Bitter blow for pubs as more opt to call last orders

It is a bitter blow for the licensed trade but 1.2 million fewer pints of beer are being drunk every day in Britain this year compared to last and over twenty pubs a week are calling last orders for the final time.

The British Beer & Pub Association blames mounting costs - including pub rents, wages and higher wholesale prices for beers and other drinks - together with sinking sales due to falling consumer confidence, higher beer prices and impact of the smoking ban which came into force in July 2007. But the biggest villains of the peace according to the pubs are the major supermarkets whose cheap beer has created a significant price wedge between the cost of drinking at home or having a few jars down the loca.

The latest data for April through to the end of June shows beer sales in pubs, bars and restaurants are down 9.6 per cent, while sales in supermarkets and off-licences are up 7.4 per cent. The BBPA estimate that around one million jobs are reliant directly or indirectly on the licensed trade.

This BBC news video looks at the issue of pub clousres and how pubs and clubs in Newcastle upon Tyne are hitting back - by ignoring self-regulation guidelines on price discounts and bringing in deep discounting of pitchers of beer and wines sold in their premises. Is there a case for having a differential excise duty on beer - one for pubs and one for the supermarkets? Or would that simply distort the market mechanism?

How much responsibility should pubs themselves take for the declining sales? It is certainly a fascinating story of how changing relative prices affect the incentives facing beer drinkers - and also how the industry itself must face up to the challenge of a shift in consumer preferences.