Langton Capital – 2015-10-27 – Daily Wrap: Alcohol abuse, sugar, evolution, fashions & other:
Leisure Wrap & Other:
So the trading day is grinding to a close. We’re another day older but are we any wiser? After a day of intensive head-scratching, pen flipping and gossip, we have been considering the following. As always, contact us if you’d like further details:
Various studies into effect of alcohol:
• The Institute of Alcohol Studies has produced a report on the impact of alcohol on the emergency services – here
• The IAS recommends more treatment centres, a lower of the drink drive limit, the introduction of a ‘flexible Late Night Levy’, a reintroduction of the duty escalator and the introduction of a minimum price for alcohol
• Allied to the report, the police ‘have urged ministers to call time on 24-hour licensing, after three-quarters of police officers and 50% of ambulance staff told a survey they had been injured while handling drink-related violence’ per The Guardian.
• ‘Police officers also said that 53% of their time was spent dealing with drink-related crime, and ambulance staff said 37% of their time was taken up tackling problems arising from alcohol.’
• This is clearly not good news but, less justifiably, The Guardian says ‘the majority (68%) of police officers surveyed blamed the introduction of 24-hour licensing in 2005 for alcohol-related crime, and many called for a return to the traditional closing times of 11pm for pubs and 2-3am for clubs.’
• As the CEO of the BBPA points out ‘24-hour drinking is very much a myth, as on average, pubs close less than half an hour later than they did under the previous Licensing Act.’
• A return to previous closure times would not affect the majority of food-led, accommodation-based or residential pubs.
• However, whilst there seems to be a move to liberalise gambling (wall-to-wall advertising post 9pm) and allow ambulance-chasing lawyers to tout for business, clamping down in one area seems a little incongruous
• And, after all, isn’t it all shades of grey? The ‘53% of time’ isn’t dealing with alcohol, it’s dealing with people who are inclined to abuse alcohol – and that’s a much bigger issue.
• It’s hard not to be rude here but they probably also spend 53% of their time dealing with people who have tattoos or are jobless or go to bed after 11pm but, whilst there may be an association, there isn’t any causality
• It would be a shame to throw out the baby with the bathwater because, as the BBPA says, ‘pubs provide a vital community function and we want to encourage drinking in a responsible environment like the pub.’
• It adds ‘UK alcohol consumption is falling overall and is down 18 per cent since 2004.’
• I may not be alone is finding it hard to believe that, as was also mentioned re minimum pricing for alcohol, there is no link between price and demand.
• I mean it’s simply not credible, is it?
• If sugar-based drinks were ten times as expensive, demand would fall. So the causality is established & all the rest is a matter of scale.
• Sure, there would be illegal sugar-stills popping up here and there – and there’s plenty of sugar to be had from a bag of apples – but that’s another issue.
• The base issue is surely not ‘will a tax work’ but rather is price the best way to address the issue
• It may be convenient to call for a tax but, as with the suggestion that higher prices would ‘solve’ any perceived alcohol ‘problem’, it’s also somewhat simplistic
Big ticket, small ticket:
• Whilst we may have moved on to wondering about the consumers’ desire to spend at all rather than just looking at the big-ticket, small-ticket split, it’s interesting to note Carpetright’s comments this morning.
• Despite caution from Travis Perkins last week, Carpetright group says trading is fine.
• Sales are +4% LfL.
• There is no change in full year profit guidance.
• We await further comment from the small ticket leisure and other retailers and, on that topic, Greene King will produce its latest leisure tracker tomorrow
Things can change:
• A propos of nothing it’s interesting to see that things can change.
• Emerging markets were just the ticket for the branded consumer goods companies, for example, until they weren’t.
• Ditto Waitrose, whose halo has recently slipped.
• Of course social and demographic changes do lead to more permanent changes but the above begs the question as to whether, in a couple of years, we won’t be praising big-shed food retailing and small ticket spending
Random information, hopefully not all of it useless (re most leisure operators etc.):
• UK earnings. BP is an exception, Whitbread was as well but there are a number of UK companies reporting & missing their numbers. Such actions lead one to periodically question the market’s rating.
• Oil price broken down below $48 after a few days steady between $48 and $48.50
• Coffee price down again, sugar rally fades.
• Pig prices down again, should be helpful for Cranswick. Group passes both higher and lower prices on – but margins have a habit of widening on falling prices. Price of hogs now down c28% over the last year.
• Payday lenders getting caught miss selling; not such a surprise, surely? Talk Talk down on ball-fumbling.
• Cooler weather good for the fashion retailers (see Nick Bubb this morning). Cooler weather also helpful for Premier Foods, custards, sauces and the like. Group reports H1 numbers on 10 Nov.
• Off our patch but, if VW is as good as or better than anyone else in the world when it comes to making car engines, why did they have to cheat when the others (allegedly) didn’t?
We’re so 21st Century, this morning’s Tweets (diff. font size denotes importance):
1. BBPA CEO Brigid Simmonds has called alcohol’s perceived impact on emergency services ‘a myth’ following a recent study.
2. The number of new wine producers in the UK rose 41% last year, with the HMRC receiving 65 applications.
3. Stonegate’s with TCG + NewRiver Retail’s purchase of 158 Punch pubs show there is still demand for pubs including tenancies per CBRE
4. Mexican fast food chain Chilango, which opens its 10th London site soon, is aiming to raise £1m through a second crowdfunding campaign
5. IEA notes fat taxes in Denmark didn’t change consumer habits + had limited impact on public health. Says any UK sugar tax would also fail
6. Majestic is to drop the six-bottle minimum purchase rule, meaning customers will be able to buy individual bottles from its stores.
7. Wal-Mart has applied for permission to test drones for home delivery in the US. It has been conducting indoor tests for some time
8. 130-strong Bingo operator Gala is being bought by investment trust Caledonia for £241m.