While cider has continued the strong growth of recent years, the beer market has seen a turbulent year, although sales lost in the on trade appear to be migrating to the take home sector.
For wholesalers though, there has been added pressure on beer with a surge in duty fraud taking away business from legitimate traders, and the multiple grocers slashing the cost of cases and using them as loss leaders.
The outlook appears to be improving, however. Lobbying by the FWD has paid off with HM Revenue amp; Customs taking strong action on duty fraud, and with increasing government concern about alcohol-related problems there are even proposals to curb the multiples worst excesses.
Brewers and cider makers are also showing support for the sector with almost all the major players offering price-marked packs that are exclusive to the impulse sector, giving wholesalers’ customers the opportunity to offer something different to the multiples.
== LAGER ==
Further support directed at independent retailers has come from Molson Coors, which has launched Club Coors, a new loyalty and beer category education scheme created for independent off-trade retailers.
Club Coors provides a package of advice, support and promotions, giving independent retailers access to category and shopper insights to enable them to build value and volume in the beer category. The scheme has been structured according to feedback from retailers and awards points that can be used for money off their next purchase or redeemed against business rewards.
In April, over 4,000 retailers were offered a three-case deal on Carling 99 Calorie bottles and around the same number will be called with Carling can and Coors Light three-case bottle and can deals during the summer.
Wholesale channel director Tom Maclennan comments: “88% of retailers that we surveyed said they would be interested in a loyalty scheme and would be happy to participate, especially if it gave them information around the beer category and helped them build their business. This scheme is about rewarding loyalty with independent retailers and sees Coors investing in this key channel – the investment in Club Coors alone during 2009 will be £1.2m.”
This month the company also backed National Independents’ Week with a 50p off coupon for four cans of Carling and staff taking part in store to help with shelf stocking and sampling.
Molson Coors says Carling is the most important brand to independents with 16.6% of the lager market (Nielsen Scantrack Independents MAT to 18/4/09), and it has invested £0.5m relaunching Carling in a bottle with the message it contains only 99 calories. Since the re-launch it estimates sales are up 25%. Six-packs of two of its other brands, Grolsch and Coors Light, are available price-marked £5.25 and £5 respectively.
Carlsberg, too, is employing a PMP strategy. David Scott, customer marketing director, says: “Consumers expect to pay more in independent stores, but they like to see a really competitive price on a particular SKU. A PMP pack of eight cans for £7 enables retailers to offer a value proposition.”
The wholesale channel accounts for about 22% of Carlsberg’s take home off trade sales, and is “massive in terms of focus”, according to Scott. He says: “Over the past five or six years we have been the only major brewer with a sales force calling on both wholesalers and retailers. Our sales force is a big USP for Carlsberg.” He says TCMs (territory customer managers) can pass on feedback from retailers to depots and also “help to pull stock through so we’re not just pushing stock into depots but pulling it through”.
Its top five SKUs in the channel are the 500ml cans of Carlsberg, Carlsberg Special Brew, Skol Super, Holsten Pils and Carlsberg Export. In the impulse channel Carlsberg is in value growth of 5.2% and Carlsberg Special Brew is up 9.1% (Nielsen MAT to 18/4/09).
Trying to make the in-home experience as close as possible to the on trade is key to S amp;N’s strategy. UK customer marketing manager, wholesale, Matthew Godwin says the introduction of Foster’s with In-can Scuba and Kronenbourg 1664 with Dynamo Système is designed to deliver better quality. Foster’s ‘Game on’ promotion continues the at home strategy, with prizes including ‘the ultimate lads’ night in’.
With the addition of Heineken to its portfolio, S amp;N now has two premium lagers. Godwin says: “Heineken 330ml bottles are available in handy portable four-packs which are perfect for convenience while the premium price point will drive profit for retailers.”
He adds: “Kronenbourg 1664 is the number two mainstream premium lager and continues to grow its share of the category. S amp;N UK’s research into consumers’ occasions for purchasing long alcoholic drinks (LADs) revealed that there is a recognised occasion where consumers like to treat themselves and, during the summer months, retailers can tap in to this by stocking Continental brands like Kronenbourg 1664 or Heineken that will help to create a holiday spirit and boost profit margins.”
InBev is another brewer offering the independent sector price-marked packs. Simon Harrison, commercial director – off trade wholesale, says: “We currently offer several PMPs like Stella Artois 4% or Budweiser cans and bottles available through cash and carries. These packs give the consumer the confidence that they are buying a premium product at a value-for-money price point.”
He says: “Summer has become the new Christmas for impulse and convenience purchases and is crucial for sales so we are hoping for much better weather this year than we endured in 2008. The warmer weather provides great opportunities for chilled, convenient packs of Stella Artois, Beck’s and Budweiser, which are a major consumer attraction and recognised key proven performers as buyers tend to look for the names they know and trust. It is crucial that wholesalers stock up on major brands with a variety of ABVs such as Stella Artois 4% and Beck’s Alcohol Free in anticipation of the warmer weather.”
He says the sector does a good job at displaying and selling InBev’s brands, and adds: “A number of wholesalers are working on chilled delivery which could provide a real point of differentiation compared with the multiples.
“Other opportunities for wholesalers include continuing to make sure the appropriate amount of space is given to big brands, thus minimising out of stocks. Too many independent retailers still leave the wholesaler’s premises having not purchased something they intended to.”
Miller Brands has worked closely with cash and carries and delivered wholesalers to drive sales of its core products – Peroni Nastro Azzurro, Pilsner Urquell and Miller Geniune Draft – as well as two Polish brands Tyskie and Lech.
Leo Murphy, director of sales for grocery and cash and carry, says: “Our wholesaler partners have been very supportive of all of our brands. They pioneered and were rewarded with the success of Tyskie and Lech. They have enjoyed Peroni brand growth tripling last year, and over the last three years they’ve got firmly behind Miller Genuine Draft.”
Last year Peroni had a high profile in depots with its Pole Position incentive, which offered an all expenses paid trip for 16 people to the Italian Grand Prix. It had more than 170 depots taking part and there were visits to several with a Ferrari 360 Spider, a Formula 1 simulator and the Peroni Nastro Azzurro sampling team. Murphy says the activity doubled sales of Peroni. This July it will be giving depots point of sale material including high visibility units – one of the standing displays is 5ft tall – giving customers in depots the chance to win a weekend shopping trip to Milan via a free prize draw.
In addition Tyskie and Lech will be offering cash and carry customers the chance of winning all expenses paid trips to the Hungarian Grand Prix in July. They will be able to enter a prize draw in 74 outlets across the country and there will also be a number of staff incentives.
== ALE ==
Ale is undergoing a resurgence, according to Neil Jardine, Greene King take home director. He says: “There are some really positive signs for ale, which has consistently outperformed the overall beer category in recent times. Total ale in the impulse sector is up 6% in the last 12 weeks and premium ale is up 10.4% (Nielsen, 12 weeks to 18.4.09).”
Old Speckled Hen is the brewer’s main focus in the wholesale channel, and is currently on TV for the first time with an eight-month sponsorship of Prime Time on the digital channel Dave, part of a £3.6m brand spend targeting beer drinkers.
Jardine says: “We have a strong and consistent record in the channel. Old Speckled Hen has been consistently outperforming the category and continues to break ground, driving beer (not just ale) sales. Single bottles are the most important variant, although recently we have also seen significant wins with multi-packs. In impulse the brand is up 28% year-on-year, bottles up 27% and cans up 30%. In addition, Abbot Ale is also outperforming the category with bottles showing a 7% increase in sales.”
Contrasting category growth of 4% in impulse, compared with 12% in grocery multiples, he says there is an obvious opportunity. “Given the growth in the category, and the potential for superior margins, wholesalers and retailers should be working together to get the basics right – distribution, availability, display and promotions – and offering more space to bottled ale.”
He accepts that independent retailers do not have the space of multiple retailers but says they should be stocking the leading brands. “Wholesalers could benefit from working with the brewers on bay branding, using leading brands such as Old Speckled Hen to signpost the category, featuring top 10 ales, running beer festivals, featuring regional favourites and choosing a beer of the month. We are always happy to work with wholesalers to increase the success of the overall category through a programme of activities that will sustain and build the interest in ale, beer’s best-performing sub-category.”
Forthcoming plans will concentrate on sports with ‘LBW’, a cricket-themed ale brewed to take advantage of The Ashes, and a continuation of its activity as the ‘official beer of England rugby’, fronted by former England captain Lawrence Dallaglio.
Marston’s will also be focusing on The Ashes this summer. Justin Way, Marston’s channel marketing manager, says: “We have recently increased the ABV of Marston’s Pedigree to 5% to better replicate the cask version and as the ‘official beer of the England cricket team’, we’re producing a limited edition pack to celebrate the Ashes series.
“We’ve identified the key trends for this season. Look out for premiumisation in higher strength beers, with 16 of the top 25 bottled brands at 5% ABV or above; growth in organic beers, +23% year-on-year; and growth of mixed packs, which are +50% year-on-year.
“With our unrivalled portfolio of premium ales and our organic bottled beer Brakspear Oxford Gold, we think we will romp home this season again.”
Limited edition packs, including new cricket season red and white Pedigree cans, will be available through to September.
Rugby will be the theme for Guinness, before the Ashes, and the company’s 250th anniversary. Richard Barlow, marketing manager packaged Guinness, says the British Lions tour of South Africa will boost sales, particularly as the matches will be conveniently timed for home viewing. Guinness will be distributing 1,000 Lions POS kits to the trade.
He says: “Wholesale is a very important part of our business accounting for about 30% of take home off trade.” In wholesale its biggest sellers are price-marked small packs, exclusive to the wholesale channel. It is currently coming to the end of a six for five Guinness Draft in can, and up to Christmas will run six for £6.49.
== CIDER ==
The cider sector is still flying even though Magners, which sparked the revival and is the biggest selling premium cider, has seen its growth grind to a halt. One of the reasons for Magners slowdown is a massive explosion of competition in the market.
In 2004 Nielsen was tracking around 40 premium ciders, but by the end of 2008 the figure had increased to 125, with more added in 2009. With most brands coming in several SKUs, that represents huge competition for the limited space available in wholesalers’ depots and on retailers’ shelves.
Matthew Godwin, S amp;N UK customer marketing manager, wholesale, says: “The first thing for a wholesaler to consider is whether they have allocated enough space to the growing cider market in their beer and cider fixture. Cider is continuing to grow and we recommend that, of the space given to long alcoholic drinks, 17.5% is given to cider.”
S amp;N is the biggest player in the UK cider market. Its biggest cider brand, Strongbow, is the number one cider within impulse, and has an MAT value share of more than 30%, over three times that of its nearest competitor (IRI Total Impulse 18/04/09). Godwin says: “S amp;N UK is investing in the Strongbow brand throughout the year with a multi-million pound marketing campaign to ensure it remains the UK’s favourite.”
It also owns the Bulmers Original brand in the UK, which continues to grow at 10.9% MAT value and is the number one selling 568ml bottle (IRI Total Impulse 18/04/09).
Bulmers has been strengthened by the addition of a pear cider variant, which was launched just as demand for pear ciders suddenly rocketed.
Godwin says: “With off-trade sales totalling almost £36m (IRI Off-Trade Value Sales to 24/01/09), pear cider is enjoying phenomenal success, fuelled by the popularity of Bulmers Pear, which is now the fifth biggest cider in the UK off trade. With a 425% increase in year-on-year sales, Bulmers Pear is also the fastest growing Top 10 cider brand in Britain. To capitalise on this popularity, Bulmers Pear has just been launched in a new canned format.” S amp;N UK recently launched the first phase of a summer campaign for Bulmers Pear through outdoor advertising.
Godwin says innovation in flavoured ciders has mainly been driven by the wish to appeal to female drinkers. He says the light and fruity flavours of S amp;N’s Jacques appeal to females who are looking for more natural products that are refreshing, stylish, and an alternative to wine. Jacques Orchard Fruits and Fruits of the Forest are available in a 750ml bottle.
Godwin says: “Retailer education is an area which remains a huge opportunity and S amp;N UK is currently delivering a project in partnership with Landmark Wholesale which focuses on this area. A series of retailer education sessions are focusing on the five ‘point of purchase’ levers. These include: range, merchandising, pricing, promotions, staff and how retailers can utilise these to grow their beer and cider category. Over time we’ll be able to track how effective this has been for the retailers and measure the uplift in sales that it has delivered. S amp;N UK believes this is a great opportunity across the wholesale sector and plans to deliver more retailer education programmes with other wholesalers in the near future.”
Anthony Heaton, Magners trade marketing manager, urges wholesalers to ensure they are giving the best selling brands a fair share of the space, and not to be distracted by lines that add little to category growth.
Within the convenience and impulse markets, he says that while single serve, such as the single pint bottle, is important for the top-up shop, it’s also important for retailers to make the most of the multipacks that are on offer to help them drive weight of purchase, while offering value to their customers. He adds: “We have recently launched Magners Pear cider which is delivering some fantastic results. We have invested £8m on the launch of this new product in order to further drive consumer demand and support our customers.”
He says Magners has done a great deal of promotional activity in the wholesale channel, from opportunities for retailers to win Magners branded fridges to glassware promotions, giving the independent retailers the chance to offer something different for their customers that they wouldn’t see in the supermarkets.
Aston Manor is expecting a bumper year. Glenn Asquith, sales and marketing director, says it has outperformed the market, growing at over 20% year-on-year for each of the past five years with growth led by its Frosty Jack’s, Kingstone Press and Hereford Orchard brands. This growth has seen Aston Manor expand to become the third largest cider maker in the UK, and in 2009 sales are expected to exceed £50m for the first time.
This year Frosty Jack’s has again invested in sponsorship of ITV2’s comedy season, which will be supported by a fully integrated through-the-line marketing strategy covering TV, promotions and online activities.
Asquith says: “The wholesale and independent retail trade continues to be extremely important for Frosty Jack’s. The impulse sector accounts for nearly 75% of sales value in its category, with approximately half of this coming from independent retailers. Backed with a range of on-pack and other promotions it is therefore a must stock brand.”
This year will also see increased activity on another of its key brands, Kingstone Press, with the extension of the brand with a new pear cider in 660ml bottles.
To maximise sales during the important summer season Gaymer Cider Company is stepping up its music marketing campaign. It will again be the official cider of Glastonbury, and ‘Gaymers Cider Garden’ brand experience zones will be at Leeds, Latitude, Bestival and Lovebox in London.
In order to maximise on this exposure Gaymers is targeting all outlets and cash and carries along the main festival routes with festival POS, posters and bus stops to drive awareness among customers in store.
In addition, it is producing a festival pack of 12 Gaymers 440ml cans, in either original or pear, with festival imagery and a handle that makes it easy to carry. The pack will also feature promotions offering festival-goers the chance to win prizes every day throughout the festival season.
Peter Spencer, managing director at Gaymer Cider Company, says: “Multipacks perform well in cash and carry and eight-packs of Blackthorn and Olde English continue to sell well, especially during the summer months. Blackthorn has recently been relaunched with new packaging and a new mellower taste. Its ABV has been reduced from 5.5% to 4.7% in line with consumer and industry trends.”
The impulse channel is at last catching on to the growth trend in premium cider, according to Merrydown managing director Chris Carr. He says: “Nielsen shows impulse is growing at twice the rate of the multiples in premium cider. Independents were slow getting on board and were not allocating enough space, but it is now being done.”
However, Carr says he has been disappointed because despite Nielsen also showing that Merrydown has the highest rate of sale among premium bottled ciders (MAT to December 2008), and cash and carries remaining very loyal, the same report suggested retail distribution of Merrydown was falling.
To counter this Merrydown mounted a van sales operation to retailers in Scotland with a promotional offer on packs of six, which Carr says encouraged retailers to restock from cash and carries. He says the activity increased distribution and provided a valuable insight into retailers’ views.
Merrydown is sticking with its one litre glass bottles of medium and dry in the cash and carry sector, and not pushing cans, although Carr says he may review this strategy. This summer it will be launching a poster campaign near shops in Scotland so it can measure how they affect rate of sales.
Another premium cider maker making inroads into the independent sector is Thatchers. Martin Thatcher, managing director of Thatchers Cider, says: “Thatchers Cider has sold twice as much cider than the previous year with independent retailers in the premium cider category, with brands such as Thatchers Katy and Thatchers Coxs.
“An established favourite in the West Country where it is a real local hero, Thatchers Gold is currently making particular inroads in the on-trade across the country, and is a brand that wholesalers would do well to stock to benefit from this growing interest in craft ciders. Thatchers Gold is available in cans, 500ml and two litre bottles.”
He says future growth in the market will come from the fruit and pear category, and recognising this, Thatchers has recently launched its Katy Rosé cider. Katy Rosé takes its blush from the colour of the apple, to produce a soft, light and fruity, pink cider. At 5.4% ABV, lower than the traditional Thatchers Katy at 7.4%, and packaged in a wine-style 750ml flint bottle, Katy Rosé is being targeted at the female market. It has an RRP of £3.79.
Brothers Drinks has seen strong interest in its flavoured ciders. Matthew Langley, consumer marketing manager, says: “Brothers Strawberry is now our strongest growing line and Toffee Apple was such a success as a seasonal line over the winter we have maintained it as an ongoing line for wholesalers.”
He says wholesale and cash and carry are both performing really well for Brothers. “I believe this is due to their ability to quickly respond to their customers needs.”
He adds: “Generally wholesalers are good at merchandising Brothers Cider and featuring it in brochures, however many wholesalers and cash and carries do not take full advantage of the support we offer. This includes account manager visits to key customers, cash and carry sampling days, the Brothers Cider point of sale hotline and even helping wholesalers incentivise their staff.”
ICB’s St Helier pear cider is well placed to benefit from the surge in popularity for the pear variety, according to joint managing director John Hibberd. Having been launched three years ago it has established a base of loyal drinkers, which gives it a good foundation from which to push on. Hibberd says the range of flavours of pear cider – blueberry, raspberry and lime, and peach in addition to the standard pear – also gives St Helier a point of difference.
He adds: “Wholesalers and cash and carries are very important to us, not just to reach retailers but also restaurants and caterers. It is a very effective way to reach the on and off trade, and often a good way to launch new products.” This year St Helier has sponsored ITV’s coverage of the Football Championship and Alan Brazil’s Monday night TalkSport radio programme, and it will feature on perimeter boards at England away games and Scotland home games.
Another early pioneer of pear cider in the UK was Kopparberg, which claims to be the world’s best selling pear cider brand. Davin Nugent, managing director of Kopparberg UK, says: “Since day one, over three years ago, Kopparberg has benefited from the support of the wholesale channel. From the large players through to the more niche operators, wholesalers have realised the opportunity of Kopparberg. When we launched in the UK, we highlighted that Kopparberg would grow the cider category and not just steal existing sales from other brands.”
Yorkshire-based importer, agent, producer, bottler and distributor of wines and alcoholic beverages, CWF, has introduced one of the latest launches to the pear cider category. Nectars is a 5% ABV product available in 500ml bottles. Vicky Lee, marketing manager, adds: “In addition, CWF distributes Simply Fresco lightly sparkling perry, a competitively price positioned brand in 1.5 litre magnum size at 7.5% ABV that offers an excellent quality tertiary offering for independent and convenience stores.”
The burgeoning range of new variants could spell danger for the cider category, however, according to Halewood International’s marketing controller Richard Clark. He says: “If brand owners simply look to introduce yet more flavours of existing products there is a danger of us ending up in the same place as the RTD (ready to drink) category some years ago whereby a plethora of product variants was a key factor in driving the value out of the sector.”
Halewood International’s response to a perceived lack of category innovation has been the introduction of Crabbie’s Alcoholic Ginger Beer to the cider fixture, backed by £1m of marketing support.
While it is not a cider from a duty perspective, Halewood believes the brand is best sited in the cider fixture for a number of reasons. First, the product is best served over ice with a slice of lemon. Second, is the premium packaging, which means it is not suitable for the RTD fixture. Third, it is available in a 500ml bottle designed for self serve over ice, setting it apart from RTDs. In discussions with customers, Halewood International is reporting that buyers see how the product sits naturally in the cider category.
Clark says: “This positioning in the cider category is underpinned by the fact that many of the consumers Halewood is targeting the brand at are shopping the cider fixture for over ice products so it is logical to site the brand in a place where consumers will find it.”
Another brand looking to bring something new to the cider category is WKD Core. The new brand is being backed with a £2m Core specific campaign, but Beverage Brands expects it will also benefit from a halo effect from the £26.5m marketing spend behind the WKD brand portfolio.
Explaining the rationale behind the launch of WKD Core, Debs Carter, marketing director at Beverage Brands, says: “We see this as a huge opportunity to broaden the appeal of the WKD brand and at the same time bring a new edge to the cider category which is continuing to flourish.”
=== Wholesale perspective ===
According to Nielsen MAT to February 21, impulse has grown value by 11.1% and volume by 4.3%. Independents have grown value by 4.3% and volume by 6.3%.
The total off trade has grown value by 15.8%. It is clear amber cider is driving this growth at +18.3% and 86% share, with bigger can packs in the multiple grocers and premium brands performing well above average. White ciders at only +0.3% value growth, mainstream brands, +3% and tertiary brands, -1.2% are holding back the category. Own label is performing relatively well at +11.2% with 5% share.
== Landmark’s Performance ==
Landmark is comfortably ahead of both the impulse and independent sectors but is being driven by other areas of the category. White cider is+18.9% and own label at +17.4%. Both these numbers are affected by the change in strategy to the management of our own label range.
Landmark was carrying two amber and two white own brands 18 months ago with declining sales. Following a strategic review the range was reduced to two brands, White Storm and Eridge Vale. Eridge Vale’s ABV was lowered to 5%, it was reduced in price and the whole range was competitively price marked. Within three months the performance turned around. Performance highlights are White Storm two litre up 24.5%, White Storm three litre up 36.4%, Eridge Vale two litre up 18.4%, and Eridge Vale three litre increased 92.9%. The other interesting dynamic in Landmarks figures are the poor performance of our Premium sales at -8.1%. Within this number is the Magner’s brand. Magner’s has done more than any other brand to revitalise the category with great performances over recent years but sales have fallen by 36.9% in Landmark in the last 12 months.
Looking at the overall on trade market, given the much publicised problems facing the sector it is not a surprise that sales here fell by 0.16%. This number was affected by Magner’s pints at -30.7% and Bulmer’s pints -22.0%. Although of less importance than these two brands there are other on trade brands performing well like Kopparberg, Jacques and Gaymers Original. Landmarks Keane’s Cider in pint bottles for the over ice market will be consistently supported this year with a promotionally supported 99p RSP making it excellent value.
== Outlook ==
The cider category will enjoy another year of strong double digit growth. Do not underestimate the opportunity a long warm dry summer presents following the wet seasons of the last two years. We will be planning deliveries against this positive forecast.
== Market Performance ==