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Beer and Cider Category Review

Draft-Beer

Alcohol consumption in the UK is falling. The British Beer Pub Association (BBPA) reports that since 2004 alcohol consumption per head has declined by 18.4 percent.

Today, 21 percent of adults do not drink alcohol, up from 19 percent in 2005 (The Guardian) – “the proportion of young adults [aged 16 to 24] who do not drink alcohol at all has increased by more than 40 percent between 2005 and 2013.”

Pubs have been worst affected by the decline in alcohol consumption; on-trade beer sales have fallen 24 percent between 2004 and 2013. However, 2014 saw sales increase by 1.3 percent following nine consecutive years of decline.

Off-trade beer sales have fared better; increasing by 3.5 percent in 2014, overtaking on-trade for the first time. The World Cup is likely to have boosted these sales.

In its latest ‘Focus On’ article, The Grocer highlights that, overall, beer and cider sales have flattened since the end of June last year with cider sales declining 0.3 percent after years of growth.

Promotional analysis of beer and cider categories

Brand View has reviewed the promotional activity of the Cider, Ale & Stout, and Lager sub-categories since 1 May 2014 in Asda, Morrisons, Sainsbury’s, Tesco and Waitrose.

Between May and October 2014 all three sub-categories had a similar proportion of their range on promotion – this increased slightly while the World Cup was on (12 June – 13 July).

The percentage of the ranges on promotion peaked in the run up to Christmas; cider was most heavily promoted – on average 10 percent more than lager.

range of beers and ciders on promo

The Grocer highlighted that cider sales and volumes have fallen in the last 12 months.

The analysis shows that from November 2014 cider has had the greatest percentage of its range on promotion, particularly from March 2015 – presumably a response from manufacturers and retailers to boost sales.

Average depth of cut of beer and cider sub-categories

The average depth of cut of cider and lager promotions has been declining since the World Cup. The largest promotions were on cider products; the average depth of cut was 1.6 percent higher than ale & stouts and lager.

The trend of the average depth of discount on ales & stouts is more volatile and less consistent than cider and lager. Asda and Tesco repeatedly ran promotions across almost the whole category regardless of brand, whereas Morrisons, Sainsbury’s and Waitrose tended to promote each brand differently.

All five retailers employ promotional strategies for cider and lager products at both the brand and individual SKU level, this is why we see large peaks and troughs in the promotions of ales & stouts.

The Grocer reports that lager was the only sub-category to experience sales and volume growth. This is likely due to shoppers taking advantage of increased promotions during the World Cup. As manufacturers are increasingly focusing promotions on cider and ales & stouts this could impact the future sales of lager.

average dof beer and cider

Flavoured cider sales growth

Despite poor performance across the sub-category as a whole, flavoured cider sales grew 17.9 percent in the 12 months from April 2014 according to Kantar WorldPanel.

This growth was however accompanied by a 20 percent drop in sales of pear cider and a 1 percent drop of apple cider sales; the increase in flavoured cider sales is potentially as a result of cannibalisation of other cider products.

The trend in new product listings across the retailers mimics that of the sales. The amount of flavoured cider products has increased 33.6 percent since May 2014, while new listings of pear cider items has decreased 26.2 percent and shows no sign of slowing. Meanwhile, new listings of apple cider SKUs hasn’t changed a great deal in the last year

number of ciders listed

Rising popularity of craft beer

Craft beer continues to be the rising star of the beer industry; the number of craft breweries has doubled in the last four years. Increased UK spending on craft beer means that the Office for National Statistics now include it in the CPI basket of goods.

Although the definition of craft beer is widely debated, the Brewers Association insist that true craft beer originates from a small, independent traditional brewer. Despite this, large breweries and alcoholic beverage manufacturers continually produce new products that are deemed to be ‘craft beer’.

In the past twelve months Guinness has launched the most new products, with 13 new listings in the ale & stout and craft lager sub-categories. These 13 new listings consist of its three new bottled products Guinness Dublin Porter, Guinness West Indies Porter and Guinness Golden Ale.

no of ales, stout, craft

Hilden Brewing Company saw the greatest percentage increase of listings starting with just one product on 1st May 2014 rising to seven on 18 June 2015.

Tesco has introduced the most own label products, with nine new listings including four from the Metropolitan range brewed by Greene King. Overall, retailers launched 16 own label new listings in the period analysed.

tesco beer
Tesco website 26 June 2015

 

Tennents has the greatest number of delists across all categories; this included the larger crates of its Original Export lager and Special Ale as well as four packs of Tennents Super.

Along with Tennents, Belhaven and William Brothers also had a large numbers of SKUs delisted. Interestingly, a number of manufacturers such as Greene King, Guinness and Brains have the highest number of new listings and delistings. The products delisted by Greene King and Brains are relatively new, experimental beers that presumably have not performed well. The majority of the Guinness delistings are of the Original Stout products in Asda and Morrisons.

Future of beer and cider

The final half of 2015 should see sales of ales & stout, cider and lager all boosted as England and Wales play host to the Rugby World Cup in September and October 2015.

Retailers’ wider promotional support across the cider sub-category will aim to boost sales during the warm Summer weather. Flavoured ciders should continue to contribute to growth in the subcategory and it can be expected that flavoured cider product listings will continue to rise and pear cider listings may decrease further.

The craft beer revolution shows no signs of abating; new and existing breweries will continue to release new beers in an effort to increase sales in an already saturated market.

Craft-Beer-Cans

It is likely that more canned craft beer will hit the shelves as the stigma associated with drinking canned ale decreases. Marks & Spencers’ introduction of Fourpure canned beers, as well as BrewDog expanding its canned range, will stimulate the introduction of canned craft beer in the larger supermarkets. Furthermore, German discounters Aldi and Lidl are hoping to replicate the success of their bargain fine wine range with the introduction of premium bottled beers, ales from micro-breweries and ciders.

 


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