After a failed attempt to enter the Irish market almost a decade ago, Tim Martin and the J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY) pub group are back for another go. The pub chain that Martin named after a teacher who said he would never succeed in business has grown hugely since 1979, when Tim Martin opened his first pub, ‘Marler’s Bar’, in London. Today there are close to 900 J D Wetherspoon pubs dotted around the UK and the company share price has risen steadily since floating on the London Stock Exchange.
Having already conquered Northern Ireland with nine successful outlets, the firm is now set to take on the daunting task of tackling the Republic of Ireland market with a proposed acquisition of the Tonic public house in Blackrock, County Dublin.
New life for a staid market
It’s news that should have the Irish Vintners Association (IVA) quaking in their boots. J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY) shook up the pub market in the UK with low prices, cask ale, long opening hours and no music, while the IVA has been accused of being an ‘old boys club’ and of keeping the price of a pint artificially high among its members.
Tim already has some experience of Ireland. Back in 2004, the J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY) chain attempted to infiltrate the Irish market by buying a warehouse in central Dublin with the aim of converting the building it into a superpub. In the end, they pulled out, selling the £2 million premises at a loss. Chairman and founder, Tim Martin, spoke to Valuewalk regarding that decision, as well as the new venture:
‘As we were going though the transaction, property prices rocketed. It wasn’t worth going into the market with the intent of opening just one pub. It wouldn’t have been economically viable, so we scrapped the idea.’
Replicating success in the UK
By heavily undercutting traditional brewery-run pubs in the UK, Tim Martin built an impressive empire in a relatively short period of time. Given the high price of a pint in Ireland, can he do the same there? He seems to think so saying that the new pubs will as competitive as possible.
Indeed, rumours are circulating that the company has already lined up a second pub for acquisition, in the form of the landmark Forty Foot pub in Dun Laoghaire. Could this be the start of large-scale invasion and are there any plans for a city centre branch of J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY)?
‘Well, our Northern Irish pubs are doing very well. We could have a few more there, so there’s no reason we can’t do well in the south. The Republic has got more than double the population (of Northern Ireland) and so our aspiration would be 20 or 30 in the longer term. We’d like to be in Central Dublin, but we haven’t found anything yet. We have discussed one or two sites but nothing has come to fruition. Obviously, it’s a top place to be.’
Can you use your UK supply chain to offer the same business model to the Irish market?
‘It’s difficult to say. We hope to source a number of products of Ireland. There would be some products we would get from Ireland and England.
J D Wetherspoon’s key to success
The key to success, however, will all come down to price. Can J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY) undercut the existing bars?
‘We will always aim to be as competitive as possible, but this will partly depend on things outside our control.’
Craft brewing has seen a recent upsurge in popularity in Ireland with more pubs straying from the tried and tested big breweries and offering products from micro-breweries. That’s something Wetherspoon does in the UK, with regular craft beer and cider festivals. Is that something you’d be interested in trying in Ireland
‘We definitely keen to push traditional beers brewed in Ireland and some from Britain, Europe and Ireland.’
And do you expect any opposition from the likes of the Vintner’s Association?
‘The reality is most areas in which we’ve traded opposition from vested interest from time to time. As the years have moved on, it seems that tying to preserve a monopoly is something we don’t come across it much anymore. We’re hoping it will be the same in Ireland.’
Raise your glasses to J D Wetherspoon
That could be wishful thinking on Tim’s part. More than likely, J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY)’s biggest challenge in Ireland will come in the form of the powerful Vintners Association. The group will also find that their operating costs are much higher than in the UK. The recession has taken its toll too. Competition between bars in Ireland has never been higher. But, there is a readymade market for cheap pints and meals, if J D Wetherspoons can get their pricing right.
J D Wetherspoon plc (LON:JDW) (OTCMKTS:JDWPY) will offer the first real competition the Irish pub market has seen in years. Done right, it may not be too long until shareholders are toasting the success of Tim Martin’s Irish venture.