Monday 12 December 2016 12:01 am

Craft drinks have put a cork in the UK’s pub insolvency problem

Investment in craft beer, high-quality food and trendy refurbishments is helping save the UK's pubs from insolvency.

The number of pubs and bars unable to pay their debts has dropped seven per cent, decreasing from 521 to 480 in just one year, Ortus Secured Finance will today report.

Over the last three years, the rate of pub and bar companies going insolvent has dropped by 16 per cent because of alternative finance options that allow pubs to invest in "growing trends in public demand" like craft beer and food offerings, the leisure sector lender said.

Not only does better availability to debt helps pubs invest in a wider range of suppliers, but it also contributes to pub renovations like "interior designer" beer gardens or roofs and better food offerings, from which pub operators like Marston's have found success.

The number of pubs going insolvent has dropped by 7% this year (Source: Ortus Secured Finance)

In the UK, there is a large demographic of people who will shell out on super premium drinks, said Jon Salisbury, managing director at Ortus Secured Finance.

“Successfully tap into that super premium market and you can transform your margins," Salisbury said.

"A £5 pint no longer raises eyebrows."

For every £4 spent on beer in London, £1 was spent on a super-premium beer, according to research from UK brewer Miller Brand.

When consumers are willing to spend more on premium alcohol, they're also more likely to pay for high quality food, a trend that helps smaller pubs in particular.

“For small pub and bar companies especially, it’s crucial that they have access to alternative finance providers who are able to help them invest in their business- helping them become direct competitors of the larger, more well-known pub brands," Salisbury said.