Is there a future for the pub? The economics of drinking

Formerly a British institution, a number of recent statistics suggest that the future may be less than rosy for the pub – the number of pubs in the UK has been steadily falling since 2000, and according to The Campaign for Real Ale, 18 pubs across the country closed every week in the second half of 2017. Why is the pub struggling, and what does it mean for students?

Tax on beer rose by over 40%…

There are various factors at play that can help explain the decline of the pub. Taxes have been rising on pints, with the British Beer and Pub Association stating that, between 2008 and 2013, tax on beer rose by over 40% – and over a third of these price (an average of £1.02) went straight to the taxman as reported by the BBC. Pubs are also hit by rising business rates and VAT, and publicans are often also expected to pay a rent to a landlord that can easily be in excess of £3000 per month.

It would be easier to offset these costs if people were buying at pubs but, since 2014, the volume of beer sold in supermarkets and off-licences (off-trade) rather than in pubs has continued to rise. The Institute of Alcohol Studies reports that the affordability of off-trade beer has risen by 188% since 1987, and wine and spirits by 131%. By contrast, pub prices have steadily risen, with the average price of £3.58 per pint of lager and £3.05 per pint of bitter. In London, the average price is £4.20.

An estimated 3% increase in sales of pub meals to £7.4 billion, and a decrease in the volume of alcoholic drinks consumed in bars and pubs…

Pubs are also now seen as more family-friendly places, with children now an accepted presence in many establishments (something that has been linked to both the lifting of a ban on children under 14 in 1995 and the implementation of the smoking ban in 2007) – this has led to an estimated 3% increase in sales of pub meals to £7.4 billion, but a decrease in the volume of alcoholic drinks consumed in bars and pubs. However, this has not come without issues – children’s behaviour topped the list of pub regulars complaints in 2016, and it is linked to 30% of UK adults cutting down on pub visits.

How do students fit into this changing drinking landscape? Somewhat surprisingly (especially given the amount of anecdotal evidence I’m sure we could all provide), all the evidence suggests that students are in fact turning their backs on alcohol and drinking. Figures from the Office of National Statistics show that a quarter of 16 to 24-year-olds class themselves as entirely teetotal (up from one in five a decade ago), and more than 50% think that they are only light drinkers.

Alcohol was at the bottom of today’s student expenditure list, with the average student spending £68 per month on alcohol…

Research also suggests that this current generation of students is one of the healthiest ever – a survey by student letting app SPCE found that alcohol was at the bottom of today’s student expenditure list, with the average student spending £68 per month on alcohol (down from £71 per month among students studying from 2007 to 2017), and 18% spending nothing at all on drinks. This is in contrast to an average spend of £120 per month on gyms and sports club memberships, an increase of almost 400% (unsurprisingly, the biggest expenditure is still rent and bills, at an average of £274 per month).

In Glasgow, a large drinking culture is a key factor in making it the UK’s least affordable city for students so it seems that universities and students’ unions are starting to catch up with the rise in sobriety. Students at Reading University and, as a direct consequence, the University of Kent, have set up societies for non- and light drinkers, and societies here at Warwick have seen a greater push by the SU to run more ‘sober socials’.

Obviously, the decline of the pub is not the biggest issue for a student audience that is far more likely to drink at nightclubs or at home, but it does suggest a huge issue in years to come – if a future generation is increasingly choosing to abstain from drinking and even adults are starting to reduce their alcohol consumption, how will the alcohol industry survive?