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Is 2017 the year of the Red Lion? Could the public house sector be fighting back?

2017 may be a more positive year for the pub sector with the market beginning to see a slow down of pubs falling insolvent and closing. In 2016 it has been reported that pub insolvencies fell 7% down to 480.

The market has seen a lifeline in the rise of alternative finance options which many publicans have taken advantage of to invest in refurbishments and improvements to premises. Publicans had previously struggled to obtain vital support from banks following the recession but this extra funding is helping pubs invest in projects such as roof gardens and seating.

The growth of gastropubs has meant that more people are staying at pubs and bars longer and spending money on food as well as drinks. This market has also been helped by growing consumer popularity for craft ales and specialist gins with some consumers no longer raising eyebrows at being charged £5 for a premium drink.

More favourable licensing laws permitting pubs to stay open later are opening the market to an additional footfall and allowing them to compete with the old fashioned night clubs.

There has been a recent rise in the average sale price of pubs, especially those which are to remain as pubs with the percentage of pubs sold for non-pub use decreasing in 2016.

Overall the market is experiencing a lower supply and higher demand as well as increased volumes of freehouse deals. The emergence of more “free of tie” leases should help the pub sector go from strength to strength. Heineken have recently recognised this and whilst it may not be a popular move in the market they are investing large amounts of money in to the model and the pub sector.

For those partaking in a ‘dry January’ and many dieters questioning the health benefits of an alcoholic drink, The Independent has recently stated that the mere act of going to a pub has a positive affect on a persons life.

It is reported that like other complex bonding systems such as dancing, singing and storytelling, it has often been adopted by large social communities as a ritual associated with bonding. People visiting a local pub regularly tended to feel more socially engaged and contented, and trusted other members of their community more.

The outlook for the sector is expected to be a continued rationalisation with investment in good pubs and closure of the weaker ones, possibly ending in a better industry because of this.

Here at Portland we have lots of experience of assisting pubs, and breweries, with advice and support when facing times of adversity. Last year we started to see first hand the rise in popularity of craft ales with the successful sale of a local brewery out of an administration, saving a number of jobs and a popular brand of ales.

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