Polarisation, consumer support, business confidence, delivery etc.:

A DAY IN THE LIFE:

Baldrick may have majored on turnips…

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On to the news:

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QUESTION OF THE WEEK?

Question of this week:

What will win out, premiumisation or the consumer hunt for value? Or will the market polarise between the two?

Answer of the Week:

Of course there is no single answer but we do have sympathy with the suggestion that polarisation is likely. This may be likened to a barbell or egg-timer-shaped distribution of demand. Consumers, to this way of thinking, will go either the one way or the other.

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Question of next week:

What will happen to the delivery market when times get hard and when restaurants are open for sit-downs (and they may be discounting)?

PUBS & RESTAURANTS:

Consumer support:

Chancellor Rishi Sunak yesterday announced a temporary windfall tax of 25% of profits on a number of energy companies in order to fund measures designed to help consumers.

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The IFS has said the government will continue to come under pressure to help people facing high energy bills next year. Chancellor Rishi Sunak has told the BBC that his measures will have a “minimal impact” on inflation. We have our doubts.

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Business confidence.

The chancellor’s measures above, if they are moving money from business (via taxes) to consumers, could be deemed anti-business. Business confidence levels are currently rather low. The Institute of Chartered Accountants in England & Wales has surveyed 1,000 members across the UK has found ‘confidence at 18.6 on the quarterly index for Q2 of 2022.

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Nat West’s Alison Rose has said that confidence is falling across its corporate customers.

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Delivery:

Foodservice analyst Peter Backman has launched a new product, TheDelivery.World.

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The US restaurant industry has continued its growth run.

Return to the office: Grosvenor Estates yesterday commented on its performance, including trends such as the gradual return to the office.

Other news:

The Cross-Party Group on Beer and Pubs in the Scottish Parliament has launched the “Brew with your MSP” Certificate. The initiative will encourage members of the Scottish Parliament to visit local breweries.

COMPANY NEWS:

RedCat Pub Company has acquired the Castle of Brecon hotel, within the Brecon Beacons National Park, expanding its subsidiary, The Coaching Inn Group.

The MA reports that Heineken UK has proposed the closure of its Caledonian Brewery, citing the decades old infrastructure causing ‘significant inefficiencies and costs’. The closure of the historic building, which has been running for more than 150 years, would mean a loss of 30 jobs.

KFC UKI will trial delivery only kitchens in London, with each kitchen creating 30 jobs. Customers will be able to order from the delivery only kitchen locations through Deliveroo, JustEat, UberEats & via KFC’s website and app.

The British Honey Company, which is a producer of premium British honey and craft spirits products, has announced that it has agreed to terminate its JV with Tusmore Park.

The MCA reports that Knoops, the chocolate-focused cafe brand, is targeting 100 sites in the UK over the next five years.

Meatless Farm has created a range of five ready meals, with three frozen and two chilled. They are made using the same pea protein as the rest of the brand’s products.

Hostmore’s shares dropped by around 14% yesterday as the group announced lower sales, higher costs, lower margins and, presumably, lower profits. The group’s shares listed in Q4 last year and traded around 133p. They are currently changing hands at 43p.

HOLIDAYS & LEISURE TRAVEL:

RSM UK reports that rising inflation, the cost of living and falling consumer confidence are combining to dent recovery in the travel sector. Ian Bell, head of travel and tourism at RSM UK, said ‘Air fares have also rocketed by 12.6% year on year so it’s inevitable that winter breaks and summer 2023 holidays will cost more which could impact future outbound sales.’

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On a more optimistic note, UKinbound claims the sector needs to build on the boost to business that has come from the Platinum Jubilee celebrations. Many of its 300-plus members will host overseas visitors who have planned their visit to the UK to coincide with festivities for the royal landmark during June 2-5.

The UK government’s Flightpath to the Future plan has been welcomed by aviation industry bodies as it will see the formation of a new Aviation Council to facilitate ongoing dialogue between sector representatives and government.

The CEO of Norwegian Cruise Line Holdings, Frank Del Rio, is confident the sector would not face another shutdown due to the emergence of a new Covid-19 variant.

OTHER LEISURE:

Manchester United has reported larger losses and an increase in debt for Q3 of its financial year. The company, which is listed on the New York Stock Exchange, has recently finished the English football league season with just 58 points, its lowest total for the club in the history of the Premier League. The club will play in the Europa League next year.

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A number of Twitter investors are suing Elon Musk and Twitter itself over the handling of Mr Musk’s approach to buy the company.

FINANCE & MARKETS:

The Institute for Economic Affairs comments on the possibility of a ‘disruptive summer of discontent sparked by trade union militancy’ (presumably in response to a tight labour market and triggered by the need to push to keep wages moving in line with inflation).

Purplebricks has reported a drop in new instructions this year to date. This fits in with anecdotal evidence from elsewhere suggesting that the housing market might be cooling.

Sterling mixed at $1.2646 and €1.1757. Oil higher at $117.66. UK 10yr gilt yield up 7bps at 1.98%. World markets better yesterday. London set to open down around 23pts.

FORTHCOMING NEWS:

AG Barr holds its AGM today.

Next week is a short work-week running up to the Jubilee Bank Holidays. Very few companies have inked in announcements. We have Sportech’s AGM on Tuesday and that, at the moment, is about it.

The following week (beginning 6 June) is only a little more active with City Pub Group holding its AGM on the Wednesday and Fuller’s full year numbers on the Thursday.

RETAIL WITH NICK BUBB:

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