While cider may chalk up much smaller overall sales in the wholesale channel than beer, when it comes to growth it has been streets ahead over the last year.
Recent ACNielsen figures have shown a flat beer market, but cider, led by the explosive rise of Magners, achieved substantial sales growth. Consumers’ preference for higher alcohol premium lagers appears to be waning, and easier drinking standard lager and new cider over ice products are on the up.
Although cider sales are growing strongly in the impulse sector, John Mills, managing director of Gaymer Cider Company, argues that wholesalers are still missing out on a massive opportunity. He points out that despite the increase in volume, wholesale’s overall percentage share of the off trade market has fallen by nearly half in the last two years and it has been the multiples which have made the greatest gains.
He says: “Yet again wholesalers are getting left behind. They are concentrating on big plastic bottles when the growth is in premium glass and multi-pack cans. They have got to champion glass and multi-packs otherwise the multiples will take it off them.
“We have a great offer, eight-packs of Blackthorn and Olde English price-marked pound;5, but cash and carries are not getting behind them enough.”
In the absence of ‘push’ from wholesalers, the company is trying to generate ‘pull’ from retailers. In the run-up to last Christmas it employed a third-party sales force to call on 3,000 retailers, and Mills says that the results have encouraged it to carry out a similar exercise involving 4,000 retailers nationwide from the middle of May (for more news about Blackthorn see page 57).
Chris Carr, managing director of Merrydown, agrees that the wholesale sector is losing share to the multiples. He says: “Wholesale is very important but was even more important in the past. It used to account for about 60% of Merrydown’s Features > Business, but that has fallen to about 45%. This does not represent a fall in sales through the wholesale channel, rather it shows the growth in sales through the multiples, Thresher and Bargain Booze.”
He adds: “The key to growing Merrydown is getting people to sample it. We have been sponsoring events like the Metro Weekender concerts and FatBoy Slim’s New Year’s Party on Brighton Beach, and when we do we try to get the local cash and carry to take extra stocks and we run linked promotions for local retailers.
He also agrees with Mills that the trade concentrates too much on the lower end of the market but says some of this is down to retailers. “Many independents stock too much white cider. It is only 8% of the market but 30% of many independents’ range. They should cut back and use the space for premium cider. There is no loyalty to white cider, and if one variety is not available consumers will happily switch.”
He believes cash and carries can do more to help their customers too. “They need to lay out their fixtures with separate sections for premium, amber and white cider to make it easier to shop. Often it is quite random.” For more news about Merrydown see page 57.
The brand taking most of the credit for changing consumers’ attitudes to cider, and driving value into the sector is Magners. It has been similarly successful in Ireland since the early 1990s (where it is known as Bulmers, but no relation to S N’s UK version). It had a phased introduction into the UK starting in Glasgow in 2003 and only going nationwide in March 2006. Strong promotions made the product a runaway success, although at points last summer the company was unable to satisfy demand. Marketing director Maurice Breen promises that this summer the company should have no similar problems after investing ?200m to double capacity at its production plant in Tipperary.
Breen credits the wholesale channel with a major role in developing the brand in the UK. He says: “Wholesalers have been critical to servicing the trade. Right from the off we got critical wholesalers in Scotland on board and they helped drive sales.”
He says: “In Ireland, it has been outperforming beer for years, and is now the number three alcoholic drinks brand. Only Guinness and Heineken in the on trade, and Budweiser and Heineken in the off trade, sell more. We are looking for the same to happen in the UK. We’ve shaken up the whole category and repositioned cider to get rid of its baggage.”
Although Magners, with its ‘over ice’ style, stole all the headlines last year, the UK’s biggest cider producer, S N, is looking to take it on directly with its new portfolio of ‘premium over ice’ products, Bulmers, Jacques and Sirrus, as well as promoting the market leader Strongbow.
The company has invested in a TV campaign for Bulmers Original, which it introduced last year, and is promising new bottle and pack formats to complement the single bottle and 12-packs.
Pear cider has also seen growth on the back of the category’s new popularity. A new launch last autumn was InterContinental Brands’ St Helier, available in 500ml and one litre bottles. Paul Burton, joint managing director of ICB, says: “We expect the market to come back for spring and summer even more strongly, fuelled by new product development and increased spend. We are looking forward to even stronger high street sales and are confident that on trade sales, which exceeded expectations last year, will continue to grow.”
With the World Cup last year and no equivalent event this year beer is going to have to work hard to exceed 2006 levels, but John Heynen, sales director impulse at Coors, says events are less important to the impulse sector. He explains: “Hot weather is a lot more important. Football does have an effect, but the sales increasingly go to the multiples. If people are planning for football they tend to buy in advance from the multiples whereas hot weather encourages shoppers to buy on impulse, which is where the local retailer benefits.”
This is why Coors’ activity in cash and carries over the past two years has consistently emphasised the key advantage for local retailers of offering cold beer. He says: “This year there will be activity focused on thermo-chromic ink on Carling. We learned from last year’s activity on Grolsch and Coors Fine Light when perhaps we didn’t promote it heavily enough. We are looking for significant displays and presence within depots, and to really bring thermo-chromic to life.”
More generally, he says, consumers are looking at alcohol consumption and this is why Coors has invested in development of its low alcohol lager C2. Previous attempts to grow this category have foundered because of the flavour, but Coors has spent years and gone through hundreds of recipes developing C2 and believes it has finally cracked it. Heynen says sampling will be the key to growing the brand.
One sector of the beer market that is growing is imported beers. Anheuser-Busch is capitalising on this trend with the introduction of Estrella from Barcelona, to add to Harbin and the relaunch of Michelbob, which will be imported from the US.
Anheuser-Busch’s flagship brand, Budweiser, already has 100% distribution throughout the wholesale channel, and UK sales director Alistair Kemp comments: “We would advise that wholesalers continue to stock our key selling brands including Budweiser, the third best selling premium lager in the UK, and make room for Estrella, Harbin and Michelbob, as these will be strong sellers through 2007 and beyond.”
He adds: “Our current promotion is centred around Bud Bucks – the biggest ever UK promotion for Budweiser. This interactive consumer on-pack promotion kicked off in February and is running across 400 million bottles and cans. We have recently rolled out the POS material to support this promotion which helps wholesalers and retailers create strong in-store displays.”
Another company specialising in imported beers is Global Brands. Jenny Allway, head of retail, comments: “Makro is the first wholesaler to list all of the beers in our world beer portfolio. Salitos, the only brand left to be listed, will be going into depots from spring to join the number one beer from the Caribbean, Carib, the Estonian premium beer Viru, and the UK’s number one Chinese beer Tsingtao.”
InBev is responsible for 27% of the beer trade through the wholesale channel, according to Neilsen Scantrack, with a portfolio headed by the number one take home brand Stella Artois.
Simon Harrison, commercial director – wholesale, says: “There has been a really positive sales performance in wholesale from recent arrivals such as Brahma and Beck’s Vier. We have a strong pipeline of new brands to come during 2007 through initiatives such as La Famille Artois. At the same time, established brands such as Beck’s have also undergone a strong resurgence and this has been helped by our commitment to bespoke and price-marked packs.” For more news about Beck’s see page 57.
With the absence of a major football tournament this year, S N sees barbeques as a key driver in alcohol sales this summer, and will be launching the ‘Tuck in with Fosters’ campaign. Craig Clarkson, S N UK head of customer marketing (off-trade), says: “With activity focused on the recognition between the Foster’s brand and the barbeque occasion, cash and carries nationwide will be displaying barbeques and colourful, branded gazeboes with Fosters and Foster’s Twist product.
“Our aim is to phase wholesale activity throughout the summer to communicate new opportunities for our customers to help them make the most of the barbeque occasion at the tills. Our initial activity will introduce the start of the barbeque season and then we will look at suggesting other in-store activity such as links with food.
“We will also be organising wholesale customer prize draws to win the display gazebos and barbeques at the end of our promotional activity.”
Expansion of Marston’s impulse department from what used to be a regional operation in the West Midlands to a national basis with the use of agencies covering 50,000 independent outlets in the UK, is helping to increase its sales. The wholesale sector is one of the fastest-growing areas of the market for the company with some of its brands selling more than 65% of their packaged product via independents.
Marston’s senior sector controller – take home impulse, Kevin Mellor, says: “It is certainly a growing market for us. The wholesale market has moved on and become much more sophisticated. Cash and carries no longer rely on shop owners piling their trolleys high – they deliver.”
This new strategy has involved Marston’s going out and speaking to independents, looking at ways to help the consumer pull-through and up-grading in-shop POS.
Mellor says the increasing profile of Marston’s business and national brands has helped create significant business in the independent sector. He says the launch of Marston’s Smooth can in particular has helped. Other offers for independents include revamped Jennings Lakeland packs and price-marked Banks’s Original and Bitter six-can packs.
While there will not be a soccer World Cup this year, Guinness is looking to benefit from its associations with rugby when that World Cup begins in September. Paul Downing, wholesale director for Diageo, says the company has really benefited from its association with the Guinness Premiership. He is expecting another boost at the end of the summer and predicts: “The World Cup should be really massive for us.”
=== Buyer’s viewpoint ===
“Cider sales are up and beer sales are up too. This is against beer sales being down over the past two years. Magners has made a big effort and changed the cider market. We still face the eternal problem of duty fraud and are still waiting for the government to do something serious about it rather than pay lip service to it. We need suppliers to stop supplies.
Of course if the summer is like it has been during April, with summer all year long, then we will see lots of business boosted this year without having to worry about not having a World Cup.”