Around the world in 800,000 barrels

Aside from the declining volumes of the big brands there is a niche beer market that is on the up — and it's accessible to licensees, reports Nigel Huddleston

While the mainstream beer market continues to face challenges —despite recent good performances by real ale — imported and speciality brands are proving to be a ray of light within the category.

Brands such as Leffe, Corona, Peroni and Cobra are showing double-digit growth despite their relative longevity in the market, and more and more brewers from around the world are attempting to enter the UK to grab a piece of the action.

While the commercial benefits require careful consideration, a licensee could — if he or she had the urge — easily source beers from Laos, Peru or Nepal without having to make an international phone call.

There's such a trade buzz about so-called "world beers" that it would be easy for licensees to get carried away, but the reality is that the category — such that there is one, given the fluid boundaries of the definition —remains niche.

Nielsen analyst Graham Page suggests the annual volume of brands that get thrown into the "world" and "speciality" beer categories is around 800,000 barrels and growing, but is still only a fragment of the total market of some 32 million barrels. The relatively small size of the category makes exact figures hard to record.

Page says: "What I would call 'discovery' beers started as a very exciting niche. It has now become a significant market that is growing very rapidly — but it's still a niche."

Nigel Stevenson, sales manager of speciality beer importer James Clay, which has a high focus on traditional brewing nations such as Germany and Belgium, says: "I've been quoted figures suggesting total speciality beer was just 2.5% of the market — including English bottled beers.

"You've also got established brands such as Hoegaarden and Leffe in there, so when you look at it, the share for everyone else is pretty miniscule — probably only about 1% of the whole market.

"Although we are seeing growth, we're comfortable with the fact that it's pretty niche."

But for pubs, the crucial element in this sector may not be its total size, but the margins to be made on selling higher-priced products. The profit opportunity is significant if you list the right products and can successfully market them to customers.

Steve Perez, managing director of Global Brands, whose beer line-up includes Carib, from Trinidad, and Viru, from Estonia, says: "Speciality beers have maintained their premium price, while manufacturers of standard brands are having to discount their products. The element of strength here is a good sign."

Michael Cook, director of imported beer at imported beer wholesaler Pierhead Purchasing, adds: "Many consumers won't go into a pub and drink eight pints of a bland mainstream lager when they can buy a case of it for £10 in a supermarket. 

"Licensees have to offer a beer selection that is different from the supermarkets."

Nick Miller, sales director at Peroni and Pilsner Urquell supplier Miller Brands (UK), says despite the high profile and relative maturity of his brands in the UK market, he doesn't want to see them dragged into competing in the mainstream.

"We're trying to target our beers at treat occasions," he says. "We don't want people to find them in ubiquitous distribution or sold at ridiculously cheap prices in the off-trade.

"Peroni is a brand with provenance: it's brewed in Italy, with Italian water, hops, barley and yeast and has an Italian style, which is very fashionable in itself.

"It has a hook that people can catch on to — that is important with these beers — but it also offers real value to our retailers, as it has the highest price per litre of any premium lager on draught."

But Stevenson at James Clay thinks consumer perception may not always be in line with what's actually happening in the market.

"Peroni is a curious brand," he says, "because it's everywhere — but people don't seem to realise it's everywhere, so it's still regarded as quite cool."

Usually, he argues, the nature of the category dictates that what start out as fashionable brands inevitably fall out of favour before too long.

"It's that difficult second-album thing," he says.

"If something becomes too successful, people want to take it out because it's not cool any more.

"Sol is trying to make a comeback now — that was one that was everywhere when it first came out, and then suddenly it was nowhere."

The point about Sol highlights two world-beer issues: clutter and churn. One brewer estimated that something like 200 imported brands are competing for space in UK pub fridges, and when a new one is listed something else normally gets the boot.

James Whiteley, import brands manager at Anheuser-Busch — whose imported beer range comprises Michelob, from the US, China's Harbin and Estrella Damm, from Spain — cautions against licensees constantly trying to reinvent their ranges, especially when driven by sporting events, such as this summer's Olympics.

"It delivers a mixed message," he says, "and could be too confusing to operate for the outlet. Events should be viewed as an opportunity to market your chosen range as right for your outlet, but to chop and change isn't going to work in the long run."

Increasingly, world beers are staking their claim for some space on the bar top, rather than in fridges, with many brands reporting a surge in draft sales.

A decade ago, the phenomenon of so-called "badge drinking" meant you had to swig from the bottle, so that everyone could see what you were drinking.

These days, the extensive use of branded glassware means you can do the same with draught beer.

Tony Jennings, chief executive officer of Budweiser Budvar UK, says: "Draught is the main focus for us and it's doing well."

Many continental lagers, such as Paulaner and Veltins, have been building small but significant niches on draught, and there's also been growing interest in draught wheat and fruit beers, such as Früli and Erdinger Weisse.

But while continental fruit beers, wheat beers and US craft brews are often the ones to receive critical acclaim, their presence in the market pales against beers of a Pilsner lager style.

Richard Dinwoodie, co-owner of the Rake beer bar, in London's Borough Market and the speciality beer wholesaler Utobeer, says there's room for more variety.

"If everyone was independent and could stock exactly what they wanted, we'd see a much greater diversity of beers," he says.

"Countries such as Italy are starting to become very excited about beer — and those beers are getting darker.

"The problem is that we tend to get the big lager brands because they are the ones that export and the ones most importers look for first."

Stevenson at James Clay adds: "The problem for a lot of brewers is that they just don't have the right capacity or the marketing budget to support them."

For every Anheuser-backed ad campaign for Michelob or Harbin, it is possible to find a raw enthusiast who is trying to break into the market with no money and little experience.

Nepal Ice, from Kent-based Altitude Imports (UK), is the latest. Founder Kishore Sapkota says: "We haven't got much of a marketing budget, so it will be a case of building sales in a few pubs and restaurants and then hopefully using those sales figures to have a push for a big retailer."

For most world beers, it's a long haul to climb out of the niche.

What role does food play in marketing beers from around the world?

"Every beer brand is trying to jump on the bandwagon of the growth in pub-food sales.

"Cobra has greater credibility in doing so than most as it was initially developed as a response to consumer demand for a smooth, less gassy lager to better partner food.

"As the foundation of the brand, food is integral to Cobra's marketing platform.

"We'll continue to encourage the association of Cobra beers as great accompaniments to a wide range of foods. And we'll supp