Magners has proved a big hit, but tough competition on price and a desire for something different means it has been de-listed by some pubs. Rosie Davenport looks at the challenges facing the brand
In a little less than two years, Magners has become the darling of the drinks trade, grabbing media attention and breathing new life into a market that would have been washed up, were it not for Strongbow's singular efforts.
The trade has been abuzz with talk of the "Magners effect" and suppliers are busy trying to replicate its success by finding the next craze that consumers will adopt as readily as the simple ritual of pouring a drink over ice.
Other companies have been quick to ride this wave of success, collectively pushing bottled ciders into 82,000 on-trade outlets - up 28,000 since last June, according to researchers CGA.
Much of this growth has come from Magners, which has gone from being sold in 3,600 outlets in September 2005 to 48,000 a year later, adding a further 1,880 three months after that.
More figures from CGA reveal that within six months of its national launch in March 2006, Magners had gained 26% of the packaged long alcoholic drink market (which includes bottled beers) and 30% of the packaged cider market in the UK. It already enjoyed a 46% share in Scotland, where it had first appeared. By July, the UK figure had risen to 75% of the bottled-cider market.
Undoubtedly, its rise to fame is awe-inspiring - and because its success revolves around the pint bottle with lots of ice, its a success story that began in pubs, which has benefited them as much as brand owners C&C.
But success often breeds contempt - and even with more than £26m in marketing support behind it, some pub groups are turning their backs on Magners. All Bar One de-listed the brand last year, claiming they want something more individual and niche rather than a product that is so ubiquitous. Marston's Inns & Taverns and Youngs have followed suit.
Phil Tate of CGA says: "Magners has become a very mainstream brand and may suffer in more stylish venues as customers look for cutting-edge premium brands. All Bar One has added Aspall cider products into its range to ensure premium cutting-edge choice for their consumers."
And while the Magners effect has opened up the cider market, it has also encouraged more and more new products to join the fray, making it far easier for pubs to turn away from the brand that fuelled the revival.
For Market Town Taverns, a small 10-outlet group, Magners is no longer its cider of choice. Although it's still sold in three of its pubs, managing director Ian Fozard says he wants more niche brands: "People think it's expensive and realise other products are out there.
"It is a marketing-led phenomenon. As a company, we want to sell what we perceive to be quality products. If you taste Magners against some of the quality ciders, there is no comparison. In everything we sell, we are a product-focused company in terms of quality, catering for a niche market.
"Magners does not fall into that category - partly because it is a marketed brand, partly because it is expensive and partly because I don't rate it. They have opened the market up - and we are hopeful that quality ciders will benefit from this."
Magners marketing director Maurice Breen is bullish about the criticism.
"We always knew we were going to get into a competitive situation," he says.
"Frankly, that's business. It comes down to consumer choice. We have seen some instances where Magners has been taken out and has gone back in because consumers want it."
Wide-open category
While niche brands are challenging Magners with their unique points of difference, it's the emergence of the bigger players that is most likely to upset the apple-cart.
Tate of CGA Strategy says: "Magners has opened up the cider category completely and has led to the emergence of smaller brands.
"These brands do not carry the same media or customer interest as Magners and they will struggle to make a significant impact on the high level of distribution of the Magners brand.
"But they do have the opportunity to build on the re-invigorated category and achieve distribution and share of space themselves."
Diageo is the latest player of significant scale looking to move into the market, and S&N is already making huge strides with Bulmers Original.
"A lot of people are under pressure in the boardroom and are trying ciders," says Breen.
"Diageo is an example - it has a very strong track record of product development. Parts of the Bulmers' proposition echoes what Magners is about."
He says one of the main differences, however, is quality, explaining that Magners is made from fresh fruit, rather than concentrate.
According to Punch Taverns category manager Stephen Martin, "Magners is massive", but like-for-like he says that Bulmers is enjoying a huge growth, though from a lower base. Punch Taverns sells Magners in approximately 75% of its pubs while 25% sell Bulmers. Of that 25%, many will be offering both.
Martin adds: "Packaged cider is still likely to be huge in 2007 and 2008, given the level of investment levied by cider producers.
"Magners will continue to dominate, but it will ultimately slow down because of more brands coming in."
He believes that by offering a wider selection of brands, pubs will sell more cider. Punch Taverns has just launched Brothers cider and is about to add Addlestones, Kopperberg Pear Cider, Kopperberg Apple Cider and Scrumpy Jack.
"Pubs could have three or four products that are not the same as Magners," he says.
The issue of price continues to dog Magners, as buyers can demand increasingly competitive offers from producers keen to break into the market. As in the case of S&N, pub groups are able to exploit the benefits of buying across the company's extensive portfolio, bringing prices down even further.
All this means licensees can pass the discount on to their customers, while still making decent margins. According to CGA, Bulmers sells for £2.91 [per pint bottle] on average, compared to Magners' £3.13.
"We deliver premium margins and are trying to invest and not take the value out. S&N is an aggressive trader which is able to portfolio-sell, so this will be a challenging year. We could probably make a cheaper product, but that is not what we're about," says Breen.
Bulmers, having made a significant dent in the market, is nipping at Magners' heels.
S&N UK marketing manager for ciders Stephen Mosey says: "Bulmers Original has been received enthusiastically by licensees and consumers alike in the on-trade.
"It has quickly established itself as a leading player and is a great success story in the off-trade too, with distribution in the grocery channel hitting 80%.
"Consumer awareness of Bulmers Original has been raised significantly by the success of the new TV advertising campaign, launched in November.
"We are continuing investment behind the brand in 2007, including more TV exposure."
Marketing game-plan
Another challenger is Gaymers, which lacks the scale of S&N but could still steal volume.
Spokesman Simon Russell says: "Magners is now one of three major competitors in a category in which Gaymers Original had only just launched 12 months ago.
"One year on, it (Magners) does perform well, but there are two very strong contenders, both of which are looking to invest heavily and have good strength in the UK market at present.
"I think the outlook is different from that of 12 months ago and it will be interesting to see what will happen."
As well as Gaymers Original, the company also launched two new packaged cider products on top of its existing portfolio last year - Addlestones in bottled form and Orchard Reserve. It believes it is important to offer this variety.
Russell adds: "Having a strong portfolio with different ciders for different occasions and different types of outlets is a better position [to be in] than just having one product, no matter how strong that