Why is Lidl opening a pub?

An important development from the financial markets: Why is Lidl opening a pub? 7 hours ago Share Save Add as preferred on GoogleJake WoodBBC News NI BBCIt really has been a big talking point and we have almost reached the main event as Lidl is set to open a pub in the coming weeks. There has been much debate about what seems like a bizarre idea of having a cold pint after exploring the store's well-known middle aisle.

It may sound like a gimmick but the supermarket chain's venture into the world of hospitality shines a light on something more complex. 'Surrender principle'Northern Ireland has one of the strictest alcohol licensing systems in Europe, wherein anyone wanting to open a pub or off-sales must buy an existing licence from another business which has closed. This 'surrender principle' has shaped the pub trade in Northern Ireland for the best part of the last century, limiting new venues and driving licence prices into the hundreds of thousands.

Economic Details

This £500,000 Lidl pub, which is to be called The Middle Ale, is raising new questions about whether licensing laws in Northern Ireland should be reformed. The new pub in Dundonald, east Belfast, will open next month and will accommodate up to 60 customers. It will not operate in the store itself but in separate premises next door.

It is Lidl's first-ever pub - but it hasn't been a simple process to get here. Lidl's situation boils down to two rules: a fixed number of alcohol licences in existence and an 'inadequacy test'. In the first instance, Lidl wanted to sell alcohol from its Dundonald store as normal, but the law in Northern Ireland states that you can only open a new pub or off-licence by buying an existing licence which has been 'surrendered' and then by proving an area is inadequately served.

Lidl bought a licence from a closing pub, but the court ruled there were already enough off-licences in the area, thus failing the first test. They then switched strategy. Instead of arguing the area lacks off-licences, they argued it lacks pubs, which lets them use the same licence to open a pub and sell alcohol to take away.

Analyst Views

Getty ImagesLidl's new pub in Dundonald, east Belfast, will accommodate up to 60 customersA century in the making The opening of Lidl's pub has been 100 years in the making. In 1923 the intoxicating liquor act was brought in by the parliament in Northern Ireland, bringing more restrictive licensing laws than the Republic of Ireland - to try to curb the high levels of alcohol consumption in Northern Ireland. This is where the 'surrender principle' came in.

Under this law, two pubs had to close for a new one to open. That has since been softened but arguably the most controversial aspect, that 'surrender principle', has remained intact. This sets Northern Ireland apart from the rest of the UK and Ireland, where opening a pub or off-licence is easier and less expensive.

Stirling reviewLast year, Communities Minister Gordon Lyons rejected a number of changes to the rules around alcohol licensing recommended by an independent report.

Economists are analysing what the news means for the markets.