The Scottish Licensed Trade Association today releases its half-year On-trade Market Review, sponsored by KPMG UK, containing key insights on Scotland’s burgeoning food and drink sector.
Colin Wilkinson, managing director of the SLTA, said: “Our survey covers all types of licensed premises and is an indicator of the key challenges facing the wide range of small to large businesses which trade within the wider hospitality sector.
“Our survey is based upon quantitative research from 500 outlets covering the length and breadth of the country and is supported by major chains, independent operators and our partners in the Scottish Bartenders Network.
“Up against a buoyant market in 2018, fuelled by the World Cup and a hot summer, there has been a slight slowdown in the market, but retailers remain optimistic for the rest of 2019. Overall, 56% of outlets surveyed reported their business as growing or stable, with local food and drink and online bookings being key drivers of the market.
“We are also delighted to see retailers evolve to meet emerging market trends, with 15% of outlets seeing an increase in sales from the Women’s World Cup.”
Wilkinson also pointed to recent research indicating 71% of foreign tourists visit local pubs. “We are proud of our continuing support for Scotland’s Food and Drink 2030 Ambition,” he said.
“But there are concerns, particularly around Brexit. In our Christmas survey, 17% of respondents said that Brexit had negatively impacted upon them, and this number has increased to 28%.”
He added: “Looking forward, however, retailers are overall optimistic about their sector, with 72% anticipating growth or stability in the rest of 2019, with growth led by Scottish gin, online bookings and craft beers.’’
The report is the latest annual review from the SLTA and provides key insights on food and drink performance directly from frontline retailers across city centre and rural locations.
Alistair McAlinden, head of hospitality and leisure at KPMG LLP in Scotland, the survey’s sponsor, commented: “In what remains a highly uncertain trading climate, it is very heartening to see that more than half of operators report their business as being stable or growing.
“Perhaps, unsurprisingly – and following the prevailing trend in the UK casual dining market – the number of operators reporting growth has fallen compared to 2018, albeit a hot World Cup summer set a high bar last year.–
“Notably, an increased proportion of multiple unit operators are reporting declines compared to last year and city centre outlets are now reporting trading pressures more typically associated with rural businesses. No doubt a number of factors will be giving rise to these results, but curtailed customer spending and fixed cost overheads are likely to be chief among them.
“Mirroring recent survey results, national and local legislation, minimum wage-related considerations and rates remain the key challenges reported by operators.”
McAlinden added “Whilst Brexit uncertainty persists, and regulation remains a key challenge, it is more crucial than ever for operators to proactively and regularly review contingency plans, including taking appropriate advice at an early stage. Focus and caution must be borne in mind as the changing winds of autumn approach.”
Wilkinson further added: “The SLTA has been the voice of the licensed trade in Scotland since 1880, and this report demonstrates our ambition for retailers to work with manufacturers and brand owners by sharing the frontline key insights which our members are uniquely able to provide to manufacturers and wholesalers.”
EXECUTIVE SUMMARY
- RETAIL
HEADLINESS & CATEGORY PERFORMANCES
- We are seeing less growth in the first seven months of 2019 than in prior years. Overall, 56% of business are stable or growing, but the number showing growth has fallen from 48% to 26%. This will be partially attributable to the World Cup and a prolonged hot summer in 2018.
- We have no outlets reporting significant year on year growth (>>10%+) in the calendar year to July 19.
- Retailers have adapted to emerging trends, with 15% reporting an increase in sales during the Women’s World Cup.
- Independent/craft beer again stands out as outperforming total beer and total market.
- MACRO
ECONOMIC CHALLENGES
- Consistently over five years, retailers see government legislation – national and local – as the biggest challenge facing their business.
- Brexit has already started to impact – 28% of outlets have seen a negative impact on sales. This is an increase from 17% in our previous survey.
- OUTLOOK
- Last year’s hot summer and World Cup negatively impacted first-half performances, but as the year progresses there is increased optimism for the second half of year.
- The growth areas are expected to be online bookings, food, locally sourced products including craft gin and beer, and conversely the biggest decline is expected in mainstream beer and lager (46% of respondents expecting a decline).