Wholesalers can help struggling pubs to boost their margins

What is the relationship between a modern, successful pub and wholesalers? I spend much of my time discovering how wholesalers meet the needs of retailers and restaurants; pubs, however, have so far remained a mystery to me.

So this month, I did what any right-minded person does when looking for wisdom and perspective: I went to my local. Mick Jackson has run the Nag’s Head – a 15th century pub in Great Linford, on the outskirts of Milton Keynes – for 14 years and knows a thing or two about the challenges facing the trade.

One of the biggest is the decline in our alcohol consumption. In 2003, the year after Jackson took over the pub, the average Briton drank 218 pints of beer a year. By 2011, that had declined by almost a third to 152 pints. Added to this has been a large increase in tax and, of course, supermarkets’ deep discounts on beer and cider.

In the years after the credit crunch, 52 pubs closed every week and in the past eight years, more than 20% of our pubs have closed their doors.

Talking with my local landlord, I was dismayed at the relatively insignificant support my decade of patronage had provided: of the £3.70 I spend on my usual pint of Guinness, a mere 40p is profit for him – a margin of 11%. My beer consumption at the Nag’s Head has therefore rarely contributed more than £2 in profit per visit.

This paints a tough picture. If an award-winning pub like this is making such meagre profits from beer and facing ever greater challenges, such as the National Living Wage, then how can it and other pubs hope to survive?

“They take at least 20% from everything – there’s a pub nearby which even has to give the brewery 20% from sales of tampons and condoms in the toilet,” he says.

Working with wholesalers turns out to be how. “We used to be tied into a contract for everything – food, spirits, toilet roll – with the Green King brewery,” says Jackson. 

Eight years ago, Jackson and his partner Lynne Amos decided to shift to a more independent operation. They would still get beer from the brewery but buy spirits, wine, food and everything else they need from wholesalers instead.

By sourcing curry sauces, fresh meat and vegetables from Booker and Bidvest, for example, Jackson’s margins have shot up to 65%. Wines and spirits margins, meanwhile, can stretch beyond 50%, making a mockery of the 11% margin my pint of Guinness provides. It’s the same story with snacks, soap, and – yes – the condoms and tampons in the toilets.

There are other benefits he can see from working with wholesale. Not only do Booker, Brakes and Bidvest supply food and wine, they supply Nag’s Head-branded wine lists and menus for free. Deliveries are regular and easily controlled by Jackson, who orders from Bidvest and Brakes by phone but from Booker using its website. And while Green King supplied the pub with frozen chicken from Thailand, wholesalers can source fresh British chicken for the same price. 

Wholesalers are providing better margins, personalised free point-of-sale material, greater flexibility and better quality produce – no wonder Jackson sees wholesalers as crucial to the success of his pub.

That Bidvest is his favourite highlights where others can improve to meet the needs of pubs. “Green King demands immediate payment for the beers we sell and the same is true for Booker,” he says. “Bidvest give us a month which is really useful, particularly at the start of the year when it’s quiet.”

It’s this level of respect, understanding and flexibility that have been in short supply for pubs, in an age in which breweries have wielded so much power and pubs’ takings have too often been in a tailspin.