While beer producers are hoping for a successful World Cup and a baking hot summer to spark growth in a near static market, cider producers can look back on one of the most dramatic turnarounds in history and look forward to more growth to come.
One company with a presence in both camps is Scottish Newcastle UK, which owns beer brands such as Foster’s, John Smith’s and Kronenbourg 1664, but also has the leading cider brand Strongbow. S N UK’s customer marketing manager Craig Clarkson says: “The overall beers, wines and spirits market was showing growth of 2.1% in the year to the end of February, but that growth was largely due to cider and perry which was up 8.5% while beer only achieved 1.1%.”
Although huge investment by other cider producers is helping to fuel the present growth, S N can take a lot of credit for sparking the revival in the cider market. Less than three years ago extra fill offers on two litre bottles of white cider made it the favourite of drinkers simply looking for the cheapest units of alcohol they could buy.
Price pressure was pushing value out of the supply chain, and in many consumers’ eyes cider had become associated with drunks on park benches. As the market leader, S N announced it was ending extra fill deals, as part of its commitment to the responsible drinking campaign, and began marketing cider as a drink for younger adults. Clarkson says: “Scottish Newcastle has driven growth into amber cider. We have spent pound;22m on marketing for Strongbow. It’s no longer seen as an older person’s drink, it’s much more mainstream. With activities like sponsoring music festivals we have managed to double the number of 21-34-year-olds drinking cider.”
S N UK’s trading director Kim Francis also points out that cider should not be seen as just a warm weather drink. “Some people think of cider as a summer drink, but there are opportunities throughout the year and particularly at Christmas.”
Another company pouring investment into the category is Gaymer Cider Company. Managing director John Mills says growth is being driven by innovation in packaged ciders and strong performance in certain regions. However, he points out that impulse is lagging behind the multiple sector in terms of growing cider sales, and he believes impulse has the potential to be stronger. “Volume growth in impulse is up 3% whereas it is 5% in the multiple grocers, and in value terms there was a healthy 7% growth in the impulse sector, but in future it could match or exceed the 12% increase being enjoyed by the multiple retailers.”
He adds: “The issues for retailers in the impulse sector are to understand the breadth of ciders to offer, based on different drinking occasions and different consumers, and the importance of regional brands and preferences that drive consumers’ choices.”
Mills believes his company is best placed to guide retailers. “Gaymer Cider Company has a broader portfolio of products than any other major producer – from the mainstream brands through to strong regional bands and premium ciders. Added to this we have both the resources and the expertise to be able to support retailers to develop their cider sales.”
Demonstrating its belief in the sector, Gaymer has launched a raft of new products and announced an investment of pound;24m to support its brands. Mills says: “This is the largest investment made by Gaymer Cider Company in over a decade and reflects both our confidence in the future of the category and the position we hold as the reference cider company, best placed to help the wholesale channel and retailers to realise the potential there is.”
One of the most significant new launches is Gaymers Original, with an advertising budget of pound;3m. Mills says: “It is a clean, crisp refreshing cider that has been developed for the new consumers being recruited to the category. In taste trials it out-performed the competition and will be highly visible this summer due to the advertising and related activity, making it a must-stock brand for the future of any retailer.”
Two other new products are Orchard Reserve, a range of single orchard ciders, and Addlestones, a cloudy cider which is popular in the on-trade and has now been launched as a packaged product. Mills says further announcements on new product development will be made in the near future.
World Cup Action
For many sports fans beer has always been a natural accompaniment to the action. Beer brands have poured money into sponsoring horse racing, rugby, cricket and league soccer, but judging by the promotional spend of the major brewers they appear to believe the football World Cup will be the defining event of this summer.
S N’s Clarkson says: “Every football year we see a significant increase in sales. This year there is also very friendly timing with matches being played in the evenings and weekends. Experience shows we can expect an increase of 80,000 barrels as a result of the World Cup.”
A beer with one of the strongest soccer associations is Carling, and its owner Coors Brewers also sees the summer of football as vitally important. John Heynan, director of sales for impulse, comments: “Our main activity this summer will revolve around our ‘Get a Result’ Carling promotion. We know that big football tournaments are hugely important to both suppliers and retailers. During Euro 2004, the average weekly retail sales of beer reached pound;39m and it grew to become the fourth biggest category (from seventh). Beer also benefited from the biggest sales increase of all major categories; its sales were up by 29%, twice the increase of any other top ten category. The key for all suppliers and retailers is to make sure we are properly prepared and do not miss out on the opportunity to maximise sales.”
Heynan says that major football tournaments are particularly important for wholesalers, because impulse sales become even more significant. “During Euro 2004, small and mid-packs accounted for around half of all off-trade beer spending. That’s because people buy these packs – to drink straightaway – on their way home to watch the matches. So the importance of having chilled small and mid-packs is greater than ever. It’s also crucial to guarantee availability of the big beer brands that people trust; a major football tournament is not the time to start experimenting with other, smaller brands.”
He adds: “During 2006 we are investing pound;14m in football, including pound;7m specifically on football this summer. The ‘Get a Result’ promotion offers thousands of opportunities for consumers to win cash prizes. We’re confident it will be a success, partly because it applies to every match during the tournament, not just those featuring England. We’ll be supporting it heavily with TV and radio advertising and we’re hoping the independent sector will get right behind the campaign.”
Aside from the football promotion, Coors is also running other activities specifically for the impulse sector across Carling and its other two leading brands Grolsch and Coors Fine Light Beer. Heynan says: “We enjoyed considerable success with our price-marked packs initiative for Christmas across our three leading lager brands, targeted solely at the impulse market. Some of these packs will continue to be available, notably Grolsch with the 8 x 300ml at pound;5, plus the upcoming 8 x 440ml at pound;6.”
Cold ignites sales
Coors will also be maintaining the Sell it Cold campaign it ran through the wholesale channel last summer. Heynan says: “We are focusing on the benefits of cold beer – not least the benefits of installing chillers and keeping them well stocked – throughout this summer. This has already kicked off with a range of activity linked to the launch of our new Grolsch cans, which feature special cold-sensitive panels, in the shape of a G, which turn blue when the beer is perfectly cold and ready to drink.
“We are running a promotion with our wholesale customers that is linked to the launch of the new cans. This gives independent retailers the chance to win one of 100 special Grolsch-branded single-door chillers. Winning messages are printed on the inside of the trays for the 6x4x500ml packs, ensuring that they will know if they are a winner as soon as they have opened the packaging.”
Scottish Newcastle is another brewer with a big World Cup promotion. In what it claims is its biggest ever promotional spend it is launching a joint initiative with Ladbrokes.com offering consumers millions of pounds of free football bets.
Consumers buying promotional multipacks of 8, 12, 18, 20 or 24 of Foster’s Kronenbourg 1664, John Smith’s Extra Smooth or Strongbow can claim a free pound;5 bet on each pack. Four-packs or single bottles of Strongbow Sirrus will entitle the consumer to an entry to a draw to win a pound;1,000 bet with Ladbrokes. The purchase also entitles them to a pound;5 matched bet where a pound;5 outlay by them is matched by a free pound;5 bet from Ladbrokes.
Clarkson says: “We carefully consider the needs of the impulse sector to ensure activity always takes place in the right pack sizes for their market. For instance, the World Cup activity takes in four packs and individual cans as well as larger pack sizes.”
Looking beyond the World Cup, he cautions: “What we need to guard against is a dip immediately after. We have plans in place to sustain the impact of summer.” Francis adds: “Weather is also important. With the World Cup, but poor weather, we would still have a good summer. With good weather too, we would have a very good summer.”
Like several other brewers S N is also offering price-marked packs through the wholesale channel, with eight-packs of Foster’s and Strongbow for pound;5.50. Francis says: “They are seen as good value by consumers, but also the price point in independent retailers has been very stable for a long time and we wanted to support the retailer to have a bit more of a margin.” He adds that S N is also keen to work with wholesalers’ retail clubs, and has a number of local initiatives depending on what works best for them.
New twist on Foster’s
The company is also working on new plans for Foster’s, having just bought the brand in Europe and Russia outright from Foster’s in Australia. A new lager, branded Foster’s Twist, will be launched immediately after the World Cup, backed by a multi-million pound marketing campaign, including extensive television advertising. It will be brewed with citrus hops for a hint of lime, and sold in a twisted-cut glass bottle designed to be served ice cold.
John Smith’s Extra Smooth, backed by S N’s sponsorship of the Grand National and advertising featuring Peter Kay, has bucked the downward trend in the ale market, but Original is following the market down. However, Clarkson says: “Other brewers are also investing in market. The category has been in a trough but I think it has hit the bottom and is coming back. There is still a lot of life left in ale.”
The wholesale market is fundamental to the success of InBev UK, according to Des Ewing, director of customer relationships – wholesale take-home sales. He says: “More than 60% of the company’s take home sales are through the wholesale and convenience channel, and InBev UK is currently responsible for 30% of the beer trade through the cash and carry and wholesale sectors.”
He adds: “To help retailers generate impulse sales and encourage shoppers to increase weight of purchase we are focusing the bulk of our activity on price-marked packs this year.” The range of price-marked packs has been introduced across its lager range spearheaded by Stella Artois, which accounts for 50% of InBev’s take-home sales through cash and carry and wholesale outlets, and also taking in Beck’s and Tennent’s Lager.
Ewing says: “Price-marked packs communicate immediate value to shoppers stimulating impulse purchase. A growing number of retailers recognise the role they play in terms of driving business and we have responded to that customer demand by launching a price-marked range featuring the key brands in our portfolio.
“Research shows that shoppers are put off buying a brand if there is no clear pricing, which can be a problem in independent stores that don’t put any focus on display. This can have an even bigger impact on shopping behaviour when you consider that one in three shoppers only decide which beer brand to buy once they are in the store. Price-marked packs will help to make the shopping experience easier by speeding up the purchase decision and clearly showing that small stores can compete in terms of offering value to encourage long-term shopper loyalty.”
Carlsberg has made what it claims is its largest ever investment in a football sales and marketing campaign for the World Cup, including investing pound;10.5m on TV advertising. As part of the campaign it has launched a promotional and advertising campaign tapping into England fans’ hopes of victory using the line “2006…Probably”.
Ged Lowry, take-home controller for Carlsberg UK, says: “We have taken our famous advertising strapline ‘Probably the best lager in the world’ and used it to convey the nation’s belief that England can win the tournament. Football will be the talk of the country during June and July and we have put together a great programme of promotional activity to help retailers maximise every sales opportunity that football mania provides. With 64 matches in the tournament, there are plenty of opportunities for retailers to benefit from Carlsberg’s long-standing relationship with football.”
The ‘2006…Probably’ campaign will run on all Carlsberg packs and the imagery features four of England’s players and a limited edition Carlsberg glass. On-pack promotions will include the opportunity to win glassware embossed with the three lions logo – exclusively available to Carlsberg through its status as The Official Beer of England.
Lowry continues: “Our research shows that 63% of people prefer to watch England in the comfort of their home. Carlsberg will be providing the trade with planners and posters to highlight the key match dates to allow retailers to time in-store activity around the points of high demand, especially the England matches.
“Our branded POS materials feature exclusive player imagery to help retailers make the most of Carlsberg’s football sponsorships. As the Official Beer of England, we are the only brand that is able to use England player shots on our promotional material.”
Carlsberg’s ‘2006…Probably’ packs will be available in a variety of pack sizes. Special deals include price-marked packs, available at eight cans for pound;5.85 for 500ml and pound;5.50 for 440ml, both of which include the exclusive England glass promotion.
Further heightening the football association, Carlsberg will also be running TV adverts featuring a ‘pub team’ comprising former England stars with a combined total of 796 caps, and the voiceover: “Carlsberg don’t do pub teams, but if they did they’d probably be the best pub team in the world.”