Rising to the challenge
As the beleaguered beer market
emerges from another demanding
year, Nigel Huddleston looks at the
key trends and brand developments
Saying that it's been a tough year for the on-trade beer market has become almost as predictable as Christmas falling in December.
The drift from on-trade to take-home has seen a steady erosion of pubs' collective share of the beer market for the past 20 years, and 2006 was no different.
The total on-trade beer market was down 4.6% in the year to last November, according to ACNielsen. The free trade fared even worse, with a fall of 5.3%.
Within that, standard lager dropped 2.4%, making it the best-performing sector, while premium draught lager was down 4.9%.
Cask ale was down by 8% overall, with premium cask ale doing a little better at just -4%.
It seems likely that things will get worse for beer before they improve. Whether you see the impending smoke ban as a potential blip or a ticking time-bomb for business, it seems likely that there will be at least a short-term fall in beer sales.
But other factors have already impacted on beer sales in the past 12 months.
Perhaps the most disappointing aspect is that the latest figures reflect the pub industry's performance in beer during a World Cup year when a boom in sales was anticipated. It seems the tournament was a victory for the off-trade and that - despite great efforts from individual pubs - the on-trade didn't do the business as a team when it mattered.
Changing habits
Anheuser-Busch (A-B) Europe UK sales director Alistair Kemp, whose Budweiser brand was an official World Cup sponsor, says: "We sold three times as much beer at that time of year as we would normally expect", but that was clearly not everyone's experience.
Kemp adds: "History and evidence from other countries is that you do get a bit of a peak at the time of the World Cup and a fall afterwards."
As one industry source says: "Habits are changing. People are choosing to watch big events with their mates at home, where they don't have to wait to be served.
"During the World Cup, just about every newspaper had plasma-screen ads. The days when pubs could just open their doors, turn on the TV and expect people to turn up are long gone."
Other negative factors influenced beer figures too, including the dreaded Magners
effect. Scottish & Newcastle UK (S&NUK) head of category marketing for the regions Shaun Heyes says: "One reason beer is down over the past 12 months is the category growth of cider. But really, it's more about gradual decline of the on-trade, driven by growth of the off-trade and the way people use their free time."
Where cider has had an impact, it appears to have affected lager. Greene King marketing director Fiona Hope insists cider isn't a factor in declining ale sales.
"The research we have collected suggests that there isn't a strong crossover between
cider and real-ale drinkers," Hope says.
"If anything, it's more about wine, as well as people making less frequent pub visits."
One area where the on-trade arguably still has the edge is its ability to deliver beer cold at the point of purchase - something the supermarkets still struggle with.
Heyes at S&N says: "In the past two to three years, consumers have clearly stated that the number one priority they look for in the on-trade is coldness and refreshment.
"That's why a product such as Foster's
Superchilled has proved such a significant investment for us."
As producers aim to boost their fortunes, the big development in lager, in addition to the proliferation of extra-cold variants, has been the emergence of new generation brands.Many of these have effectively been reinventions of premium lager in standard form.
Alistair Kemp at A-B Europe says: "Total
lager is down in volume, but is gaining share of the overall beer category.
"It's being driven by standard lager rather than premium - that's one of the reasons we're launching Bud Silver."
Making a difference
Bud Silver is one of several launches from big brewers that are blurring the boundaries between premium and standard lager, using premium lager imagery and/or brewing credentials to tap into lower abv markets.
Recent launches include InBev UK's Peeterman Artois and Beck's Vier, and Heineken is also involved in that sector with Amstel.
Coors Brewers has gone a step further and produced a half-strength version of its standard lager brand in the form of Carling C2.
Coors director of marketing for portfolio brands Rob Borland says: "It's really an extension of that trend at about 4%, in that it's all about sessionability and occasionality. Those brands are responding to the simple fact of what someone can consume in a session.
"There was a trend towards premium lager a few years ago, but people have worked out that they can't always go out during the week and drink those brands. It's also what's driving growth in lighter-tasting lagers such as Sol and Coors Fine Light Beer."
And it is also part of the same trend that has seen major brewers trying out citrus-tinged versions of their brands, such as Foster's Twist and Carlsberg Edge.
The emergence of all these products marks a shift in the UK market from a few years ago when beer-drinking fashion was influenced by Europe, and consumers' thirsts were for beers with fuller flavours at 5% abv.
Borland says consumers are increasingly taking cues from markets such as Canada, the US and Australia, where products in the mid-strength band of 2.5% to 3.5% are taking a sizeable chunk of the market.
"The UK doesn't seem likely to turn into a light-beer market any time soon," says Borland, "but it is starting to pick up on trends from other countries."
One element of that is the growth of imported speciality brands. Heyes at S&N, which includes Kronenbourg Blanc and Baltika in its armoury, says: "They're a great opportunity for pubs to sell beers with a premium price, but on drinking occasions when people want to reward themselves and are looking for something different."
And offering something different is just what the on-trade beer market needs.
