We’re obsessed with premiumisation, and the pandemic has heightened this with the narrative over the last 18 months talking about ‘accelerated trends’ and how the world will ‘never be the same again.’
So how valid is this obsession? Premiumisation has been a long-term trend in the lager category, with World Lager seeing steady and sustained share growth over the last 10+ years from less than 5% of Draught Lager volume in the On Trade back in 2009 up to 27.0% now.
This is clearly impressive growth and something that cannot be ignored, but it’s the performance since the pandemic that has been a big talking point, with the category seeing a notable step-change in its share.
For the 12 weeks ending 14th August 2021, Draught World Lager commanded a 28.5% share of Draught Lager volume in the On Trade, up 7.5 percentage points versus the same period two years ago.
If World Lager has been the key winner from a share perspective, the Core Standard Lager has been the most affected, its share declining by 8.3 percentage points over the same period. Carling, Foster’s, Carlsberg and Tennents have been the biggest losers from a share perspective, whilst the Top 3 winners have been the biggest World Lager brands: Birra Moretti, San Miguel and Peroni.
Premiumisation gets a huge amount of airtime and it’s easy to see why – it’s exciting, it’s aspirational and it ultimately offers operators the opportunity to put more money in the till.
But the everyday familiar favourites such as Core Standard Lager remain critically important in terms of value and volume for the vast majority of outlets, even at the levels seen in the latest data. Pre-pandemic it accounted for 45% of sales value for the overall lager segment, and it continues to account for the biggest proportion of sales in the lager category.
But because they’re not widely seen as an exciting or aspirational, they’re given little airtime and too readily in my view downplayed and overlooked.
Far from normal
The last year and a half have been far from ‘normal’ and we’re still some way from consumer behaviour being back to where it was pre-pandemic. Unsurprisingly, consumer confidence has been hit hard by this, with many still understandably feeling cautious about going out.
A CGA survey post ‘Freedom Day’ showed that consumer confidence across all age brackets is still well behind 100%, with the older age groups in particular feeling less confident visiting pubs, bars and restaurants.
This has clearly impacted behaviour, with older people being much slower to return to the on-trade than younger adults, particularly in the early stages of re-opening, and two in five (41%) of those yet to return being in the 55+ age bracket.
In addition, many of our working habits have changed, with the number of people working from home doubling during lockdown and hybrid models with commuting just once or twice a week emerging since April.
Furthermore, the shape of the on-trade has shifted; with more local, premium, leased & tenanted and managed pubs benefiting whilst more mainstream, free trade outlets, in particular sports & social clubs have been most affected by outlet closures and have been the slowest to re-open and recover.
Artificial world
So why does all of this matter and what’s it got to do with the premiumisation question? We’ve been living in an artificial world for the last 19 months.
The World Lager consumer profile is typically younger than the Core Standard Lager profile, so the faster return of younger consumers has helped to drive the share growth that World Lager has seen.
More of us have been working from home, which means we’ve been less likely to have after-work drinks in towns & cities, but instead have opted for more lower-tempo occasions closer to home.
This dynamic has also favoured World Lager, with many drinkers being prepared to treat themselves when having shorter occasions, and we’ve also got to consider the novelty factor/desire to celebrate after being cooped up at home for months on end, which can be seen with the success of the spirits category in the early days with drinks such as cocktails and shots featuring far more prominently in drinkers’ repertoires than they would do normally.
It’s still relatively early days since pubs, bars and restaurants have been able to open fully without restrictions and it’s clear that it’s going to take time for things to return to normal.
Even in this context, Core Standard Lager has been a key part of the sales mix and remains an important part of a balanced and varied range.
Normality will see return to standard
As consumer confidence builds, people start to travel more for work and leisure and as more spontaneous and big group occasion return, I fully expect to see some normalisation of the sales mix, with familiar favourites such as Core Standard Lager regaining share and more premium sectors such as World Lager dropping back slightly.
The pandemic has undoubtedly accelerated trends that were already underway, but we need to see things settle back to normality before we can read too much into things.
It might not be the most exciting message, but I’m convinced that the world hasn’t fundamentally shifted over the past 19 months and as we look ahead at some of the economic headwinds that are coming such as rising energy prices and the corresponding squeeze that these will have on people’s disposable incomes, you wouldn’t bet against Core Standard Lager seeing a resurgence.
Premiumisation is clearly a long-term trend, but we need to have some balance – let’s not overlook the importance of the familiar favourites which are the go-to for so many drinkers on a wide variety of different occasions.