The combined beer and cider markets are worth around £3.3bn in total and growing by around +4%, with annual cider sales in the region of £800m and growing by +14%, according to IRI figures for the year to February.
Doug Walker, head of customer marketing at Heineken UK, says: “The array of sporting and social occasions taking place will see large numbers of shoppers buying beer and cider for at home get-togethers with family and friends. A third of consumers plan to purchase alcoholic drinks to entertain at home during the Olympic Games, demonstrating the scale of the opportunity for wholesalers.”
Summer events such as Euro 2012 are traditionally the preserve of mainstream lager brands, but the established hierarchies have started to crumble in both beer and cider markets in recent times. In cider, big brands such as Strongbow have faced a dual challenge from newcomers such as Magners and Kopparberg, while fruit and flavoured ciders have also grown rapidly in the last two years.
In beer, lager still dominates the sales charts, but has stagnated in recent years with growth coming from premium bottled ales, so-called world beers such as Peroni, Cobra and Corona, and sub-categories like alcoholic ginger beer which are small in numbers of brands but booming in sales.
Premium bottled ale (PBA) grew 16.4% in 2012 against a fall of 10.1% for standard lager, according to IRI figures in the Marston’s Premium Bottled Ale Report.
James Coyle, national sales and marketing director at Marston’s, says the convenience channel may need persuasion from wholesalers to get behind these trends: “There’s always a time lag between what’s happening in wholesalers and cash and carries and things being taken up by independent retailers, but in general wholesalers now have more space for bottled ales with a better range,” he says. “The wholesalers with retail hubs are doing very well in this area but the pure independents are the ones really lagging behind. “We’re working with the likes of Parfetts, Makro, Bestway and Costco to help them get their offer right.”
Coyle says the wholesale channel needs to recognise both the USP and margin bottled ales could provide. “Bottled ales are a big opportunity for independents because they can charge £1.70 or £1.80 a bottle and do three for £4, and operate at the same price point as the multiple grocers, but they can’t hope to compete with them on the carnage of cases of Stella or Carling at two for £16,” he says. “It’s perhaps a confidence issue with many independents. They only sell what they’ve always sold which is big brand lagers. It’s a bit of a leap of faith to commit to a whole different sub-category.”
Another beer trend has been the emergence of alcoholic ginger beer – led by Crabbie’s – and currently growing in the off-trade at around 60%.
Neil Anderson, marketing controller for the Ginger Joe brand at Accolade Wines, says: “There is a real ginger trend within the food and beverage market, with the increased popularity for Thai cuisine and fusion cooking, where ginger features heavily. This is now making a real impression within the drinks market and consumers are embracing this by choosing ginger beer.”
World beers – a catch-all term for genuinely imported beers and some with specific overseas heritage but brewed in the UK – are another important and growing category for the wholesale sector. Brands such as Tyskie and Lech from Poland are targeted at communities that use specialist independent stores a lot, while many other international lagers are marketed around specific cuisines catered for by independent restaurant and speciality food shops.
“World lagers, wheat and speciality beers are already captivating beer drinkers in the on-trade and there is a growing demand from consumers to have these beers available in their local independent convenience stores,” says Gordon Dow, UK and Ireland area manager for German brewer Warsteiner.
“Wholesalers should enhance their offering by running specific sub-category deals in their brochures, complete with suggested retail mechanics, and consider introducing special added-value packs, including those that offer free glassware, for key trading periods.”
Diageo GB has had a big distribution push behind Nigerian-brewed Guinness Extra Foreign Stout and non-alcoholic Malta Guinness through specialist African-Caribbean drinks distributor Kato Enterprises, in response to value growth of 40% in independents and 20.5% in the multiple convenience sector.
Guy Dodwell, channel director for route-to-market and convenience, says: “Nigerian-brewed Guinness and Malta Guinness have seen a strong rise in popularity since it was first introduced in the UK. With strong expertise in supplying African-Caribbean beverages we are confident Kato will help us grow the variants further.”
Heineken UK has the world beers Tiger, Sares and Moretti in its portfolio but Doug Walker, head of customer marketing, says the wholesale/convenience channel still needs to focus on big brands such as John Smith’s and Foster’s.
Walker says: “It’s very tempting to stock a range of exotic beers, but in reality, the vast majority of sales come from the biggest selling brands, which also deliver the best rate of sale. The top 10 SKUs currently deliver over a third of all sales in impulse, while the top 10 brands bring in 80% of total sales.”
Heineken’s Strongbow remains the dominant mainstream force in cider and is being backed by a new male-oriented marketing campaign, which in the words of brand manager Lucy Henderson is aimed at taking the brand into “younger, more aspirational territory”.
Cider’s appeal to a younger audience has been largely driven by the emergence of modern brands such as Magners, and pear and fruit ciders championed by the likes of Kopparberg, Brothers and Rekorderlig.
Magners head of marketing Kirsty Hunter says modern ciders grew by 35.9% in value in the off-trade in 2011, based on Nielsen figures. She adds: “While the category is in growth, cider is still significantly under-spaced on shelves and fixtures. Don’t squeeze more brands into the existing space allocated, but expand it.”
Cheryl Sheppard, consumer marketing manager for Brothers, whose Strawberry cider is the best seller in a range that also include Pear, Toffee Apple, Tutti Frutti and Ginger, says the convenience channel is increasingly receptive to new cider trends.
“In the off-trade, impulse is where the big growth is coming in fruit and flavoured cider,” she says. “Impulse retailers are getting smarter about range and aren’t just sticking to apple ciders, and consumers in turn are starting to realise that they can buy fruit ciders in their local stores instead of having to make a trip to the supermarket.
“We’ve launched four-packs on Toffee Apple, Tutti Frutti and Strawberry specifically for the cash and carry and convenience sector, and we’re doing price-marked packs. We want to give that channel something that would allow them to differentiate themselves in the category.”
Davin Nugent, managing director of Kopparberg supplier COS Brands, says it has also been making the wholesale/convenience channel a focus of its activity. “We’ve helped the category by introducing price-marked packs of our 33cl can of Pear cider and a six-pack of 33cl cans of Mixed Fruit, neither of which are in multiples, and given to support in the form of new planograms to all the major cash and carries including Batleys, Makro, Parfetts, Booker and Bestway.
We’ve previously worked very closely with the grocery multiples on this area and we’ve applied some of them learnings from there to cash and carry operators.”
Halewood International is another company that’s identified the fruit cider opportunity, making its Lambrini brand into cider with three flavours.
Brand manager Lorna Tweed says: “We chose to launch in 33cl individual bottles and 75cl sharing sizes to offer consumers different formats for different occasions. This means that there is more choice for retailers and they can construct a range which really works for their consumers.
“The flip side is that there is also more pressure on fixture and fridge space, so retailers need to pick the brands which will drive the most sales in terms of volume.”
Westons has also launched a limited edition raspberry flavour of its Westons Twist brand in response to growth in fruit ciders.
Off-trade customer marketing manager Abi Evans says: “As this sector further evolves, pear cider drinkers will start to look to explore the more traditionally made, authentic perries on offer. We will start to see a focus shift from entry-level ciders with more fixture space being given to fruit and traditional ciders. Once consumers have acquired a taste for cider they inevitably begin looking for a more challenging, traditional cider and it is important to have this premium offering.
She adds that variety is key and encourages wholesalers to offer a wide choice of flavours and styles, taking into account the different pockets of their customers and the consumers they serve.
“Also offering a good range of pack formats is also important, to appeal to a range of consumers and occasions,” she concluded.
Craft cider maker Thatchers says its performance is outstripping the mainstream market with total sales growth +34%, well ahead of the total market at +13%. And Thatchers Gold sales in the off trade total coverage is growing at 111% – more than eight times that of total market growth.
MD, Martin Thatcher says: “Consumers are showing an increasingly sophisticated approach to their choices and knowing the origins of what they are drinking is important to them while recognising real value. At Thatchers, as craft cider makers, it’s second nature to us to demonstrate the provenance of our ciders from the apple right through to the glass.”
He adds that the wholesale trade can expect to see the best cider category growth coming from the premium end of the market in the next 12 months. “For instance, there’s a £4m marketing spend behind Thatchers Gold this year, which is driving demand within this sector. The national TV and poster campaign paints a picture of everything that we represent – quality, heritage and taste. Our customers buy into this picture, and because Gold genuinely does taste as good as it looks in the glass, customers are coming back for more.”
Aside from television, Thatchers is also putting £1.5m behind a national outdoor media campaign to support Thatchers Gold. The 48 and 96-sheet billboard programme in the Midlands, South, North West, Yorkshire and Wales regions is being extended with high profile sites selected for Liverpool, Manchester, Birmingham and Leeds.
Thatcher urges wholesalers to ensure they give their customers a choice that meets their varied requirements. “By understanding how the different ciders are crafted, the styles and why taste and quality makes so much difference, helps wholesalers understand the category and so improve their own business offer. With a varied range of customers, it’s hugely important for wholesalers to match this with an equally broader and considered range of ciders, from fruit and pear, to mainstream, and traditional.
“Consumer interest in the provenance of their ciders won’t diminish, and we anticipate that values of heritage and quality, which lead to the production of great tasting ciders, will differentiate the sustainable business of the craft producers from those who are entering the market for short term gain.”
Steve Parfett, chairman, AG Parfett amp; Son:
“Premium bottled ales is a category that we were relatively early into in the wholesale trade. It’s a very worthwhile opportunity, especially with the level of duty fraud that’s taking place on major beer brands. It’s a good opportunity to concentrate on a category that isn’t subject to that.
“If you are getting into that area, it’s important to have some of the recognised brands, but also aim for variety and keep changing the range from time-to-time. As a general rule, convenience stores like local products and it’s much easier for them to get a good rate-of-sale on a local product in beer than it is in a category such as speciality cheese, for example, because they’re less geared up to fresh food.
“Major events such as the Euros, Jubilee and Olympics are certainly something the independent sector needs to get better at in beer and cider, but the weather is still going to be the major factor this summer.
“The multiples have massive resources available to them and will do deep price promotions which means they’ll do well whatever the weather. For the rest of the trade it will be a case of if the sun comes out it will be a very good summer and every one will say it’s because of all the big events.”
DON’T DITCH TRADITION
Modern and fruit ciders may be growth engines, wholesalers shouldn’t marginalise more traditional products.
Amanda Grabham, head of brand marketing at Merrydown, says: “It’s still important to remember that non-apple ciders are less than half the size of pure apple.
“Over 60% of all cider is consumed by over 35s. There are many younger consumers coming into the market, but there has to be a balance between targeting them and the main cider drinkers.
“In the wholesale trade, heritage brands, such as Merrydown, Westons, Thatchers and Aspall, have been getting lost in the deluge of new brands coming into the market.”
TOP 10 ALES, TOTAL OFF-TRADE (+/-%)
|1 John Smith’s Extra Smooth 0|
|2 Old Speckled Hen +7|
|3 Boddingtons Draught -4|
|4 Newcastle Brown +3|
|5 McEwan’s Export -4|
|6 Tetley’s Smoothflow +22|
|7 London Pride +2|
|8 Hobglobin +8|
|9 John Smith’s Original -12|
|10 Tetley’s Original -5|
Source: Nielsen, value year to October 1, 2011
TOP 10 LAGERS, TOTAL OFF-TRADE (+/-%)
|1 Stella Artois -2|
|2 Foster’s +9|
|3 Carling 0|
|4 Carlsberg -4|
|5 Budweiser +1|
|6 Carlsberg Export -7|
|7 Kronenbourg 1664 +6|
|8 Beck’s +1|
|9 Peroni +17|
|10 San Miguel +22|
Source: Nielsen, value year to October 1, 2011