For your aisles only

In the leisure industry there is something of a tradition of the out-of-home environment being the focal point for new product launches and tests.

Look at cinemas. What has kept cinemas afloat in their battle against improving home entertainment systems has been their ability to show new releases some months before they come out on DVD.

Cuisine is another example. Most British consumers were introduced to foods such as pizza, curry, Thai and Chinese by eating in restaurants, not by finding them as new items begging to be tried in a neat piece of packaging on a supermarket shelf.

So, in a similar way, when brewers had a new brand or product to bring to market, the off-trade was never the place to launch. Instead, the beers would first be poured in outlets that attracted large groups of people in a sociable atmosphere - pubs.

Glenn Payne, now an entrepreneur in the brewing industry and formerly beer buyer for the Safeway supermarket chain, explains.

"Traditionally the only way to launch a product was to first establish it in the pubs and then people would demand it in supermarkets," he says. "It was very hard to establish a beer straight into the off-premise - it needed the momentum from the pubs."

But is the pub no longer the place to launch new products? Over recent months a number of products have come to market that are either off-trade-exclusive or have been launched into supermarkets before pubs. They include Adnams' carbon neutral berr East Green, which initially launched into Tesco, and Magners Mid-Strength.

There is a growing pattern of favour for the off-trade, and that is something that should concern pubs. If they lose their place as the showcase for new products - as the place brand owners want to show off their new creations to customers - then they will lose yet another of the things that make them special.

Pump up the volume

So why is it that the off-trade is being favoured? Glenn says there is one big factor which in these uncertain economic times is pretty compelling: guaranteed volume sales.

"The off-trade has made massive strides in the past few years," he says. "But that is down to three things: volume, volume and volume.

"Tesco, for example, has disciplines in place to deliver guaranteed volume sales. And the brewers dance to that tune. Tesco will tell a brewer that it will roll out a product across 500 stores and just from that they can tell exactly how much they will sell, at what price and at what margin."

This, of course, is becoming prevalent across different consumer goods categories - in the DVD world supermarkets have struck deals with film distributors to guarantee exclusivity deals.

The big four multiple retailers will supply from one or two depots from across the country thus massively cutting down on distribution costs - yet another saving for the supplier. They appear to have all the angles covered.

David Bremner, business development director at marketing and design agency MDA and formerly of Everards Brewery, believes that the pendulum could swing in completely the opposite direction and that soon brand owners might only consider launching into pubs after a successful launch in the off-premise.

"Launching in the off-trade first is actually a clever move," he says. "You can build up a large group of loyal customers and fans who will then ask for it in the pub. When you have strong demand for something in the on-trade then you are in an excellent position to protect its price point when you roll it out into the on-trade.

"What choice do you have when you are someone like Punch Taverns if you are faced with a hugely successful, highly demanded off-trade brand and it is about to launch into the on-trade? You launch it at the price point you are told to or you don't get it."Revolution or evolution?

However, this turn of events may not be a hammer blow to pubs, but simply a sign of the industry slowly evolving. Keith Bott, managing director of Titanic Brewery and former chief executive of the Society of Independent Brewers (SIBA), says that while he and a lot of other brewers like him are working closely with supermarkets, the pub is still their preference when it comes to launching new product.

"Our work with Morrisons [Titanic brews an own-label beer for the supermarket] happened by default really," he says. "They really told us to come up with something. But if we came to market with a brand spanking new beer, we would always go into pubs first."

Keith believes that supermarkets will become increasingly important for all brewers. He argues that where brewers may end up working more closely with supermarkets in the future is if they can guarantee them an exclusivity deal - much like Adnams did earlier this year with East Green.

"The supermarkets don't like it when a new launch goes into rival multiple retailers," he says. "It is about exclusivity for them. They want to have a point of difference."

Andy Wood, managing director of Adnams, argues that the case of East Green and the brewer's overall strategy are not a matter of on-trade versus off-trade. "We need a portfolio of products that meet all consumer occasions," he says "We had to get our line-up right in the off-trade."

To that end the brewer has just announced it is launching two new beers exclusively to the off-trade - Lighthouse and Gunhill. But Wood stresses that this is simply about growing the Adnams business across the board.

"The focus first and foremost for Adnams is on-trade business," he insists. "Only 12 per cent of our sales are off-trade."

So what we are witnessing is an interesting evolution, rather than a bloody revolution. You cannot say that brand owners are not interested in the pub as a vehicle to launch brands.

But things have changed. The off-trade is a hugely powerful and sophisticated tool and perhaps it is up to pubs to try and learn from the things that supermarkets do well.

Because there are people, like Glenn Payne, who feel that as things stand, the pull of off-trade success is more powerful for brewers and drinks companies than the thought of seeing it in pub.

"If I was InBev and was coming to market with a brand spanking new beer, would I go into the uncertainty, both in terms of pricing and sales, of the on-trade or go to the off-trade and guaranteed volumes?" he asks. "It is not a hard choice."