumer confidence to be down. It also found that 15,000 jobs had been lost in the last 18 months in the drinks industry.
And new independent research conducted in April this year by research company Ask Chili on behalf of the VFI showed that at least 3,000 jobs have been in lost in the pub trade in the last six months alone.
Speaking to delegates, President Gerry Mellett said,
"Research produced by independent research company Ask Chili has shown that over 80 per cent of publicans saw their revenue decline year-on-year with 28 per cent of those seeing a massive decline in revenue of over 30 per cent.
“The decline in revenue has led many to make severe cutbacks with over 40 per cent of publicans reducing staff numbers while 65 per cent have cut back the working hours of their staff.
“The drinks industry employs in the region of 85,000 people and we need these jobs to be protected. Legislation needs to help the industry and not hamper attempts to inject new hope.”
VFI Chief Executive Padraig Cribben added, “Our members are doing everything they can to ensure the pub industry has a future. They have cut staff numbers, cut costs and are trying to add value by holding events, putting on extra entertainment and raising the standards.
“The theme of this year’s AGM is ‘Raising the Bar to Meet the Challenges’ but we cannot do it alone and we need help. This is why we are calling on the Government to help the pub trade by incentivising employment in the hospitality sector and by not introducing draconian drink-driving legislation which will lead to more pub closures.
“The Government should also immediately introduce measures that will prohibit the below-cost sale of alcohol and the irresponsible sale and marketing of alcohol by supermarkets. We also strongly believe that by cutting rates by 25 per cent this will help publicans and small businesses keep their costs down which will help prevent job losses.
“What we propose will cost the Government nothing and will provide a much-needed boost to the industry. Our members are willing to make sacrifices and redouble their efforts. All we want is support and creative thinking.”
Those present at the AGM heard that the outlook for the coming months isn’t much better and industry sentiment is not positive with 97 per cent of publicans expecting further pub closures over the next 12 months and with only 30 per cent describing the outlook for their business as positive over the same period, according to the Ask Chili research.
The survey found only nine per cent of publicans expecting an increase in revenue year-on-year with 31 per cent having let two or more employees go.
83 per cent have reduced their consumption of energy/heat/water to help save costs while 85 per cent feel a reduction in blood-alcohol levels will have a negative effect on trade.
The VFI also announced that it is working closely with Fáilte Ireland to develop an accreditation scheme for pubs. This aims to offer a standard of excellence compatible with customer expectations and to ensure the best possible customer experience at all times. The pub is a central part of the tourist offering and as such pubs need to be true ambassadors for foreign visitors.
Membership loss slowing down
The rate of loss of VFI members has been falling consistently year-on-year for the last few years with 185 members dropping out in 2009 against 218 in 2008 and 326 in 2007, according to Kildare’s John Brennan, Chairman of Member Services.
“So the rate of loss is decreasing and the present losses can be put down to the downturn in the business at large,” he claimed at this year’s conference.
The Federation currently has 4,476 members which accounts for less than two-thirds of the pubs in the country, pointed out John Brennan who’d like to see only paid-up members able to avail of the Federation’s services.
On the other hand, the Federation had managed to get the mobile numbers of some 56 per cent of present membership along with e-mail addressess for 39 per cent.
Other positive events during the year included the successful radio campaign, he added.
Don’t underestimate value of lobbying says Yates
Publicans’ difficulties are nearly all caused by regulation and taxation with our having the highest tax and VAT on alcohol in Europe, believes Ivan Yates, guest speaker at this year’s VFI AGM.
“We’re looking at surviving a 20 per cent reduction in GNP here,” he told the conference, “And you’re trying to run a family business in relation to NERA, rates, below-cost selling, drink-driving, home consumption and pre-loading?”
In addition publicans were subject to a cross-border purchasing boom and out a Nanny State that still wants to legislate for its citizens on Good Friday, for example. Undoubtedly there had been changes in consumer socialising patterns, “….but you don’t need yesteryear’s legislation to regulate you out of the business”. Over the last five years around a pub a day had closed, he said, so publicans shouldn’t underestimate the value of lobbying their local TD for help. “Politicians, too, can be liquidated if they don’t get your votes,” he reminded delegates.
Val Hanley calls for more recognition for publicans
In his outgoing address to the conference as VFI President Val Hanley reviewed the history of the licensed trade which had suffered 20,000 job losses and 1,500 pub closures, a smoking ban “… in spite of the weather we have here…”, drink-driving and no realistic rural transport setup.
“Instead of more legislation, there should be more recognition of the contribution publicans make to the Exchequer, to the community, to entertainment, food and tourism,” he stated, “Perhaps we need to take a more militant approach to get the Government to wake up,” he concluded.
For the drinks trade, unnecessary legislation had been based on “incomprehensive research,” he claimed.
80% report decline in pub trade
Val Hanley was followed at the conference by the incoming President Gerry Mellett who told delegates that the VFI intends tackling the Government regarding the stipulation thatat least 50 per cent of a smoking area must be open to the elements ie have no walls.
According to Gerry Mellett, this needs to be changed and he intends that the Federation will set about making this happen. The incoming President told delegates that having been President Delegate for the past 12 months had allowed him to get a better view of what was involved in being VFI President.
One of the biggest challenges for him would be getting support for the Federation, he said. The two key issues here were “making ourselves understood” to both the public and to Government.
With turnover down 25 to 35 per cent, a recent survey undertaken on behalf of the Federation by Ask Chili has shown 80 per cent of respondents reporting a serious decline in revenue with 45 per cent having had to let people go.
While drink-driving and smoking have been blamed as root causes, not all of that is true, he said.
He also told the conference that outgoing President Val Hanley had been ratified as the Federation’s liaison between the VFI and the Government/Houses of the Oireachtas.