The beer and cider market is heading for a steep decline, but S&NUK believes if the industry adopts its ground-breaking vision now, damage can be limited. Noli Dinkovski reports
When it comes to wet-sales, things have gone from bad to worse in pubs. With beer volumes to the end of January down a staggering 8% on the year before, the latest set of Nielsen figures make grim reading.
With the market in free fall, it is simply no longer good enough for brewers to compete for market share.
Well, Scottish & Newcastle UK (S&NUK) has said enough is enough — it believes now is the time to make a stand for the good of the market. In a radical, never-seen before commitment, it has drawn up an ambitious five-year industry-wide initiative to dramatically reduce on-trade decline in lager and cider volumes. And in doing so, "increase the size of the cake" for brewers, pubcos and licensees alike.
In a nutshell, the S&NUK "category vision" hopes to add back £718m to the beer and cider market between now and 2012 — the equivalent of
one extra pint for every pub-goer in a three month period.
The brewer forecasts that if the industry sits still and does nothing, the on-trade beer and cider market will decline 11.7% in volume by 2012, but taking action now will rescue one million barrels, resulting in a decline of just 7.1%.
S&NUK came to this figure following an 18-month research project that targeted a massive 60,000 consumers and cost upwards of £1m. The research revealed a handful of key trends affecting customer behaviour in pubs, and by understanding these trends, pubcos and licensees can maximise beer and cider sales.
S&NUK has pledged that all of its future beer and cider sales and marketing activity will be covering one or more of these trends. If they don't, we will be invited to ask why.
But the brewing behemoth adds that it can't do it all alone — it is encouraging other brewers, as well as the pubcos, to join it in turning the category around.
"The UK on-trade is facing some challenging times," says Lawson Mountstevens, S&NUK's on-trade sales managing director. "Alcohol spend is half what it used to be, while off-trade pricing has impacted substantially on the frequency of drinking in pubs."
S&NUK's director of customer marketing Shaun Heyes adds: "There are factors that we can't control, like the weather and the attack on alcohol by the health lobby, but there are factors we can, like meeting consumer needs more effectively."
S&NUK believes that consumer needs in pubs have changed signifcantly, even over the past five years.Here are the five key consumer trends the brewer has identified. It wants brewers, pubcos and licensees to seize upon them and turn the tide of fortune in wet sales:
Personal reward
(£59m sales opportunity)
This trend focuses on the consumer's willingness to pay more money for better drinks.
"Our research shows people are prepared to pay more for a better quality product," says Heyes. "Who would have thought a few years ago that a packet of crisps could
command £1.39, as the Kettle
brand does?"
Heyes says people like to reward themselves after a hard working day or week, and drinks are fully part of that equation. The modern consumer is also more savvy and eager to try better things, reflecting a growing desire to travel more and experience new things.
Don't forget cask ale too — highly dependent on quality, right down to the final serve. "We run the biggest guest cask-ale scheme in the country, and are fully aware the smallest issue with quality can make the difference in whether people are prepared to pay more or not," says Heyes.
Female appeal (£237m)
Women are visiting pubs in ever-greater numbers, but S&NUK says it's just as important to cater for mixed groups now.
"Many aspects of long alcoholic drinks are very male-orientated," says Toby Lagus, S&NUK's head of customer marketing for national sales. "We can see that women like beer, but do they really want it in a pint glass? That's when sharing bottles come into play — we find men are happy to share beer from a bottle when with women."
Lagus adds that products with lighter abvs also work with bottles as well. With an abv of 5.5%, S&NUK's Jacques might appear strong for a cider, but it compares favourably with wine when served in its 750ml bottle form.
Another interesting finding from the research is that a third of all women who visit pubs never actually go to the bar.
With this in mind, it makes sense to create more female-friendly seating areas, add drink cards to tables, and where possible, introduce table service.
Care and control (£180m)
Care and control is all about providing consumers with a choice of the right drinks to enable them to stay longer in pubs.
"Our research shows that health and well-being are now the main areas of concern when consumers are making buying decisions, and pubs need to start paying consideration to that," says Heyes.
"But it's critical when bringing out healthier variants that there is no compromise in taste and flavour, because the consumer just won't accept it."
Heyes says chocolate and crisp manufacturers have led the way in proving it can be done, and now it's the turn of the brewers.
Available in April, S&NUK says its Bulmers Light will have a third less calorie content than its standard variety, but taste exactly the same.
Many might argue that the average pub-goer is happy to forget all about being healthy for the few hours when out drinking — it's a time for relaxing and letting go.
However, S&NUK's research shows that 88% of drinkers want something that helps make the night special rather something that gets them out of control.
It is no surprise then that Heyes predicts plenty of new product developments market-wide in the coming months.
Food (£118m )
The opportunity to sell more food now the smoking ban is in place has been well documented. Many pubs have picked up on this, with the number of outlets serving food on the increase.
But S&NUK says licensees should remember that extending a food offering will in turn mean more money is spent on drinks — people will stay in pubs for longer and, if available, will buy sharing-size bottles.
"Our research shows that food increases both the number of visits to pubs and the average spend per visit," says Lagus. "We need to be giving pubs the right drinks to help them with their food offer."
Bloke pub times (£124m)
This is seen as an important area by S&NUK. It says "bloke time" is something men have a fundamental need for, and, despite declining markedly in recent years, the brewer feels the pub is still the best place for it.
"In the past, men didn't need an excuse for their partners to go down the pub, but these days they do," says Lagus. "That's why it often feels like a hassle to arrange a night out. But if pubs start providing reasons to motivate them, then chances are they might get off their backsides and go."
Such reasons might include a darts, pool, or poker night. Live sport is always a winner as well. Firstly, it
provides the excuse men very often feel they need, and secondly, a group of young adult males will always
be a competitive bunch, so providing such occasions will appeal instantly.
"At home, people are drinking more frequently — staying in is the new going out and we need to reverse that," says Heyes.
What it all means for pubs
With these "key consumer drivers" now understood, S&NUK says it is in a position to help licensees at the point of purchase. This will be carried out in a number of ways. Here we highlight three:
1) Identifying the social groups and needs
The brewer has identified five "life-state" social groups:
n Younger adults
n Younger to mid-life professionals
n Younger to mid-life stretched
n Older stretched
n Older professionals
And four social "needs":
n Reward
n Relaxing
n Bonding
n Loosen up
Each beer and cider brand fits into a c