Pubs: higher prices and fewer consumptions

15/07/2002 10:00

The favourable economy pushed up turnover in Dutch pubs and bars in the period 1995-2001. In the first quarter of 2002, however, turnover growth stagnated as the higher prices in pubs and bars and the economic slowdown resulted in customers eating and drinking less in these establishments.

Prospering economy pushed up growth

In 2001 turnover in pubs was 33 percent higher than in 1995. The increase was especially strong in the last three years of this period: turnover value rose by 20 percent. The prospering economy was the main reason for the surge in this period.

Turnover in pubs and bars

Turnover stagnates in first quarter 2002

This has now come to an end. Economic growth has slowed down substantially in the last five quarters, inflation is more than three percent for the second year in a row and consumer confidence is in a severe dip. The consequences are now being felt by pub landlords: turnover growth came to a standstill in the first quarter of 2002, the first time this has happened since the third quarter of 1998.

Prices up two years in a row

The period of turnover growth was accompanied by above average price increases. In 2001 prices jumped up sharply (by more than 8 percent), partly as a result of the increase in the rate of VAT on products sold in pubs and bars. In the first quarter of 2002 prices in this sector were 6.3 percent higher than in the previous quarter, a much larger increase than dictated by the level of inflation.

Prices in pubs and bars and consumer price index

Consumption falling

The less favourable economic situation and the strong increase in prices in pubs and bars have been resulting falling consumption for quite a time now.

Turnover volume, i.e. turnover adjusted for price increases, fell for the fifth quarter in a row. In the first quarter of this year turnover volume was as much as 7 percent down on the same quarter in the previous year.

Turnover volume in pubs and bars

Branislav Mikulic