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Micropubs: Small is beautiful for UK boozers

Sally Anscombe | Flickr | Getty Images

Make mine a small beer: micropubs –mini drinking holes – are popping up around the U.K. and are looking to fill in the gap left by the decline of the traditional British "boozer".

Martyn Hillier is the "original" micropub owner, he told CNBC. He set up "The Butcher's Arms" in an old butcher's shop in Herne Village, in the south east of England, in 2005 and says that every year since then, he has made a profit.

The pub's success is in no small part due to – rather than in spite of – its tiny proportions compared to its larger neighbors.

There is seating for only 12 customers (though Hillier says the pub once contained 37 people) and there is no "bar" as such in the 12ft x 14ft space. The one lavatory is communal and accessed through the pub's "cellar," that is, a corridor. The Butcher's Arms is open five days a week and sells only real ale, beer and red and white wine.

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By keeping things small and simple, micropubs like Hillier's have become popular alternatives to the U.K's chain pubs and have managed to survive better the country's economic downturn and changes in drinking habits.

The Butcher's Arms micropub in Kent, image courtesy of Martyn Hillier

As well as being small, micropubs don't have many of the larger pubs' features. For example, they don't serve lager, spirits or alcopops – the beverages more likely to be drunk to excess by a larger pub's younger and rowdier clientele. They also don't play recorded music – in part to promote conversation but also to circumvent the need for a costly music license. They also avoid environmental health checks – and expensive improvements to catering facilities – by not serving food.

Hillier claims his pub has brought the community back together. "People actually talk to each other in my pub. They get to know their neighbors that they've lived next to for years but have never spoken to."

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The creation of micropubs is largely thanks to a 2005 change in the U.K.'s licensing laws that allowed shops to become public houses, or pubs. With low running costs compared to a conventional public house, in the five years since Hillier started his business it has made a profit each year, as have others that have followed.

And, in keeping with their size, the micropub market is currently tiny compared the U.K's traditional chain pub industry. There are currently 38 micropubs in operation around the U.K. and Hillier's own micropub generates up to £79,000 a year. The traditional pub industry, meanwhile, employs around 338,000 people and generates around £18 billion in revenue a year, according to a Pubs & Bars market research report by IBISWorld published in September.

But the chain pub is in trouble: Government taxes on alcohol have caused alcohol prices in pubs to rise while the relative cheapness of alcohol in supermarkets have pushed people into drinking at home, resulting in the closure of thousands of pubs shutting across the country.

As a direct result of rising beer prices, the Campaign for Real Ale organisation (CAMRA), which collects data for pub closures, told CNBC that its latest data for the six months up to March 2013 showed that 2 pubs closed, per week, around the U.K. In the year 2000, the U.K. had 60,800 pubs according to data from the Beer and Pub Association. In 2012, where the body's data ends, there were 49,433.

The Butcher's Arms' says there are a growing number of micropubs eager to fill the gap left by closing traditional drinking holes. Hillier runs the nationwide "Micropub Association" now and has become something of a guru for others thinking of setting up their own versions. Every micropub he's seen open – and 20 of them have opened this year alone – had been a success. "Every micropub that has opened has hit the ground running. As soon as they start and word gets round they have customers. And it's just going to get bigger."

"Micropubs are popping up all over the U.K., which can only be a good thing for drinkers as they often focus on a small range of quality local real ales and ciders because of their limited space," Neil Walker, the press manager for CAMRA, told CNBC on Friday.

He added that one micropub, the Railway Arms – located on Platform 1 of the railway station at Downham Market, Norfolk -- had recently won the group's national Cider Pub of The Year competition.

The British Beer and Pub Association (BBPA) is cautious about the rise of smaller public houses. "While micropubs might increase choice and diversity for the consumer, we're looking very closely about whether they're operating on a level playing field with other larger, licensed premises in terms of retail standards," Neil Williams from the BBPA told CNBC.

Williams said that while it was a positive thing to see more pubs opening, as losing any pub ripped "the heart out of a community" the beer body was keeping an eye on the trend to make sure standards were upheld. "It's really a case of 'watch this space' with micropubs."

- By CNBC's Holly Ellyatt, follow her on Twitter @HollyEllyatt

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