PRESS RELEASE BY MBD...

UK PUBIC HOUSES MARKET RESEARCH REPORT

RELEASED: MAY 2008

After researching the UK public houses market development and taking into account various other factors the following conclusions can be drawn from MBD's report:

MARKET REVIEW 2003-2007:

In 2007 the total number of public houses in the UK is estimated at around 57 500, representing a decline of 1% in the year and consolidating a 2% decline recorded in 2006. Prior to that, the number of pubs in the UK increased in 2003 and 2004, albeit at moderate levels. The downward trend in the number of pubs is a reflection of several factors. This includes social factors such as the overall decline in alcohol consumption and the trend towards home drinking, as supermarkets sell alcohol at significantly lower prices than public houses. Furthermore, the introduction of the smoking ban in 2007, rising employment, food and energy costs and weaker consumer confidence have also negatively affected the public house industry, resulting in an increased number of closures. Indeed, according to research by the British Beer & Pub Association, during 2007, pubs were closing at a rate of 27 a week, which is seven times faster than in 2006 and 14 times faster than in 2005.

MARKET FORECAST 2008-2012:

MBD believe the number of public houses in The UK is set to continue to decline, at least in the short-term. Indeed, the number of pubs is expected to fall by 2% in 2008 and again by 2% in 2009. In the medium term, the number of pubs is expected to increase, albeit at modest levels. Indeed, between 2009 and 2012, the number of public houses is forecast to increase by a moderate 3% to 57 071, although compared with 2007 this still represents a decline of 1%. Trading conditions are expected to remain tough in the short-term, reflecting weaker consumer confidence and rising costs, resulting in more pub closures. Wet-led pubs are expected to continue to be hit the hardest, although pubs focussing heavily on food sales are also predicted to face more difficult conditions in the short-term as pressures on disposable income remain high, at least during 2008. The ongoing trend towards home drinking, as supermarkets sell alcohol at significantly lower prices than public houses, is also anticipated to continue to exert a downward pressure on the UK pubs market.

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