Cask gives way to bottle

30 April, 2010

Much as I love exciting craft beer, there is also a huge volume sold in the UK that I like to call “ordinary brown beer”. It sounds like I’m damning them with faint praise, but I’m not. These beers – Old Speckled Hen, Batemans, Badger’s Tanglefoot – are a mainstay of British bottled ale production and consumption.

This sector of the bottled ale market has been growing for nearly a decade, showing steady increases in volume and value. Sales of these beers happily trundle along, unfazed by fluctuations in the weather, economy or anything else you care to mention.

We’re not talking about niche retail here either. While the backstreet shop offering many hundreds of bottled English ales may still be an ideal for dedicated consumers, the supermarkets have really polished up their act in the past couple of years. Whether we are seeing them at the peak of one of the cyclical interests in bottled beer is hard to know, but currently the big multiples are piling them high and selling them not particularly cheap.

What on earth is going on? At a time when interest rates are at a record low, if you offered an investor strong returns on their investment, they would take you up on it without a moment’s hesitation. So why aren’t breweries capitalising on this??Actually, the simple truth is, they are. Having visited quite a few family and regional brewers over the past six months, I can report they are all looking at the growth in bottled ale sales and rubbing their hands happily, even though they may also be rubbing their chins ruefully.

While many lament the move from traditional cask ale to bottling, the majority see the rise in bottled ale sales as something unlikely to change in the medium to long term – that’s to say, over the next decade.

What’s underlining this slow drift from cask to bottle? Neil Jardine, take-home and export director for Greene King, says: “Although ale has its historic roots in pubs, supermarkets have recognised the scale of the opportunity presented by the bottled ale category by providing consumers with a great range and choice.” Referring to the growth of their best-selling and – given its market dominance – perhaps archetypal brown beer, he adds: “Old Speckled Hen is a good example of a brand that over the years has recruited new drinkers through its easy-drinking style, broad-appeal premium packaging and formats designed to suit different drinkers and different occasions.”?One of the most dramatic increases in bottled output can be seen in Hall & Woodhouse’s Badger-branded beers. With the market for cask ale in slow and steady decline, H&W seized upon the

opportunity bottling offered. In the space of five years, its bottled output has risen from 5% of the Dorset brewery’s production to around 60%.

Significantly, this has seen growth in the brewery’s overall output (and a £5 million new brewery in development), and happened with no loss of value either.

Brands marketing manager Rick Payne is upbeat about Badger’s prospects for the future, at home and abroad. “We are still focusing growth on the off-trade and export,” he said, adding all current reported trends indicate continued strong growth for the bottled ale sector.

Payne also notes the multiples are taking an ever-larger share of the market, although this doesn’t necessarily mean bad news for the independents.

In an expanding market, it is possible to take a proportionally decreasing share and still be in growth. And, despite personal interest on my part in the independents, the multiples’ dominance in the area signals two heartening facts: a maintenance of a premium product (growth by value), and an upswing in interest in the sector generally (growth by volume).

While it’s good to hear about larger, established producers’ success, what of the smaller players and newcomers? Although not strictly producing ordinary brown beer, Paul Halsey, managing director of Purity Brewing, says: “Purity is certainly part of this growth. Our bottles are available via both independent and multiple retailers.Presently, just over 400 off-trade premises sell our bottled ales, including Sainsbury’s stores and regional Tesco supermarkets. The bottle sales of our three brands – Mad Goose, Pure UBU and Pure Gold – are 5% higher this financial year when compared with the same period last year.”?Although no newcomer to the brewing scene, being Supreme Champion at the 2009 Great British Beer Festival meant a huge increase in demand for Rudgate Brewery’s bottled Ruby Mild. Head brewer Jamie Allen says: “Through the Yorkshire Farmers scheme, we have our beer in 12 Asda stores in Yorkshire. But the real change since winning the GBBF is the number of people just coming to the brewery and wanting to buy bottles. There’s huge interest in the sector as a whole, no doubt about it.”?It’s clear that from tiny microbreweries struggling to find space for an extra fermenter, to big breweries scaling up for even bigger production, classic English ales, the ordinary brown beers of Britain, are still the backbone of what is being brewed, sold and consumed.

And, much as I love the fruity tickle of the now-fashionable Nelson Sauvin hop, or the plush polish a whisky cask gives to a beer, it’s a sector I hope will continue to prosper.

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