Not just a commodity

21 November, 2013

It is not a research company’s job to try to sex up a market, but when Nielsen – to be fair, probably led by the brewers it was researching – called the burgeoning 1.3%-3.3% abv lager market “commodity” it was so dreary a tag as to make the “standard” lager category sound like a Hollywood A-lister.

But when you look at the figures a more exciting plot unfolds. Commodity lagers, which include Foster’s Radler and Carling C2, grew at nearly 60% in the year to October 13, 2013. 

It’s from a small base of £44.7 million but it looks glamorous in a category that is pretty much stagnant over all.

Add in the low-and-no-alcohol lager market, which grew 10% to £21.1 million in the past year, and you could almost argue that the only way forward is to take Status Quo’s advice and go down down, deeper and down.

Molson Coors UK has seen great success with 2.8% abv Carling Zest, which brands director Andy Cray says has “brought excitement and new drinkers into the lager category”.

He adds: “The lager category in the off-trade is extremely competitive, so brands need to continuously innovate in order to continue to deliver huge value and volume to the beer market. 

“It’s also vital to continue to invest in people’s favourite brands to ensure long-term growth.”

Jon Whittle, off-trade sales director for Budweiser Budvar UK, says retailers are now demanding high quality lower-abv products.

He says: “We are already in the marketplace with Pardal, a 3.8% abv brew especially created by Budvar as an everyday lager. Currently, supported on price and display, it is doing well in Morrisons.”

Premium cans are on the way up – but bottles shouldn't pop their tops just yet, as world beers are growing too

But down isn’t the only way to go – premium world beers are also on the up. Nielsen, which defines world beers as anything with provenance in another country – rather than basing it on abv or packaging – reported sales growth of 15% to £502.5 million in the past year, and many brewers are tipping this category as the most promising for 2014.

Lindsay Castling, brand manager for Spanish lager Estrella Galicia at PLB, says: “The largest recent growth is in premium bottles, fuelled by authentic world lagers. 

“Increased choice and trial of authentic world beers in the on-trade is certainly driving this trend, and all the major multiple buyers are giving them the space to grow as they have seen the value it brings to the category.

“I can see volume growth continuing in multipack world bottled lagers as they become the new promotional battle zone.”

Julian Penny, UK sales agent for Germany’s Krombacher Pils, agrees: “We’re continuing to see that consumers are looking to experiment with beers that have heritage, authenticity and are brewed in their country of origin.”

And Molson Coors’ Cray adds: “The growth of Corona and Cobra reflects the increasing popularity of world beers among consumers. There is a great appetite for beers from other cultures and consumers respond well to matching these beers to food. 

“We’ve capitalised on this growth by investing in engaging communications and promotional activity that has been driving category value.”

Budvar’s Whittle believes it is the popularity of world beers that has driven a resurgence in sales of premium lager in cans. 

While total canned lager sales fell 1% last year, premium canned sales grew 2% to £718.9 million, according to Nielsen – a 38% share of the market.

Whittle says: “There are two major trends. One is the revived popularity of the can and the other is the growth of world beers. 

“On the face of it, they look poles apart. On one hand the can has for years been regarded as a package for mass-produced, lower-end beers, and on the other we had the growth of world beers with their top-end reputation.  

“Who then would ever have thought that the humble can should suddenly find itself competing with the bottle as the package of choice at the top end?

“There are a number of reasons for this, but the most important include the realisation that once in the can, beer will be unlikely to degrade. It is easier to handle than a bottle and socially and environmentally a friendly packaging solution.

“The rising popularity of the can is demonstrated by its move into on-trade operations, albeit at the very funky end,” he adds.

Budvar has invested £2.5 million in a new canning hall, which opened in February. It is set to release a 6x33cl can pack to a UK retailer in the coming weeks.

PLB’s Castling has also noted lager drinkers drinking less but trading up to premium cans, while Tesco lager buyer James MacNay says: “Core canned lager lines have seen a decline in sales over the past year, albeit from a very high base position, while premium bottled lager – Budweiser, Stella etc – and world lagers such as Corona and Peroni have seen very good growth. Speciality lagers such as Desperados have performed well too.”

And Molson Coors’ Cray notes that, whatever the current trend, when it comes to lager sales, advertising and brand investment tend to pay off. 

“The power of good advertising can’t be underestimated,” he says. “ We are very proud of our new
It’s Good But it’s Not Quite Carling advertising campaign, which is really hitting home with our key 18 to 24-year-old audience, and this is being reflected in our latest sales figures.” 

Lager's growth: where will it come from in 2014?  

Simon Harrison, off-trade sales director, AB Inbev UK: "In 2014 there is a great opportunity to grow lager sales off the back of the FIFA World Cup. To capitalise on the key shopping missions during this tournament, retailers should ensure good availability of chilled small and mid-packs of lager. They should also look for opportunities to merchandise with soft drinks, crisps or chilled pizza near the front of the store to interrupt shoppers."

James MacNay, lager buyer, Tesco: "I predict that core lager sales will continue to see a slow decline in the year ahead, with growth in the category coming from bottled ale, fruit cider, and speciality beer and lager lines." 

Andy Craybrands director, Molson Coors UK: "We’re predicting the new flavour variants in our portfolio to be an area of growth. The success of Carling lager, with 4.3% volume growth and 2% value growth as of October 2013, will help propel the growth of Carling Zest. The launch of Carling Zest with a Hint of Citrus was so successful last year that it has now become part of our permanent portfolio. We’ve also released a new winter variant, Carling Zest with a Hint of Winter Berries, which we’re expecting to perform extremely well over the festive season."

Jon Whittleoff-trade sales director, Budweiser Budvar UK: "Current market potential is very high. I predict that multipacks, multibuys, 66cl bottles – but in particular cans and lower-abv brews – will promise excellent growth, especially when supported by price-led activity. An increasingly sophisticated consumer is ensuring that world beers offering genuine quality and heritage are gaining new distribution and well deserve the increased shelf space and in-store promotional exposure they are being allocated."

Lindsay Castlingbrand manager for Estrella Galicia, PLB: "Value growth will come as super-premium world bottled lagers are allowed more space alongside international craft beers. Reserva lagers from Italy and Spain such as Peroni and Estrella Galicia are already in drinkers’ repertoires from their restaurant experiences in the UK and on holiday."

Julian PennyUK sales agent, Krombacher: "Our prediction for growth in the year ahead is that consumers will continue to look for beers that offer a real point of difference, such as the world beer category. Consumers see these beers as something different from standard lagers and are willing to pay a little more to try them as they see them as a treat and something to savour."





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