Playing the volume game
Published:  05 March, 2010

The beer market is edging ever closer? to the £4 billion sales mark and appears in fairly rude health considering yet another poor summer last year.

It has inched up 4% in value sales compared to 2009 but volumes are down 1%.

Nielsen’s Graham Page says this has been affected by two things – duty and pack sizes. “There’s been a focus on smaller 12 or 15-pack sizes to hit grocer price points,” he says.

“These are what the grocers call ‘big packs’, yet between 2006 and 2008 the focus was all on growth through 18 and 24-packs.

“Brewers’ margins are so thin or non-existent they have, in the main, had to pass on the duty hikes to retailers. This has resulted in value going up and volumes down.”?The figures for Molson Coors tell an additional story. Chief executive Mark Hunter has put Carling and Grolsch’s hefty declines down to a conscious decision to focus on value.

He says: “We have been following a value ahead of volume? strategy and have been foregoing low margin or unprofitable volume.

“We have purposefully given up volume market share to focus on value growth – we expect value growth over time.”?The brewer is certainly putting its money where its mouth is. In January it announced a 16% increase in its 2010 marketing spend, pumping £50 million into its brands.

This includes a new can for Carling with a temperature indication logo and a ‘home experience pack’ for Grolsch, which gives consumers the chance to order glasses, skimmers and other gadgets to enhance the way they serve the lager at home.

But the long-term plan to get the category away from focusing on price seems to go against the strategies of other brewers? – Hunter says both Carlsberg and A-B Inbev “appear focused on volume”.

Certainly Stella Artois has a tight hold on the number one spot – not just for the beer category, but of all the brands in the off-trade. Its market value is a whopping £135 million ahead of next biggest brand Foster’s.

A-B Inbev’s second-biggest brand, Budweiser, has shot up from this time last year, when it saw a value decline of 12%. Now its sales have increased by 38% and are likely to keep climbing with the boost it will get thanks to its sponsorship of the World Cup. Volumes, meanwhile, are growing at 50%.

Andreas Hilger, A-B Inbev’s vice-?president of marketing for Western Europe, denies growth is due to discounting and puts the success of Stella and Budweiser down to “marketing investment and sales focus”.

In which case it seems Beck’s has fallen somewhat by the wayside, with a sharp decline in sales of 17%. This is despite its Music Inspired Art campaign, which saw bottles wrapped with new labels created by recording artists Ladyhawke and Hard-Fi, together with an interactive ad campaign.

Heineken UK puts Foster’s impressive 12% sales increase down to the lager “benefiting from its new brand campaign, extended distribution and improved marketing”.

Its ale brand, John Smith’s Extra Smooth, has moved up one place from last year and once again has managed to hold steady on its volumes, while achieving a 5% increase in sales value.

Miller Brands’ Italian beer, Peroni, continues to go from strength to strength and, at £51 million, is nipping at the heels of Carlsberg Special Brew and Grolsch.

The brand’s tie-in with Italian brand, Alessi, was promoted in the multiples with on-pack promotions at the end of last year and appeared in Tesco, Sainsbury’s, Waitrose and Morrisons.

Congratulations are due to Greene King’s Old Speckled Hen. Sales increases of 12% mean the premium bottled ale has finally eclipsed Boddingtons, thanks to a £3.5 million investment in marketing the brand last year with sponsorship of TV channel Dave.

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