After a promising start, at least from the scorching weather, last year’s World Cup ended in a damp squib, and in the wholesale channel beer sales weren’t helped by eye-watering multi-buy deals from the multiples. But with no similar sporting occasions to hang promotions on, and a reluctance by the multiples to attract political scrutiny with outrageous below cost deals, this summer could be better for wholesalers and their customers.
Richard Honey, sales director for impulse at Molson Coors, says: “We are heading for one of the most important trading periods for beer sales in the impulse channel, as summer represents 7 of the top 10 biggest trading weeks. At its peak, 32,000 extra shoppers a month buy beer from impulse stores compared to normal. The summer uplift this year could be boosted by an estimated 80,000 beer shoppers returning to local stores having switched to the multiple grocers in 2010 for football multi-buy deals.”
Meanwhile we can be certain that cider sales will continue to rise. The category has seen rapid evolution and growth through cider over ice and fruit flavoured ciders and this summer InBev’s launch of Stella Artois Cidre should help to keep the category in the fast lane.
Cidre is, of course, a brand extension of the wholesale channel’s number one brand Stella Artois, and InBev is hoping the launch of a price-marked 4 x 500ml pack of the lager will fuel growth. Simon Harrison, commercial director, off trade wholesale, says: “PMPs are a proven formula which we know consumers love. In the impulse channel PMPs continue to grow at 14% year-on-year, 11% ahead of the market.”
Budweiser is InBev’s other heavyweight brand and Harrison comments: “Budweiser is now the second biggest premium lager brand in the impulse channel in both value and volume. Across the total market the brand grew 37% in volume last year as consumers increasingly engage with it.”
Harrison emphasises the importance of the wholesale channel in getting products to the growing independent and convenience sector and adds: “At InBev we talk a lot about 360 degree promotions that drive visibility of promotion and consumer offers through to the point of purchase, a combination of activity that engages consumers and creates trial. Three hundred and sixty degree promotion allows both wholesalers and retailers the opportunity to make better margins in this category and reduces some of the reliance on price as a promotional lever.”
He also highlights how wholesalers are best positioned to advise independent retailers on best practice and focus on areas of strength such as chilling beer, which will help to grow the market.
Until InBev’s launch of Stella Artois Cidre, the only brewer with a significant presence in both beer and cider was Heineken. Foster’s is its biggest performer and has been boosted by its sponsorship of comedy and the series of ‘Good call’ adverts. The company’s flagship brand, Heineken, has maintained a high profile through its association with rugby union’s Heineken Cup and the UEFA Champions League. Doug Walker, head of off-trade customer marketing at Heineken UK, says: “Heineken UK invested heavily in the brand this year to coincide with the Championship and final which took place at the end of May, including significant outdoor media spend in London and in-depot activity to support the on-pack promotion which ran in the off-trade giving consumers the chance to win a Wembley Final Star Experience. We will also be working hard with wholesalers to mark Heineken’s sponsorship of the 2012 London Olympics and Paralympic Games.”
Heineken UK’s other premium lager, Kronenbourg 1664, will be looking to build on the success of its multi-million pound TV and press advertising campaign ‘Slow the Pace’ with a new execution this summer.
At Molson Coors, Richard Honey says: “Our most important products are our best known beer brands; Carling, Coors Light, Corona, Grolsch, Cobra, Caffreys and Worthingtons.” He agrees with Harrison that wholesalers have a role to play in advising retailers, and says: “Some of the areas wholesalers should review are how they merchandise their beer category using clear signposting within their beer aisles, giving the right space to the big brands, making them easy to find with brand-blocking techniques, and with clear price and POR communication. Using supplier point of sale in depot can also be important as this can help create interest and excitement, as can making space for promotional display in high footfall areas. Wholesalers should also support new products and innovation which can also help grow their category.” Following on from its Carling Perfect Pint and Cobra Feast promotions, Molson Coors is planning further activity with Corona and Coors Light, and is planning innovation including new packaging, new pack formats and new brand extensions, and a new product launch that is aimed specifically at women. Honey adds: “Within the Molson Coors innovation plan for 2011 there are elements of wholesale specific activity, which includes a new product launch and price-marked packs on key lines.”
The world beer category continues to outperform the overall category and is particularly strong in lager. Laura Edwards, director of trade marketing for Miller Brands, says: “Peroni Nastro Azzurro (up 27% in value), the front runner in World Beer, is a must stock in the wholesale channel, alongside Czech lager Pilsner Urquell (up 18% in value). Miller Genuine Draft also plays an important role, particularly in the Scottish wholesale market and is the number one packaged lager brand in Scotland at 38% value growth.”
She says Miller Brands develops promotions for specific channels. An example is Polish lager Lech, where customers purchasing Lech from participating cash and carries are entered into a draw to win a VIP weekend for two to a music weekend in Budapest. She adds: “Cash and carry managers have been provided with POS, pallet wraps, standees and shelf fins to drive entry into this incentive, which is rewarding them with increased sales volume.”
Another world beer performing strongly is Diageo’s Namibian lager Windhoek. Simon Hewitt says Windhoek has grown very strongly since its introduction last year, and Diageo is also looking forward to taking over distribution of Red Stripe from August 1, and building on the good work previously done by Wells amp; Young. He comments that world beer can be a confusing category for independent store owners, so wholesalers can help by providing clear visibility so their customers can find what they are looking for. They can also provide education on the category and suggest core ranges.
“John Smith’s Extra Smooth remains the UK’s leading standard ale and is a must stock for independent retailers,” according to Heineken UK’s Doug Walker. He says the continuing UK-wide sponsorship of flat and jump racing and the launch of new John Smiths’ TV advertising in 2010 with Peter Kay has been instrumental in increasing consumer demand. In addition Heinken is supporting McEwan’s Export, the UK’s leading premium canned ale (IRI total off trade volume for the year ending November 27) in the off trade with activity to raise awareness of the brand. The ‘Aye’! advertising campaign in Scotland builds on McEwan’s Scottish roots and recognises Scots’ fondness for using “aye” in everyday conversation.
James Coyle, director of national sales and marketing at Marston’s, says: “Our canned lines continue to perform exceptionally well in the wholesale channel, as the channel allows us to promote SKUs in line with their value proposition. Additionally we see the mix-pack category that we operate in to be a great alignment with wholesale in that it offers exceptional value to customers who are new to the category but are risk-averse with a bulk-buy multipack.”
He adds: “Summer has been a mixed bag for brewers in the past few years. While it is a period of increased awareness on off trade sales it is also synonymous with heavy promotion. Finding the right balance of promotion is what is most important to us during the summer months.” He believes the wholesale channel can play a crucial role in developing the ale category, and says: “We would like to see more category partnerships being met with ourselves or other larger brewers of ale in order to grow the category further.”
Suman Mullick, category marketing manager at Greene King, says: “The wholesale channel is hugely important with enormous potential for Greene King. We will be working closely with the wholesale and cash and carry trade to make the most of this, in both the bottled ale and premium canned ale categories. The ‘off licence’ channel is far more fragmented now since the collapse of First Quench and others so this channel plays an even more important role as the route to market for our brands.”
Old Speckled Hen, which is Britain’s most popular bottled ale (Nielsen, Total Coverage, value for year ending April 16), is the company’s best known brand and has grown by 14% over the past two years, boosted by sponsorship of prime time on the Dave TV channel, and of Northamptonshire, Derbyshire and Sussex cricket. Other core brands include Abbot Ale, Greene King IPA and Ruddles County. Mullick says: “Some wholesalers and licensed retailers have expanded and improved their bottled ale range but impulse channel data shows that sales of bottled ales track behind the performance of the multiple grocers, so there is a huge opportunity, which has not been tapped into.
“We are always happy to work with wholesalers to devise a programme of activities that will build interest in the category as a whole, increasing bottled ale success for the wholesale trade in the long term.”
STOUT amp; GINGER BEER
Around 35% of sales of packaged Guinness are in wholesale, according to Simon Hewitt, packaged Guinness marketing manager at Diageo. He says sales were up 2% year-on-year, and were very strong in the first quarter of 2011, helped by its association with rugby as the official partner of England, Scotland, Wales and the RBS 6 Nations, and St Patrick’s Day, which it “owns”.
Hewitt says: “Wholesale is very important to drive distribution into local stores and wholesalers are doing a good job stocking the right packs. Looking ahead to the rugby World Cup in September we will be aiming to leverage the association of Guinness with rugby.” There will be bespoke packs with rugby imagery and this will include the price-marked six-pack of Guinness Draught in a can and four-pack of extra fill Guinness Original which are exclusive to the wholesale channel.”
Ginger beer, once a forgotten backwater of the beer category, is seeing growth and NPD, with Ginger Joe being one of the latest launches. Clive Patten, Ginger Joe marketing manager at Constellation Wines, says: “Ginger Joe is gathering momentum since launch and has recently secured new listings in Today’s, Landmark, Makro and Palmer and Harvey.
“Additionally, Ginger Joe is being advertised in several leading wholesalers’ brochures, and sampled in selected wholesaler depots to give retailers the opportunity to experience this exciting addition to the alcoholic ginger beer category. Ginger Joe was recently exhibited at the Pro-retail trade show in order to reach new customers and continue to create buzz around its launch.”
Cider is still the shining star in wholesalers’ depots. The rate of growth may have peaked but John Mills, managing director of InterContinental Brands, points out that it is a percentage of a much larger base than it had just a few years ago. “From a position where it was about a tenth of the size of the beer category a decade ago it is now about a quarter of the size, so the growth rate of 5% in the off trade is still very healthy.”
Towering over the cider category is Heineken’s Strongbow, with a share that is over three times bigger than its nearest competitor in the impulse channel and an MAT share value that accounts for 85% of the mainstream cider category. Strongbow recently unveiled 330ml and one litre glass bottles which, says Doug Walker, will enable independent retailers to command higher prices for a popular mainstream cider.
Bulmers, Heineken’s other major cider brand, recently launched its third limited edition variant, Bulmers Crisp Blend, in time for the summer season, and it will be launching a new permanent variant, Bulmers N ordm;17, a 4% ABV premium quality apple cider with crushed red berries that is cut with a shot of lime. The launch of Bulmers N ordm;17 coincides with the introduction of contemporary new packaging which is being rolled out across the range of Bulmers bottled ciders.
At InBev, Harrison says the biggest single piece of activity this year if not the biggest launch for any brewer in a decade will be the launch of Stella Artois Cidre. “We are the first major brewer to launch a brand extension into another category and strongly believe that this will help pull new consumers into the cider category. InBev is launching an unprecedented marketing campaign that will be seen by 10 million consumers over the next two months that is sure to drive demand through to wholesale for this product.”
A new premium cider, Press 81, intended to compete with brands such as Bulmers and Stella Artois Cidre, has been launched by Aston Manor. Brand manager Helen Jones says: “Press 81 will be the first cider in the UK that can tell you when it’s chilled to perfection.” It comes in an aluminium bottle with three thermo-chromic rings on the front which turn blue when the cider has reached the optimum temperature.
Jones says: “Press 81 represents another step forwards in terms of innovation for the cider category which was reinvigorated by the ‘over ice’ ritual. There is a real gap in the market for a cider with substance and style, which research shows consumers are seeking.” The brand will be supported by a national through the line marketing campaign with significant focus on trade activity.
Frosty Jack’s is Aston Manor’s biggest brand in the wholesale sector, and is out performing the market, with off trade volume up 17% according to Nielsen for the year to December 25 in comparison to the total cider market which was up 6%. Jones says: “This growth is due to the substantial investment in consumer and trade marketing and the re-brand of the packaging of Frosty Jack’s cider.” She adds: “The wholesales sector plays a significant role for our business, which is why we ensure that when we launch new products such as Press 81, we make sure that they are available to both the wholesale and retail channel at the same time.”
With pear and fruit cider driving growth in the cider category, Brothers Cider is urging wholesalers and their customers to ensure they stock their brands to take advantage of the opportunity they provide. The company has brands such as Brothers Festival Cider, Brothers Strawberry as well as Tutti Frutti and Toffee Apple ciders. Brothers has introduced a number of new pack options such as a 250ml stubby in 8 and 10 packs for Pear, Apple and Strawberry and in April it launched cans with 8 x 440ml packs, and with a 12 x 440ml Festival pack added a month later.
The company has worked closely with the wholesale sector with a new flavour, Ginger, launching in Booker and special pricing activity of 15 for the price of 12 packs in cash and carries throughout the year.
Managing director Matthew Showering says: “Brothers Cider is the third largest investor in advertising in the cider market. It is committed to building rate of sale for its retailers wherever it is stocked. This will mean an even bigger TV presence on national channels across the summer backed up with sampling at festivals and the O2 arena, social networking, website and viral activity.”
John Mills at InterContinental Brands urges wholesalers to give greater prominence to cider. He says: “They need to give cider the same focus as beer and feature more of the growth brands. They should be widening their range with more glass bottles and growing brands such as Kopparberg, St Helier and Brothers.” He adds: “St Helier is doing well in cash and carry because of the focus we give to it. Cash and carry is a priority in our company because it’s the area you can influence most. It’s a case of ‘what you put in you get out’.”
St Helier has just been re-launched with its flavours in clear bottles, and introduced a new varient, St Helier Pink. Mills says: “Consumers were saying they liked the colours but we were hiding them in dark brown bottles. So far feedback has been very good. We’ve also repositioned pricing with everyday good value rather than high low pricing. We will be the best value bottled cider all year round. Retailers will know they are always getting the best price and will be able to make a good margin on it.”
St Helier has a number of deals to be the exclusive cider at outdoor regional concerts and comedy events such as Jersey Live and Laughs in the Park, and will be the exclusive packaged cider for High Voltage, Belladrum and Wickerman. Mills says: “People enjoy the cider at the event and then buy it from their local store.” Magners, which is credited with starting the resurgence in cider’s popularity, says it will be investing significantly in impactful consumer advertising and marketing activity throughout 2011.
John Dunsmore, CEO of C amp;C Group, the makers of Magners, says: “Magners is back on Britain’s TV screens as from April with a multi-million pound advertising campaign featuring two new creative executions. The new ads are the latest instalment of the award winning ‘There’s Method in the Magners’ campaign which was launched in 2010.”
Davin Nugent, managing director of Kopparberg, says: “Wholesale is very important to Kopparberg and is growing very quickly for us. Overall we grew by more 50% in the UK last year but in the wholesale channel it was nearer 100% and in the most recent quarter in wholesale we were more than 100% up on the same quarter last year.
“Until recently we haven’t had the packs the local stores need to differentiate themselves from the multiples, but in April we introduced our first price-marked pack exclusively for the c-store sector Pear Cider 6x330ml can.” Kopparberg will be investing pound;5m in marketing and advertising this year and will be making its debut on TV on C4, terrestrial, Sky and ITV, and there will also be press and radio advertising to grow awareness of the brand with consumers and retailers.
According to Amanda Grabham, Merrydown’s head of brand marketing, cash and carries and wholesalers can play an invaluable role in helping independent retailers navigate the flood of ciders coming onto the market, by carefully selecting their cider range to optimise their own and their retail customers’ profitability. She adds: “In terms of brands, the base range obviously needs to include the big sellers such as Magners or Bulmers and Merrydown.
“We advise offering both 75cl bottles and 44cl cans of Merrydown as research shows that Merrydown bottles and cans are purchased by different consumers. Merrydown in bottles tends to appeal to 35 to 64-year old consumers, whereas Merrydown cans are purchased by 25 to 34-year olds.
“Although not yet widely stocked in the wholesale or impulse sector, Merrydown cans are proving to be hugely successful in stores where they are available as the number of ‘heritage’ cider brands available in cans is very limited. Merrydown can sales in impulse have increased by 71% over the past year.”
Thatchers Cider is performing exceptionally well in the wholesale channel, according to managing director Martin Thatcher, with products such as Thatchers Gold, Green Goblin, Katy and Katy Ros eacute;. He says: “We’ve seen phenomenal growth over the last year of over 200% in both value and volume in this channel, thanks to the convenience/impulse sectors beginning to buy into cider to meet their customers’ demand for cider of the quality and with the heritage that Thatchers offers. Gold, for example, now has national listings with Booker, Makro, Nisa and Palmer and Harvey.” This summer the brand will be advertised on ITV1 and outdoor media and will be supporting outdoor events.
Weston amp; Sons is another cider specialist making inroads into the wholesale channel. Peter Matthews, head of off trade, says: “Henry Westons Vintage is the No.1 Premium 500ml bottled cider and is currently showing growth of 67%. It’s our cider maker’s finest cider and is gaining more and more distribution with a number of recent accounts such as Palmer and Harvey and Bestway/Batley listing the brand. However, Westons Premium Organic Cider, which is the UK’s number one Organic Cider, is also growing distribution with the impulse sector, recording the highest sales ever.”
He says that the business model Westons is approaching independents with allows them to compete with the major multiples and selling premium ciders offers higher profit margins, as well as enhancing their customers’ experience. Matthews adds: “We have promotional activity planned throughout the summer with all of our current cash and carry and wholesale customers. Wholesale selling prices have been negotiated to allow independent retailers to sell competitively, while returning them an excellent margin. Our only concern is that they have sufficient stock to meet demands.”
Bestway and Batleys are seeing continued good sales of beer with the top brands like Carling, Stella, Fosters, Budweiser.
Ales are also doing well with brands like John Smiths, Old Speckled Hen, Fullers London Pride, Spitfire, Bishops Finger and Courage. We have seen some good growth from Fullers London Pride and not just in the south of England; they have come up with Organic Honey Dew beer which is popular with some Asian customers who like that with curry.
This Bestway growth is bucking the trend with beer sales up 7% despite a general trend of declining sales for both lager and ales.
Price-marked packs are more popular than ever. Shoppers love them because they communicate the price clearly and reassure them that they are getting a good deal and they consider them as promotional packs and they stand out on the shelf. In our experience, retailers like them because they sell through faster than non PMPs, they can sell more and generate higher repeat purchase.
Cider has been the fastest growing category for the last three years. Cider sales at Bestway and Batleys are 12.1% up, and the Bestway group cider festival, held last month was a big success.
The fact that Bestway and Batleys branches across the UK stock some 40 different ciders must prove something for this category. We have seen more and more success coming from ciders than any other drink, especially the new fruit flavoured varieties which have become more and more popular and really do bring people into the store.
We have seen some new brands like Thatchers and Weston with a ‘traditional’ taste coming to the market.
We also have found that more and more of the Asian market, who like something different to drink with their traditional foods, and curry in particular, are switching to cider and the fruit flavours seem to complement the unique flavours of so many different curries. Stella Artois Cidre is just launching and is in all Bestway branches at a special introductory deal price and is worth watching out for.
The Bestway own label cider, Country Choice, which comes in both traditional apple and pear flavours, is on a very good promotion and gives retailers an excellent margin.