Perspectives from the big brewers
John Clements, vice president, marketing at Carlsberg Marston’s Brewing Company
When it comes to beer, consumers are most likely to purchase their ‘usual’ brand rather than trade down. Nowadays, their ‘usual’ is most likely a world lager.
We’ve seen the demand for premium lagers grow over the past decade and there’s no denying standard lager has felt the squeeze. But there will always be a role for the category – as long as brands actively keep pace with the demands of modern drinkers.
Carlsberg has completely reinvented itself over the past four years and the results speak for themselves. The brand is outperforming the standard lager market, seeing volume and value growth in the last quarter. And CMBC has added Kronenbourg 1664 to its portfolio.
Moderation is one of the biggest behavioural shifts. More than 13% of the population now say they ‘never drink alcohol’ compared to 3.5% in 2010 – that’s an incredible shift, and no and low is growing rapidly.
More customers are expecting to see high-quality options available and the ability to offer no and low on draught will really unlock the potential. San Miguel 0.0% and Brooklyn Special Effects have seen 63% and 142% growth respectively over the past 12 months.
Cask faces a number of challenges, and quality is one. While smaller containers are a great option for some venues – offering a less risky proposition by reducing the number of pints that need to be sold in the three-day window – it is not a silver bullet.
Operators can learn from the success of the lager category by stocking popular cask beers that have a known rate of sale – and we have some of the best-sellers.
It’s key, though, as a sector, we pull together to support cask, how it’s stored and maintained, and how we can bring in new audiences and increase rate of sale.
Charlie Fryday, on-trade category director at Heineken UK
We’re seeing a greater emphasis on ‘smart spending’ to maximise the return from disposable income. Consumers are looking for value for money and beer is benefiting.
We are also seeing a move in the type of beer they choose. The premium lager trend is here to stay – largely driven by younger drinkers – but the 4% ABV category continues to play a vital role, still holding more share of value and volume than higher ABV beers.
With 25% of younger drinkers preferring lighter-style beers, and 49% premium options, newcomers such as 4% Heineken Silver helps operators drive revenue. Yet sales data shows light lagers are undervalued – often sold at only 5p more than the cheapest lager on the bar.
Spanish lagers are in 73% growth and Heineken’s recent launch of Cruzcampo can add value to a pub’s beer offer by providing consumers with an experience that trades them up from classic lager brands while remaining accessible.
Value share of craft beer is a third bigger than five years ago, largely due to bigger breweries investing on the category. Consumers have been seeking out recognised, trusted brands such as Beavertown and Brixton.
Well-known brands are also winning in the low and no-alcohol space. Heineken 0.0 is the number one brand, selling more volume in the on-trade than the next nine combined and we have plans to ramp up distribution of the brand on tap this year.
Jean-David Thumelaire, on-trade sales director at Budweiser Brewing Group
We’re forecasting that by 2025, 70% of total beer consumption will be of brands in the premium or super-premium category. Despite the cost-of-living crisis, research shows beer is an affordable luxury – and consumers are willing to trade up to the beer they want.
No and low alcohol beer also continues to strengthen and it’s vital pub and bar owners understand they aren’t just for teetotallers. We’re seeing many consumers moderate their alcohol consumption and one in 10 beer drinkers now regularly opt for an alcohol-free alternative, a figure that’s grown 16% year on year.
A robust selection of no and low alternatives will not only appeal to a certain demographic but means customers are more likely to stay longer, spend more and, crucially, return. That’s why we have widened our portfolio to include alcohol-free versions of Corona, Stella Artois, Budweiser, Hoegaarden and Leffe.
Stephen Groucott, on-trade category management controller at Molson Coors
In the past 12 months, we’ve seen a stabilisation of trends in the on-trade. For example, despite accelerated levels of premiumisation through the Covid years, core standard lager has maintained its share of lager for the past six months.
People know they can rely on familiar favourites like Carling to deliver. An independent analysis from CGA showed, on average, outlets that removed standard lager significantly underperformed.
Equally, some people will be looking for a more premium experience such as they get with Madri Exceptional, and world lager has increased its share of draught lager sales value from 25% pre-pandemic up to more than 40% now.
Premium 4% lager, meanwhile, offers mainstream appeal with a distinct flavour consumers are willing to pay a little more for. It can offer a step up below the price point of a more premium beer, making it accessible.
This has been evident in the performance of Coors, which is up in value by 14.7% on pre-pandemic levels.
Demand for hazy beers and IPAs continues to rise, up 68% since 2018, and it’s a trend we’re also noticing within cask – IPAs, pale and golden beers now account for 27.5% of the category – and Sharp’s Brewery has launched its first nationally available cask hazy IPA, Solar Wave.
Sam Rhodes, marketing director at Asahi UK
We have continued to see a trend towards premiumisation across all categories with economy the only subcategory in decline. Draught beers are performing particularly well as consumers seek products that couldn’t be replicated during lockdown.
Premium-plus lager continues to see double-digit growth and is a big opportunity for all types of on-trade business. This now includes the innovation for the summer from Peroni Nastro Azzurro Stile Capri (4.2% ABV).
No and low-alcohol beer are also growing and command a higher average price per litre than total beer - £9.48 versus £7.57.
You could probably go back 10,000 years when humans first socialised over a beer and find neolithic brewers worrying about how they could enhance the occasion by making their rudimentary ales taste nicer and serving it in a more stylish gourd.
Even as we lurch today into a post-Covid world where pubs and their customers are in the grip of a financial crisis, the message remains the same: less but better.
The good news is that the value of the total UK on-trade beer market, according to CGA by NIQ figures, is back to what it was three years ago. The bad news is it’s against a background of high inflation.
“Still, it’s significant beer has gained share of total drinks sales, reflecting a normalisation of the market and a return to lower-tempo occasions,” observes Paul Bolton, client director at the research firm. “Spirits did well when we moved out of Covid restrictions and people wanted to party. Now we’ve moved on.
“The rising cost of living also means consumers are more cautious about what they spend, and that, too, can mean a move to beer.”
But which beer? Most pubs will have noticed the trend towards ‘world lagers’, the term CGA uses for the brands at the top end of the market, most sharply exemplified by the stunning success of Molson Coors’ Madri Excepcional.
“There’s been a massive shift away from standard lager,” says Bolton. “In three years, the market has completely switched around. Standard had a 28% share of beer pre-Covid, and world lager 19%. Now the figures are 21% and 29%.
“While people are visiting the pub less frequently, premium brands are better meeting the occasion – they’re more of a treat.” And brewers and publicans alike are seizing the opportunity to make a little more profit.
Another big winner is stout. Its share is 1.4% up, driven by Guinness, which hit the headlines at the end of last year when it usurped Carling as the UK’s best-selling beer – though Bolton is waiting for 12 months of stats before he’ll confirm that.
“A pint of stout was something drinkers particularly missed in lockdown, and Guinness has done a good job on quality and playing into events.”
Craft beer, the most premium of all, also continues to grow as Heineken’s Beavertown and AB InBev’s Camden Town have built bridges into the mainstream and give pubs a hook to draw in a new audience and extend the offer into independent craft brands.
For cask ale, though, while drinkers are slowly coming back, it continues to lose share and is still 20% down on pre-Covid value. Turning that around depends on, you guessed it, premiumisation.
Family values
As cask ale volumes continue to decline, family brewers are taking a hard look at their beer ranges.
At Robinsons in Stockport, where a new £8.4m brewery will come on stream from October, the move is accompanied by an overhaul of its cask and keg portfolio under its research and development wing Unicorn Brewing.
“There was a need to make a break, to change our profile,” explains joint managing director Oliver Robinson. “We’ve got to maintain our profits, keep people interested. There’s too much dull brown beer in the category.”
“Over the past seven years, we’ve seen a shift to premium with people going out less but spending better, for instance on premium lagers,” continues brands manager Sam Kennerley. “In 2017, we were selling a lot of Carling and Coors in our pubs, now it’s Moretti, Madri and craft beers, wild and wacky styles.
“We’ve spoken to our licensees and they want more range and choice. It’s about finding a balance, though. We can’t forget where we came from.”
The result is a series of new draught beers that will be released in pairs, one cask, one keg, to the Robinsons estate through to the end of 2023.
So far there’s been a 3.4% ABV cask Citra Pale, which will join the core range, along with a 4% Unfiltered Pilsner. In June, a cask New England IPA and a hazy pale ale on keg will be followed by an Amarillo pale and a West Coast IPA, a blueberry porter and an orange pale ale.
Big changes are also afoot at Hall & Woodhouse’s Badger Beers in Dorset, which has launched a sub-brand called Outland to drive innovation.
“There’s a long-term decline in cask, down 31% in some areas, so it was time to stop and look at what we’re producing, to be more market-led,” explains marketing manager Giles Mountford.
“A brand audit last year produced clear messages – there’s an image barrier, an assumption that cask is for older people, is old fashioned, heavy. It’s seen as just a sea of brown. We have to be more appealing to bring new people into the category. That’s where Outland came from.
“Some brewers don’t think in terms of cask and keg any more but produce a beer and consider the best way to serve it. I like that approach. It will open up the sector. There’s not a solid line between the two.”
The first Outland beers include a West Coast IPA that, Mountford says, is “accessible, giving people what they expect but, on the flipside, we’re also doing a milk stout and a ginger pale ale, something different, without being completely out there”.
“This will be very important for us in the on-trade where keg is reaching a broader audience. Our pubs were crying out for these beers because their customers have been asking for the competition’s brands.
“Craft is mainstream now and the consumer is ready for us. The ‘person in the street’ wants to get involved.”
In Yorkshire, Timothy Taylor’s isn’t resting on the spectacular post-Covid success of its flagship cask ale Landlord.
“We remain concerned about a cask ale market, which has lost 35% of its volume since 2014,” says chief executive Tim Dewey. “So, to protect the long-term viability of our business, we launched our first permanently available keg ale, Hopical Storm. It’s shown a strong rate of sale, and we’re now putting it into cans.
“Our core business remains cask but we feel the breadth that Hopical Storm brings to our range gives pubs greater choice to meet drinkers’ needs.”
For Shepherd Neame in the south-east, the key to the cask market also lies in diversity. Launched in 2019, its Cask Club is back, offering drinkers a different limited-edition beer each month.
“Cask drinkers are promiscuous,” says brands marketing manager Rose Davis. “They like to seek out a pint. And we’ve found these beers are enticing new drinkers to give cask a go. Younger people are looking to try different things.”
An important element is the story behind the Cask Club beers, including the fact that each is created from scratch by one of Sheps’ brewers.
The latest is Dragonfire, a fruity English ale created by technical brewer Danielle Whelan. It will be followed by Citra Smack, Cobnut and Creekside, a 3.4% IPA for the new duty band.
Stout performance
BrewDog’s launch of Black Heart highlights the opportunities opening up in nitro stout. The post-Covid sales surge driven by Guinness is attracting competing brands from brewers as diverse as Anspach & Hobday with its London Black and Theakston, which is brewing Brennan’s Irish Stout under licence.
Ben Lockwood, BrewDog’s on-trade customer marketing manager, believes Black Heart, now pouring at more than 100 sites, can invigorate a sector so long dominated by a single brand.
“We appreciate Guinness is well established and largely well-loved, but BrewDog is well placed to offer a choice and open up the category to a younger, more premium audience.”
A blind taste test near Twickenham Stadium ahead of Six Nations matches, arguably Guinness heartland, was a close-run contest, with the brand leader attracting 318 votes and Black Heart 330.
Anna MacDonald, category marketing director for Guinness, remains unfazed by the challenge, however.
“People love to experiment and we should embrace creativity in brewing. If people are trying different stouts that shouldn’t come as a surprise. But Guinness has been enjoyed for hundreds of years. It’s difficult to decode the components of its success but its distinctiveness, in look and taste, is part of it.”
Certainly, there seems little cause for panic judging by sales.
“I’m proud Guinness is now top seller,” says MacDonald. “I’ve worked here 22 years and we’ve always targeted a 10% share of the market. Now we’re above 10% in both value and volume, growing in all regions of the UK, and I’m confident we’ve got the momentum for that to continue. The principles of our success – quality, events and staff training – are still there.”
She believes Guinness can even extend its on-trade reach with its new Microdraught system taking it into bars without the rate of sale to justify a draught beer, and Guinness 0.0% providing an alcohol-free option.
Operator’s view
Simon Collinson, managing director of Oak Taverns, explains how the Thame-based pubco is faring.
“We’ve fine-tuned the beer offer in our 15 all-wet pubs in the Cotswolds and Chilterns. We don’t fry a chip and don’t screen sport. We’re not trying to be all things to all men and women, we’re a specialist with a good range of cask beer, well kept. Draught beers are 70% of what we do, and 25% to 30% of that is cask.
“Our best-sellers, though, are premium lagers. Standard 4% lager is no longer a powerhouse. There’s also been a shift from cask to craft keg, though cask is still standing up well.
“We typically have eight keg lines, including cider, with a 5% lager, a gateway craft like Camden Pale Ale or Beavertown Neck Oil and one or two options from the likes of Deya, Tiny Rebel or Verdant, plus a local craft beer. A brand like Verdant Light Bulb can be a real driver. But we’re not in the business of selling a raspberry gose at £9 a pint.
“We work with a brewer, Nick Zivkovic, and the Dead Brewers Society reviving old recipes. They’ve done really well. People like the stories behind them, and the fact we’re doing something different.
“There’s been a big change in no and low alcohol. Between three and five of our bottled range are now alcohol-free and, at a couple of pubs, we have Lucky Saint on draught, which people will switch to during a session.”
Swift halves
One surprise success in these difficult times is Old Speckled Hen. It was the only premium ale to grow in the off-trade before Christmas and now brewer Greene King wants to carry that into the on-trade, providing pubs with quiz kits to help drive trade on quiet nights.
“Our core consumer tends to be male, more mature with a bit more money – but is not reckless with it,” explains David Spencer, head of marketing for the Hen family. “They’re looking for sociability or a bite to eat when they can’t be bothered to cook. It’s not a special occasion for them, and that’s the opportunity for Old Speckled Hen. The quiz helps pubs put on activity that will give people a reason to visit.”
Greene King has been getting closer to drinkers, understanding their needs and motivations, and the barriers to them drinking ale.
“Ale isn’t saying enough to them and, inadvertently, we’re telling them it’s not going to refresh them. So we’re showing cold, condensation, in the new ads for Old Speckled Hen.”
There’s also a chance for the brand to tap into the opportunity that’s been opened up by craft, he believes.
“Old Speckled Hen has a distinct, unusual flavour profile. It has a toffee malt accent and a lot of bitterness but the hops are really restrained. This unmasks flavours coming from the yeast. It’s like nothing else on the bar, and it rewards curiosity.
“More people are drinking from a repertoire, a trend that’s been turbo-charged by craft beer. They’ve experienced many different styles, so they may want to try something that’s diametrically opposite to a lot of craft beers.”
Contract brewing
Sussex-based Hepworth & Co is best known for contract brewing for other companies, indeed contract brews account for 70% of its production. But now you could start to see its own beers taking a higher profile with a new look for its brands.
“Contract brewing is flying for us, but we want to do more of our own beers this year,” declares head of sales and marketing Dave Paterson. “You have to find your niche these days, though. We’ve been looking for a hook – and we think we’ve found it in that we’re so environmentally friendly.
“The brewery is 85% of the way to zero carbon and we’ll hit 100% in a couple of years with no offsetting. All our beers are gluten-free and vegan friendly, and some are organic.”
Hepworth is already in some 300 pubs on a regular basis, and that extends to 2,000 accounts if you include hotels, restaurants and farm shops. But Paterson wants closer links with the local community. “Our brewery tap could become an important space for us,” he says.
Quality comes in smaller packages
Some brewers are looking to pins, 36-pint containers that are half the size of the regular nine gallons, to help improve cask beer quality at the bar by shortening the length of time a cask is on tap.
Greene King was the first to announce it would be experimenting with pins, and now Theakston Brewery in North Yorkshire is making its XB ruby ale available in the smaller size.
“Customers are drinking a wider variety of beer types than ever before, which is hugely beneficial for cask,” says joint managing director Simon Theakston. “The rise of craft beer has alerted customers to shared values between craft and cask.
“Additionally, sales of dark beers and stouts are on the rise, with cask Theakston Old Peculier growing by 7% against sales pre-Covid.
“Looking ahead, it’s clear quality and innovation are important to maintaining a vibrant category.”
No and low options
After a year of experimentation, low-alcohol beer specialist Good Karma has come up with a core range focusing on British ingredients.
“I think everyone wants to support local businesses and we’ve been testing the water with different beers, knocking out specials, working with hop merchants Charles Faram and Hukins,” reports founder Steve Sailopal.
“Now we have our first core brand, Tantra IPA, made with Olicana and Jester, all UK hops. Next will be a pale ale with North Down and Ernest, then a lager. We’re just finalising the hops we’ll use in that.
“The market for no and low alcohol has changed,” he continues. “It was people on the wagon and we focused on the mindful crowd. Now there’s a cross-over with mainstream drinkers switching to low alcohol during a session, especially in the week.
“This summer could be crucial. We could see a big movement. There is so much more choice, so many brands popping up.”
Draught will grow, he believes, “but it’s going to take time. At the moment, a lot of pubs are wondering whether they’ll get through a keg so they’d rather go for cans. What it really needs is a big pub chain to grab it by the throat then others will follow.
That will please Laura Willoughby at consumer organisation Club Soda who wants to see more investment in the no and low sector, noting that a soft drinks firm, Dr Pepper, has taken a big stake in US alcohol-free brewer Athletic.
“This could be an interesting development,” she notes.
And finally… don’t forget the quality in the glass.
Allan Stevenson, draught quality training manager at line cleaning specialist Chemisphere, is calling on licensees to refocus their efforts on cellar hygiene, glassware and bar staff training.
“There is a danger that pubs fall into a downward spiral of quality if they are tempted, for instance, to save time and money by extending the period between weekly line cleans using substandard chemicals. That causes fobbing and low yields. Pubs are losing nearly £2,000 per drip tray per year and most of that is due to line hygiene and pouring technique.
“Clean beer lines have been shown to bring a 7% to 9% uplift in throughput and sales so it makes sense, and technology has come so far, with chemicals that can do 14-day cleaning.”
Glass washers are another critical area. “Dirty glassware is endemic,” he says. “People who are spending £6 or £7 on a pint of lager aren’t going to have a second if it comes in a dirty glass. More education is needed on the cleaning and use of glass washers.”
