The Cask Report 2015-16: ‘How pubs can profit from cask’

Introduction by brewer and Iron Maiden vocalist, Bruce Dickinson

When we’re on tour, cask ale is one of the main things I miss. That’s one reason why I was delighted to work with Robinson’s to create Trooper. Their heritage and Iron Maiden's global reach has enabled it to be one of the UK's premier ambassadors of British ale – it’s now doing good business in 50 different countries.

Maybe initially the band played a big part in introducing it to people, but Iron Maiden fans wouldn’t drink a duff beer just because we asked them to. They have told us they like Trooper’s flavour and balance and it has now passed our wildest expectations.

This proves to me, not that it needed proof, that British ale is a drink with global appeal. Maybe we forgot that a decade or so ago, when ale seemed a bit dog-eared and old-fashioned. But now, cask ale is regaining its rightful place on the bar, claiming back its birthright as the very DNA of a uniquely British tradition.

It is great to read in the Cask Report that cask is on track to account for one in five beers in pubs by 2020, and it is interesting to see that cask ale drinkers – proper pub regulars – put almost twice as much money over the bar as other people.

Maybe it’s only when you spend so much time touring the world that you realise just how special the British pub is. This report shows that, by boosting pubs’ profits, cask ale is playing a vital role in helping this national institution not just survive, but also thrive.

I'll drink to that - wherever I am!

Cheers!

Bruce Dickinson, September 2015

Pete Brown uncovers the main findings from this year’s Cask Report to illustrate how the nation’s favourite drink can help drive more people to your pub

Why cask is a source of profit

• Cask ale is in sustained volume growth, significantly outperforming the on-trade beer market.
• Cask is forecast to hit 20% of on-trade beer by 2020 - hugely significant when beer accounts for 64% of the average pub's wet sales.
• Cask ale cashes in on what people want from pubs today - a premium experience that can't be replicated at home.
• Cask drinkers visit the pub twice as often as the average person, and influence the choice of pub in mixed groups.
• The cask ale drinker spends £967 a year in pubs - almost double the average spend per person.
• Cellar management training improves yield by at least 7%. Staff training on how to keep and serve cask ale perfectly is now available free online via Cask Beer Uncovered.

Top tips to profit from cask

Promote Your Offer

• Cask drinkers use social media and expect their pubs to. If they like your pub, they’ll tell their friends.
• Most people don’t know much about cask ale. Encourage trial through education with tastings notes, Try Before You Buy etc.

Invest in Staff and Beer Quality

• Staff training is the easiest way to improve returns from cask.
• Improve quality and therefore sales.
• Creates genuine enthusiasm, meaning they stay longer and sell more beer while they’re there.
• Training on cask ale is available free via the Cask Beer Uncovered e-learning programme.
• Allow your staff to train you! They may well have skills that can promote the range and the pub more broadly.
• Apply for the Cask Marque Award.

Stock a Broad Range

• ‘Flavour’ is a huge social trend as well as the main reason people drink cask ale.
• Most people drink cask occasionally. They’ll drink it more often if it can satisfy their curiosity.
• Bitterness is a significant barrier for non-drinkers. A broad range of styles helps blow that perception away.

Hold a Beer Festival

• Encourages trial amongst non-cask-drinkers.
• Gets rare cask drinkers into the pub, encouraging them to see the pub as the best place for cask.
• Emphasises cask's diversity and range – the key reasons people drink it.
• Gives occasional pub-goers a reason to visit more often.

Invest in Glassware

• Cool, stylish glassware helps address the ‘too masculine’ barrier for some female drinkers.
• Drinkers like a choice of measures - e.g. new beers in a half pint, strong beers such as IPAs in two-thirds measures.
• Branded glassware premiumises the drinking experience. Consider bespoke pub-branded glassware.

Cask ale is in sustained volume growth

• Cask outperformed on-trade total beer by 1.3%. Cask grew by 0.2% in 2014, versus a decline in total on-trade beer of -1.1%. Cask therefore outperformed total beer by 1.3%.
• Cask outperformed on-trade beer by 3.4%. Cask grew by a further 0.5% in the first six months of 2015 versus an on-trade beer decline of -2.9%. Cask therefore is outperforming beer by 3.4% in 2015 to date.
• 2014 was the third consecutive year of cask volume growth.
• Cask accounts for 17% of all on-trade beer.
• Cask accounts for 57% of all on-trade draught ale (versus 43% keg).

Value growth also remains consistently healthy

• Cask ale grew by 1.6% in value terms over the past year - well ahead of inflation.
• The value of the cask ale market is £1.8bn - a 29% increase from £1.4bn in 2010 and by 2020 it will be worth £2.3bn.

A remarkable success

Cask ale is only available in the on-trade. With overall on-trade beer performance significantly lagging the resurgent off-trade, and up to 29 pubs a week closing, cask ale is bucking the trend. Pubs that stock cask ale are doing significantly better than equivalent pubs that don’t.

The number of UK pubs continues to fall but cask ale pubs fair better and the net distribution of cask ale is increasing.

Research using CAMRA’s WhatPub database and CGA-CAMRA Pub Tracker shows that cask is now available in 70% of British pubs.

Many cask pubs are not just surviving – they’re booming and in successful pubs, cask ale is an increasingly vital part of the offering. Among those pubs that stock cask ale, rate of sale of cask is steadily increasing – as is the number of brands stocked.

However:

It’s important to remember that stocking too many cask ales can have an adverse effect on quality and seriously damage sales and profitability. A useful rule of thumb is not to stock an additional handpump unless existing pumps are selling a firkin (nine gallons) in three days or less.

This success is set to continue

Cask share of market

Cask to achieve 20% of on-trade beer and 70% of on-trade ale by 2020.

• If current trends continue we expect cask to account for one in five on-trade beers by 2020.

• This is based on two things: 1) The continued growth in cask volume. 2) A continued overall decline in total on-trade beer.

As overall beer volumes in the on-trade decline, cask is set to grow its share by 25% over 10 years.

Even in modest growth, it's increasingly important for the success of the pubs that survive.

Source: British Beer and Pub Association

Why is growth happening and why will it continue?

To understand why cask ale is more relevant and appealing than it has been for years, we only have to look at trends in society.

Here’s a quick analysis of three different levels of trends that interact and affect each other to create the perfect conditions for cask ale’s growth.

Macro trends

Some relevant political, economic, cultural or social forces influencing our behaviour.

Premiumisation

In times of austerity people look for premium versions of everyday treats – you might not be able to afford that holiday, but you can afford to treat yourself to a Starbucks instead of a Nescafé.

The growth of Aldi and Lidl at the same time as the growth in premium restaurants, delicatessens and farmers’ markets – all at the expense of mainstream supermarkets – demonstrates a ‘flight from the middle’, where people buy cheaper versions of commodities and use the money saved to indulge in premium versions of discretionary treats.

Health

We’re becoming more health aware – whether it’s fat, carbs, sugar, the dangers of obesity, smoking or over-indulgence of alcohol, we are being educated about how to live longer and healthier. Younger beer drinkers increasingly balance their indulgence with an interest in sport and exercise.

Bored of Big Brands

Yes, we all shop in big supermarkets and buy big brands. But in increasing numbers we don’t feel good about it. Many – especially the affluent middle class audience that make up the majority of cask drinkers – feel choosing small, independent brands is a way of fighting back, sticking up for the little guy, expressing individuality.

Real world nostalgia

Every trend comes with a counter-trend. The more time we spend online and in virtual

worlds, the more we hanker after the real, the authentic, the local. This trend will continue to drive interest in local, traditional produce.

Sector trends

In response to macro trends, some broad trends in our eating, drinking and socialising behaviour:

Flavour

‘Flavour’ is consistently cited as the main reason for the appeal of cask ale. But beyond that, if we look at sales of cookbooks, the success of celebrity chefs, shows like Masterchef and Great British Bake Off, and the rise in different ethnic cuisines and restaurants, we have permanently thrown off the old stereotype that the British are not interested in food as a sensory experience.

Less But Better

The combination of premiumisation and health is creating a culture of ‘less but better’ in food and drink. We may not indulge as often as we did, but when we do, we want it to be a truly special experience.

Localness and Authenticity

Throwing off corporate brands and attempting to re-engage with the world immediately around us drives interest in small, artisanal producers using traditional methods.

If we know where something comes from, and we see the person who makes it, it feels more real and meaningful.

The Experience Economy

The search for something truly different, premium and real means that brands in any economic sector now feel the need to offer not just a product, but a whole experience around it.

Restaurants have an increasing sense of theatre, and festivals are where an increasing number of people explore their tastes – be that food and drink, music or literary festivals.

Market trends

How broad trends and sector trends show themselves in the beer market – and create the conditions for cask ale growth

Growth of Microbreweries

The most curious aspect of the British beer boom is that overall, beer volumes have fallen significantly over the last decade, while the number of brewers serving the market, and the variety and range of beers they produce, has boomed. Since Progressive Beer

Duty introduced tax relief for small breweries in 2002, the number of breweries in the

UK has trebled. There are many factors driving this shift from a few big brands to many small ones, including the preference for flavour, localness and authenticity, and the backlash against the homogeneity of global corporate brands. It shows no sign of slowing down.

Growth of Beer Festivals

Once the preserve of die-hard real ale fans, the traditional beer festival has grown in popularity. At the same time, new formats of beer festival that stray from the established tradition are booming across the country, craft and international beers.

Beer festivals have emerged as a key occasion for people trying cask ale for the first time, and therefore play a huge role in recruiting people to cask.

The premium pub experience

Most people now go to the pub much less than they once did – there’s a whole new range of leisure alternatives out of the home, while the home itself is becoming more popular as a place to spend leisure time.

But there’s a flipside to this – when people do go to the pub, they’re looking for something they can’t get at home or from the supermarket. Cask ale can’t be replicated at home, so along with cocktails, premium spirits and obscure craft beers, it’s part of the less frequent, but much premiumised, pub experience for a growing number of people.

Growth of Craft Beer

There’s a widespread misconception in the beer and pub industry that craft beer is (a) confusing and (b) completely different from cask ale. Neither is true.

A majority of the UK population say they have heard of craft beer, and of those, almost half are confident they know what the term means.

The Cask Report has always argued – with support from prominent craft brewers in the UK and US – that cask beer is in fact a perfect example of craft beer.

Cask and craft are not the same, but there is a significant overlap. CGA Strategy has defined craft beer not with a broad definition – which is always problematic - but by evaluating each brand individually and selecting beers from particular breweries and/or beer styles that are new and innovative, to create a segment of the beer market that is craft. These brands cross all dispense formats - cask, keg, bottle and can.

Cask is by far the biggest format, accounting for almost two thirds of total craft beer volume. When added together, these craft beers account for 8.4% of all on-trade ale and have doubled their share in the last two years.

Cask ale is the dominant format of craft beer. And the rapid growth of craft beer is making a huge contribution to the success of the broader cask ale market.

Sources: YouGov survey for the Cask Report & Visa Europe UK Expenditure Index

How cask ale's growth boosts pub profits

We’ve always known that cask ale drinkers tend to be affluent and curious, and are important to pubs. But new research shows that they spend more in the pub than any other kind of drinker – they are the drinkers keeping pubs profitable, and are too lucrative to be ignored.

The affluent drinker

In the nine years of the Cask Report we’ve consistently found that cask drinkers are affluent and upmarket. Our latest research confirms this yet again.

• 61% of cask drinkers are social grade ABC1
• Age-wise, they’re in line with the general population
• Geographically, they’re in line with the general population

But this alone doesn’t guarantee they’re valuable to pubs. It’s their behaviour that makes them particularly interesting.

Cask ale drinkers visit pubs far more often than other drinkers.

Cask drinkers are more than twice as likely as pub goers to visit the pub once a week or more

• 50% go once a week or more, compared with 30% of beer drinkers who don’t drink cask, and just 23% of the adult population as a whole.
• Therefore, cask drinkers are more than twice as likely as the average person to visit the pub once a week or more.
• n.b. Only 10% of the population say they never go to pubs. For most people it’s a rare treat. 39% say they go to the pub less than once a month.

Source: YouGov survey for the Cask Report July 2015

Cask drinkers are more loyal to pubs

Percentage of people who claim to go to the pub more often now compare to a year ago

• 36% of cask drinkers say they are visiting the pub more often than they used to, versus only 12% average among the population as a whole.

Source: YouGov survey for the Cask Report July 2015

They spend more money than anyone else

Cask drinkers spend almost double the amount the average person spends in the pub each year.

When asked how much they spend on a typical pub visit, cask ale drinkers cite a slightly lower figure than other drinkers. But because they visit the pub so much more often, they contribute a far higher amount to the pub’s turnover than anyone else.

While single purchases of wine or spirits may yield a higher margin than cask, which is priced lower, the weight of purchase makes the cask ale drinker more important overall.

Source: YouGov survey for the Cask Report July 2015

• Cask drinkers in mixed drinking groups decide what pub to go to, bringing non-cask drinkers with them
• The cask ale offer varies from pub to pub more than other drink offers do – and cask drinker are far more likely than other drinkers to say the choice of pub is theirs. Cask ale offers a more varied selection than other drinks, and cask drinkers see the quality and selection of cask ales as a shorthand of the overall quality of the pub.
• Cask drinkers are far more likely than other drinkers to say the choice of pub is theirs
• 75% Say the person who makes the decision is a cask drinker

How to grab a share of cask’s growth

So cask ale is growing in volume, and cask ale drinkers spend more in pubs as well as bringing additional value. How can the typical pub get most benefit from the opportunities cask ale offers?

Get your fair share (or more) of existing cask drinkers

Cask ale drinkers are choosy about which pubs they go to. How do you get them to visit your pub rather than someone else’s?

In every survey of what makes a pub special, ‘atmosphere’ – whatever that is – comes out top above any tangible measure. Cask ale drinkers rate atmosphere even more highly. And they create atmosphere – the regulars drinking real ale are a quintessential part of ‘pubiness’, helping differentiate the pub from other retail establishments.

This proves that it’s not enough to simply stock a good range of well-kept beers – vital though that is – there also has to be a feel to the pub that fits.

Look at what they want from a cask ale range

Cask drinkers want a mixed range of familiar and new

When it comes specifically to cask ale, how important are each of the following in choosing a pub?

Cask ale drinkers want a range that has various things going on. They want:

• Novelty and old favourites.
• Permanent brands and a rotating selection of guest ales.
• Tried and trusted brands and beers from small local brewers.

Their choice between these will depend on mood, time of day, and the last pint they had, among other things. But even if they don’t try the latest guest or every brand on the bar, it’s important to them that the choice is there.

Ranging Strategy

• Variety is about style as well as brands.
• A range of six cask ales that are all golden ales or pale ales between 3.8% and 4% from microbreweries may look diverse and eclectic from the pump clips on display, but it doesn’t offer the drinker as much choice as it first appears.
• Cask ale drinkers enjoy a broad variety of different styles, including golden ale, IPA, stout, Mild and speciality beer.
• 92% of cask drinkers also drink ‘craft keg’ ale. It’s important to recognise how cask and craft keg work together, and how both represent quality and flavour in the drinker’s eyes. The ‘anti-keg’ real ale traditionalists may make a lot of noise in your pub, but they are an increasingly small minority.

Pricing Strategy

• Drinkers are increasingly likely to accept a range of different price points for cask.

While some cask drinkers are price sensitive, this has to be balanced against the search for novelty and flavour. A good range could offer options between £3 and £5 per pint, depending on style, ABV, scarcity and provenance.

Our recommendation:

• Entry level brand priced equivalent to standard lager.
• Premium standard strength brand at a price premium to the above.
• Premium brand priced equivalent to super-premium lager.
• Craft brand that may be higher in ABV and/or unusual in style (possibly encouraged in smaller measures e.g. a two-thirds glass) to create affordability.

Optimum presentation and serve

• Explore a range of different glassware options:

People prefer smaller measures when trying a new beer for the first time. An attractive half-pint glass could increase rate of sale of new beers.

Research among women who don’t drink cask shows that presentation can be offputting. Stylish glassware is essential in helping to win over new drinkers, regardless of gender. For example, using stemmed glasses when serving cask ale with food sends really positive cues about beer and food matching.

Ensure every aspect of the serve is clean and professional - no one likes picking up a sticky, overflowing glass.

Tell them about your offering

Social media has been a key dynamic in driving the growth of interest in good beer. Another nail in the coffin of the idea of cask drinkers as old and fuddy duddy is the fact that they are more likely than average to use social media platforms.

Cask ale drinkers and consumers are switched on to social media

Pubs need to have a Facebook page, and a presence on Twitter is encouraged.

Ensure your pub is listed on the CaskFinder App which is used 70,000 times a month to find Cask Marque pubs.

But it’s not all about social media. Standard practice for marketing your cask ale range should include:

In the Pub:

• Chalkboards displaying – at least – the name of the beer, style, price and ABV.
• Try Before You Buy – preferably with small bespoke tasting glasses (shot glasses work for this).
• Simple tasting notes, such as those provided by the Cyclops scheme.
• For larger ranges, a printed beer list with tasting notes and, if appropriate, food matching recommendations.

Outside the Pub:

• Good relationships with your local CAMRA branch.
• Local press features and promotions.
• Events/relationships with other local food and drink producers, e.g. an event matching your beer range with pies made by a local baker.
• Clear signage outside the pub.

Help create more cask drinkers

42% of the population have never tried real ale. Of those who have tried it, 82% say they still drink it. Most drinkers may only have it occasionally, but it seems clear that whatever barriers exist for those who have never tried it, they appear to be mainly unfounded when people take the plunge.

Every time we research non-trialists, there are few specific hard barriers to trial. People simply don’t think it’s relevant to them, or have never been given a good reason to try it.

Where specific reasons are cited, we can see ways to overcome them:

• “It’s too bitter” – it’s one thing to try a hoppy pale ale and find it too bitter, but if you’ve never tried it, how do you know? Cask ale isn’t helped by ‘bitter’ being a generic name. But we can: Refer to it as ‘ale’ rather than ‘bitter’ – which previous research suggests is seen as an increasingly old-fashioned term anyway. Use the breadth of styles available to overcome perceptions of bitterness. Encourage trial via Try Before You Buy, tasting and sampling events.

• “It’s too masculine” – while this only scores 12% in the list of barriers to trial, if we assume that most people saying this are women, it becomes quite significant. While the number of women drinking cask ale has grown substantially in recent years, females still only account for 17% of all cask drinkers. To overcome this we can: Avoid retrograde ale brands with sexist pump clip imagery and names. Avoid patronising women by warning them about the strength or intensity of flavour of a beer, or asking if they’re sure they want a whole pint, unless we would also say these things to men. Hold women-orientated beer tasting events, perhaps with one of the growing number of female beer sommeliers.

'Try Before You Buy' and sampling can overcome perceptions of bitterness etc. But the main task is to push against the ‘soft’ barriers, where there is no specific reason why people have not tried cask ale.

20% of cask ale drinkers tried it for the first time in the last three years – and that percentage is increasing. If we look at what made those people try cask for the first time, we can do more of it.

Reasons for trial are a lot more specific than excuses for non-trial. We can see that:

• Word of mouth is the most important driver – try rewards for people who encourage friends to try real ale for the first time?

• Beer festivals - hold one in the pub, or collaborate with other pubs to create an event.

• As ever, promotions and samples are also significant.

• 4% of all cask drinkers tried it for the first time after drinking craft keg – a small number but, given the relatively small size of craft keg at the moment, still very significant. This proves that craft beer is recruiting people into cask.

Converting rare drinkers to more regular drinkers

Only 25% of cask ale drinkers claim to drink it ‘always’ or ‘often’. For most, it’s an occasional treat, probably something for real ale festivals, or occasions they visit the pub with other cask ale drinkers, or visit particular kinds of pubs.

There’s a huge opportunity to make cask ale more relevant to the majority of people who drink it. Getting the mass of cask ale drinkers to drink it just once or twice more often would yield huge volume growth.

People try cask ale because they are curious, and because they enjoy seeking out new flavours. So it’s no surprise that they enjoy lots of other drinks too. For example, cask ale drinkers are almost twice as likely to also be wine drinkers.

• Cask ale can be positioned as a lower ABV alternative to wine.
• We could also learn from the experience of beer festivals. 41% say a festival is the best place to try cask ale, versus only 37% for a pub.
• Hold more cask ale festivals in pubs.
• Educate people as to why the pub experience of cask ale is, in many ways, even better than the outside festival experience (e.g. better cellaring environment).
• Learn what appeals about the festival experience and bring that into the pub: e.g. broad range, trying something new, active promotion of styles via chalkboards, beer lists and tasting notes. We could also look at the reason why people enjoy drinking cask ale, and amplify those:
• Flavour is top – 51% say it has more flavour than other beers.
• 39% drink it because it is local – the second highest answer.
• Diversity is also key – it makes trying cask ale more fun than other drinks. These people like to explore!
• Not gassy, natural ingredients, range of styles and choice are the other significant factors.

Helping your staff deliver more from cask ale

Bar staff are the front line between the publican and the drinker. They are the face and tone of voice of the pub and can make the difference between loyal customers and people who drink somewhere else.

The oft-repeated view in the trade is that it’s not worth training bar staff because they just move on anyway. Sometimes this might be true, but it’s also a self-fulfilling prophecy – don’t look after them and they’ll definitely move on.

Those pubs and companies that invest in training staff see them stay longer as a result because their jobs are more rewarding. Also, research has shown that cellar management training reduces wastage and increases yields from cask by at least 7%, creating a significant impact on the bottom line.

That’s why Cask Marque has launched Cask Beer Uncovered, a free online training service for handling and selling cask ale. Close to 3,000 licensees and team members from 20 operators registered from its launch in March 2015 until the start of August.

The programme comprises five short online films which staff can watch at any time, followed by a multiple choice test. Staff who score at least 75% across all five modules can print off a personalised Cask Beer Uncovered certificate.

Delegates can complete the modules either via their operator’s training platform with

CPL Online, or through the Cask Matters website.

Apart from basic training there are many other ways that successful operators get the most out of staff:

• Actively encourage or even mandate the tasting of each new beer that goes on sale.
• Take staff on visits to local breweries.
• Makes sure there is always someone qualified in cellarmanship on duty at any time.
• Use the skills young bar staff bring. For example: If someone is always on their smartphone, incentivise them to run the pub’s Facebook or Twitter feed. They could even make short promotional films. If you have one member of staff who is very keen on cask ale, invest in their training and make them a ‘cask champion’, then use them to train up their colleagues.

“Cask Beer Uncovered is a great way of engaging team members with cask beer, telling them everything they need to know in bite-sized modules that are fun to watch and can be fitted into their working day. We’ve had a good response from all the team members who have started the programme, and the licensees tell us they can see an immediate improvement in the customer’s cask beer experience.”

Michael Lees-Jones, head brewer, J W Lees