Standard's strength

Lager is making headway in an otherwise declining beer market ­

but it's standard lagers, not premiums, which are pushing the growth.

Report by John Harrington and Max Gosney If "troubled" is the best description of the on-trade lager market in 2002, perhaps the most accurate description for the sector in 2003 is "relieved".

Last year, some commentators were predicting a tough time ahead for lager in pubs.

Pessimists suggested lager would cease to be the "automatic choice" for drinkers and lose ground to wine and spirits.

In fact, lager performed relatively well in a liquor market that was down 0.7% overall.

The lager market was up 0.5%, set against a fall in the beer market as a whole of 2.3% (all figures from AC Nielsen for the 12 months to November 2003).

Against these statistics, cider's gradual decline continued ­ sales fell 1.8% ­ and RTDs plummeted, with sales down 11.3%.

Meanwhile spirits were steady, up around 0.5%, and white wine sales leapt 9.6%.

According to AC Nielsen consultant Graham Page, the figures are encouraging when compared to an overall beer market that has been declining in recent years.

Part of this is down to Mother Nature.

"The very warm summer has had a very supportive affect

[on sales]," he says.

"The absolute level of decline has slowed down.

"Lager has held up very well, given that fact.

Lager is the only section in beer that is not doing too badly.

Ale is being squeezed more and more, not just by other drinkers but by lager's increase in the share."

He continued: "The critical point is that standard lager has been driving the growth.

Despite the increase in premium lager unit sales, it has been the likes of Carling, Foster's and Carlsberg that have been pushing the category."

The year to November 2003 saw standard volumes rise 1.1%, with around 8.2 million barrels sold, compared to 8.1 million in the preceding 12 months.

Meanwhile, premium sales fell by a fraction ­ the 7.1 million barrels sold represent a 0.13% drop.

Partly this is due to the widening price gap between standard and premium lagers that,says Page, averaged about 28p in 2001, but 35p in 2003.

In terms of the brands themselves, Page indicates that consolidation will continue apace.

"The evidence in the marketplace is that the big brands are getting bigger.

Last year, Carling sold five million barrels for the first time.

That is astronomic.

"In 1990, the 10 biggest-selling brands in Great Britain accounted for 32.5% of the on-trade.

In November 2003, they accounted for 62.2%."

But that doesn't mean brands that were minnows 10 years ago haven't been able to make their mark.

There has been a "premiumisation" of the market, Page says, whereby a lot of drinkers have got into the habit of having fewer pints withhigher abvs.

Premium lagers, it seems, now have a loyal following.

"What is interesting is if we go back to 1990, there's not a single premium lager in the top 10.

Now there are two ­ Stella and Kronenbourg.

"Most of the brands that were there in 1990 are still there now ­ the likes of Carlsberg, Foster's and Carling ­ but new premium brands have also emerged.

Kronenbourg has grown rapidly in just 13 months to make it into the top 10.

"And Stella has probably been the biggest single growth brand of the last decade.

It has gone from being outside the top 10 to well within it.

And in value terms, it gets near Carling and Foster's because it is sold at a premium price."

"At the same time Skol has virtually become a cheap and cheerful brand for the take-home trade."

The biggest change in the market in 2003 concerns Castlemaine XXXX.

The brand, taken over by Interbrew in January last year, benefited from the demise of its standard rival, Heineken Cold Filtered (3.4% abv).

"The death of Heineken Cold Filtered has been a major feature of the lager scene," Page says.

"XXXX is one of the big growth brands of 2003 and has picked up from the fall of Cold Filtered."

Page says that, far from being downtrodden, lager remains a first choice for a large bulk of British drinkers.

"Two thirds of beer sales in the UK are now lager.

The ale market has progressively been squeezed as the lager market gets bigger.

"Generally speaking, if your friends drink lager then you drink lager.

Lager has taken over."

But Page says lager's fortunes in the on-trade are largely in the hands of the retailers, who need to improve standards of service to attract drinkers away from the take-home sector.

"The price of beer in the supermarket has not gone up in real terms, whereas in the on-trade it is up three and a half times [the rate of inflation].

"That is not in itself a problem if the standards of service in the on-trade are higher because people will pay a premium.

But does that high standard apply to all of Britain's 60,000 pubs?

It is no surprise that the on-trade is finding it tough to retain its premium prices."

On-trade top-10 lagers By volume, in the British on-trade for the year to November 2003 (all draught unless stated):

Mainstream 1) Carling 2) Foster's 3) Carlsberg 4) Tennent's 5) Castlemaine XXXX 6) Miller 7)

Heineken Cold Filtered 8) McEwan's 9) Labatt's Canadian 10) Carling (packaged) Premium 1)

Stella Artois 2) Kronenbourg 1664 3) Budweiser (packaged) 4) Carlsberg Export 5) Grolsch 6) Beck's (packaged) 7) Holsten Pils (packaged)

8) Stella Artois (packaged) 9) Sam Smith's Ayingerbrau* 10) Budweiser Premium Packaged Lagers 1) Budweiser 2) Beck's 3) Budweiser Budvar 4) Corona

Extra 5) Foster's Ice 6) Holsten Pils 7) Kronenbourg 1664 8) Red Stripe 9) Stella Artois 10)

Miller Genuine Draft All figures from AC Nielsen *

Ayingerbrau may be over-represented, says AC Nielsen's Graham Page, because there were a few very high-volume stockists of the brand included in the sample