How low can you go?

27 July, 2007

Changing consumer tastes are driving the market for sessionable beer, differentiated by lower alcohol or flavours, finds Christine†Boggis

It might be government pressure to drink less alcohol, a more health-conscious population or consumers losing interest in some of the biggest premium lager brands, but brewers are putting more and more focus on the under-5 per cent beer market.

The brewers believe people want more excitement and less alcohol, so they are investing in "premium-standard" lagers, fruit-flavoured beers and lower-alcohol offerings - as well as putting marketing muscle behind big brands such as Foster's and Castlemaine XXXX. Scottish & Newcastle's off-trade customer marketing head Craig Clarkson says: "For me, session lager is where the majority of growth is coming from at the moment. People are really turning to that area as their regular drink - they are becoming more aware of alcohol consumption, health and wellbeing, they like to be more in control so they have turned to session lager.

"At the moment the key players for us more and more are the standard everyday lagers. I think the challenge for our industry is to add innovation to continue to offer something different

from the everyday lagers category so we offer shoppers something new."

InBev UK take-home managing director Steve McAllister says: "It's partly to do with the fact that more variety is now available in terms of easy-drinking, refreshing lagers. We have seen a resurgence in 4 per cent abv lagers over the last year or so following developments in on-trade dispense, but the beers available didn't have many points of difference between them.

"Our research showed that there are consumers who generally drink premium lager but on certain occasions want a more refreshing beer, with less alcohol. The 4 per cent abv lagers available to them at the time would be a 'distress' purchase, and some would actually buy something other than beer instead."

A year ago InBev launched Beck's Vier, with the selling point that it was just as premium as Beck's, but with less alcohol. Earlier this year it launched Peeterman Artois, which is lower alcohol, brewed with wheat and coriander to give it a different flavour, but has the added benefit of coming under the banner of big brother Stella Artois - still the best-selling brand in the UK off-trade despite sales slumps over the last few years.

McAllister says the recent launches are doing well and getting positive feedback, and the brewer has been backing them with ad campaigns.

He says: "Our research on recent additions to the beer market shows that the majority of purchases are by consumers adding to their repertoire. Sales are clearly not being 'stolen' from elsewhere within the category, which was exactly what we set out to do - help develop and grow the market."

Heineken looked like it was putting all its eggs in one premium lager basket in 2003 when it relaunched Heineken as a 5 per cent abv only brand. But waiting in the wings was Amstel, a 4.1 per cent abv lager imported from Amsterdam, which relaunched in bottles in October.

Customer marketing controller Chris Duffy says: "We made a decision to make Heineken 5 per cent abv because we needed to do something with the brand to try to reinvigorate it, and that was critical to us. That left an opportunity for us to introduce a sessionable lager into the range.

"What is important from our perspective is that we didn't want to introduce another sessionable lager that didn't really have any point of difference - if it didn't have a point of difference it wouldn't add value to the category. We sell Amstel at a premium price, it is imported and made with natural products, and people are prepared to pay a premium for it. It offers an alternative to the mainstream standard lagers that are available in the market."

Brand manager Toby Shaw says the brand has grown volumes by 58 per cent in the last year, with value keeping pace, and expects to see 44 per cent growth this year. There are plans to launch new SKUs, possibly including a canned version, later in the year.

Duffy adds: "It reflects consumers' desire to experience different things. They have more disposable income these days, they travel more and experience new brands and new products. By the introduction of Amstel we've added another product that tastes a bit different but has those premium values that you would associate with the premium lager category."

Carlsberg has also launched an under-†5 per cent abv lager with a premium image. Tuborg, which has 4.6 per cent abv, relaunched in March with an unusual "ring-pull cap" and a £5 million marketing budget targeting the brand at 18 to 30-year-olds. Press and poster ads have been backed up with internet ads and music festival sponsorship.

But Bud Silver, a 4.1 per cent alternative to Budweiser which came in a 50cl bottle with finger grooves, didn't make it. Anheuser-Busch withdrew the brand, which launched around the same time as Beck's Vier, earlier this year saying there was too much competition from other brands in the same category.

Taste the difference

Other sessionable lagers have added fruity flavours to give themselves a point of difference in the market - such as Foster's Twist, Carlsberg Edge and the lower-alcohol Beck's Green Lemon.

S&N's Clarkson says: "Foster's Twist really complements Foster's as a whole. Foster's drinkers are the type of people who love a pint or a couple of cans. After that, we discovered, the core Foster's drinker would like to move on to something lighter, maybe moving from a pint to a bottle. Regular Foster's drinkers wanted to stay with Foster's, but there wasn't a solution for them. Now Foster's loyalists are able to continue enjoying their evening without having to drink pints or cans."

Cobra launched Cobra Bite, a 4.3 per cent abv lager in Sweet Lime, Blood Orange, Apple and Lemongrass flavours, in Tesco earlier this summer.

UK marketing manager Zoe Smith says: "It is a lot more sessionable and that is exactly why we created it - fruit beers can be a bit of a challenge, but this is fruit-flavoured lager, which is much easier to drink. We have had some fabulous feedback on the product, it is performing really well for us. We will be rolling it out throughout the year, into other channels within the off-trade and then to the on-trade as well."

Does all this growth in standard lagers mean the death knell for their premium-strength cousins?

"I think premium lager will come back," says Clarkson. "I think some elements of premium lager were in for a bit of a hard time because of images of overindulgence, but we are positioning Kronenbourg as a beer that you should sit down and take the time to savour, and doing a lot of work with food and about really appreciating the taste. I would certainly not see premium lagers being in long-term decline, although I would see standard lagers continuing to grow."

InBev's McAllister says: "There are now signs that the sector is moving forward, with volume sales up since the beginning of the year. We have just announced a major on-pack promotion for Beck's, and new advertising has recently broken for La Famille Artois, so we intend to drive consumer interest in the category even further in the months ahead."

Premium ale on the way up

There is a different picture in the ale market, where most growth is coming from premium beer while everyday drinking bitters such as Boddingtons seem to have fallen out of the spotlight.

"A possible reason for this is the increased awareness and popularity of beers to savour such as speciality

beers, which have contributed to a reappraisal of some premium bottled ales," says McAllister.

S&N has kept investing in John Smith's - notably through sponsorship of horseracing events - and the brand has kept growing while others have faltered.

Clarkson says: "John Smith's continues to dominate the category as the number one ale of choice. Our continued investment in the brand is driving overall category growth, by reminding consumers to make John Smith's their everyday choice for a no nonsense, consistently smooth bitter.

"While John Smith's is driving growth in canned ales, premium bottled ales is currently the fastest-growing category in the ale sector, enjoying 6.8 per cent value growth in the year to May 19, according to Nielsen. The premium bottled ales category has opportunity for further growth as consumers look to reward themselves for their busy lifestyles by investing in brands that offer premium quality, or something different from their usual drinks choice."

Steve Curzon, marketing director for Suffolk brewer Adnams, says English ales have such variety that they can be a premium drink even at everyday drinking alcohol levels.

"It is not about drinking volumes of beer and not appreciating the flavour,"

he says. "Consumers are increasingly sophisticated in their tastes, and look for beers that have flavour and refreshment, however that manifests itself.

"English ale sales are continuing to grow, it is an area of interest for the consumer that is growing all the time. I think that is partly driven by innovation in the sector as more and more new beers and new beer styles are coming through.

"There is an opportunity for English beers to capitalise on growing consumer demand for English provenance. In a world increasingly dominated by global businesses and global brands there is a growing interest and a growing sense of pride in English beers. English brewers have recently faced up to the challenge and have started to develop different styles to meet these needs, and the consumer now has fantastic choice."

Lower strength doesn't mean lower appeal

As the government piles on the pressure to drink less, or at least more responsibly, interest in lower-alcohol beers is growing - and brewers say it is drawing new drinkers into the beer category.

Coors launched 2 per cent abv Carling C2 last year. Spokesman Paul Hegarty says: "Mid-strength is an area of real interest for retailers and suppliers as it is one of the few areas of innovation that is genuinely driving category growth and expanding drinking occasions. C2, at the forefront of driving this category, is a great example of this, with 60 per cent of its sales being new to the category, according to Nielsen, driving incremental value."

Cobra says its 0.0 per cent abv version is doing "exceptionally well" and getting excellent customer feedback. InBev UK says sales of Beck's Alcohol Free have grown 27 per cent in the past year, and that it is "seeing results" after launching 2.5 per cent abv Beck's Green Lemon.

Craig Clarkson says it is a "very interesting" category, but that S&N has no immediate plans to launch a lower alcohol variant. "There is definitely a market arriving, but we've got to make sure we don't spoil it before people know what it is all about. It has got to be good tasting, so drinkers aren't compromising on anything other than the fact that it is lower strength," he says.

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