Reading the Scottish smoke signals

It is just over a month since smoking was banned in Scotland and reports on the initial impact have been markedly positive. The reaction of Scottish consumers to the legislation has been surprising, with smokers happy to wear it and non-smokers enjoying a newer, cleaner and fresher-smelling pub. As a consequence, pub and bar operators have reported marginal uplifts in sales. A piece of research by analysts at Merrill Lynch suggest wet volumes are unchanged, with beer in 3% volume decline and wine and spirits in growth. It said food sales growth had perhaps predictably surged ahead since the legislation. Merrill’s initial observations are: most pub owners and managers have been surprised by the reaction of the Scottish consumer to the smoking ban; non-smokers are returning to pubs; the reaction from smokers is mixed with some happy to cut down while others are less pleased. The lack of outside space for smokers does not appear to have had any impact. This maybe the shrewd timing of the ban, which kicked in as the clocks reverted to British Summer Time, and could change come November. Merrill suggests that some customers are moving from pub to pub more as they take the opportunity to smoke as they walk. This might currently be hurting some pubs but should even out over time. Clearly it is very early and most of the evidence is anecdotal. But Ireland is increasingly being discounted as an accurate indicator of what could happen here, given market-specific circumstances. When a ban kicked in there, a very wet-led on-trade was already declining 4% annually. Drinks groups that raised prices to try and offset assumed lost sales only served to compound the problem, driving consumers to the off-trade. Home consumption soared. Most are looking to Scotland for clues of what will happen in England in July 2007, when smoking is banned. Operators warned of a “novelty factor” in Scotland as consumers sampled the new smoke-free establishments. Tim Clarke, chief executive of Mitchells & Butlers said time was required to gauge the real impact of the legislation. Clarke said: “Initial indications are extremely positive. If this performance should be sustained it’s very good news for the ban in England and Wales next year, but we need six months.” For wet-led, low-volume “boozers” with limited opportunities to appeal to new customers or re-engineer the offer, the smoke-free future is perhaps not great news. But there is genuine reason to believe that for the majority of UK pubs and restaurants, the smoking legislation is an opportunity as much as a threat. As Giles Thorley, Punch Tavern’s chief executive, writes in the latest issue of M&C Report: “The pub sector has proved its resilience and propensity to evolve over the centuries. “Those that embrace the smoking ban as the next step on the road to improved standards of environment and service will benefit. “After all, how many customers like the smoky atmosphere of the pub? People don’t go to the pub “to smoke” and 75% of the population don’t smoke anyway.”