On-trade set to struggle in 2012

2012 is likely to prove even tougher for the UK on-trade than 2011, despite an anticipated uplift from the Olympic Games and Queen’s Jubilee celebrations.

According to UK foodservice consultancy Horizons, the sector saw an estimated volume sales decline of 3-5% during 2011, adding further pressure on businesses after declines in consumer spending during both 2010 and 2009.

Horizons’ managing director Peter Backmann highlighted the possible impact of such sustained pressure, saying: “Although the number of corporate failures in the UK eating out sector has been fairly small, balance sheets have been stretched during 2011 and it will not take much to see the rate of failures rise, probably as early as the first quarter.”

While recognising that “The Olympic Games are likely to bring an uplift in sales for some foodservice outlets – most notably those with contracts at Olympic venues”, Backmann suggested that the halo-effect would be limited, with businesses outside its sphere even at risk of seeing their takings fall.

“Operators outside the Olympic venues could see visitor numbers drop,” he warned, adding: “If the UK sees 10% fewer visitors this year, compared to a normal year, the UK eating out market will be £100m worse off.”

This view of further decline was echoed by Mark Newton, client relations manager for on-trade data specialists CGA Strategy.

Assessing the outlook for on-trade wine sales in the year to come, Newton summed up: “Overall, we feel that the main driver of on-trade wine during 2011 – voucher culture and the uplift in wine value – will slow down in the coming year.

“Wine as a category will continue to see gradual volume declines across both still and sparkling as the economic climate remains uncertain.”

For further forecasts on what to expect from 2012, see the drinks business Trends Report, published with the January issue.