Green shoots for ale

14 February, 2014

For the first time in a decade the UK beer market has shown two consecutive quarters of growth – led by retailers who champion premium bottled ale. The British Beer & Pub Association produces a quarterly beer barometer survey and it shows the total beer market grew 5.2% in the third quarter of 2013, its best performance this century.

It then grew 0.8% in the fourth quarter of the year, leading the BBPA to hail the resurgence of a “great British product” that had been in seemingly terminal decline.

But upon closer examination a clear trend emerges. In the third quarter, on-trade beer sales were down 1.2% but take-home grew 12.5%.

In the final quarter of the year, pubs took another hammering as on-trade sales dipped 2.2%, but the off-trade thrived as the category grew 3.9%.

The off-trade is the place to be, and retailers have made it so by honing in on trends, giving extra shelf space to growth categories and embracing innovation.

For example, spirit beers are up 262% in value (IRI, year to August 17, 2013) with new lines like Dead Crow and Cuvana joining mainstay Des- perados in a burgeoning category.

Lighter lagers like Foster’s Radler and Carling C2 are up 32.9% and alcohol-free beers by 4.9% (Nielsen, 12 weeks to January 4).

Star performer

But while these styles are building up from tiny bases, the overwhelming star performer in the take-home beer market is premium bottled ale.

Tesco, winner of the Multiple Beer Retailer of the Year gong in this month’s Drinks Retailing Awards, now has more than 400 ale lines ranged by taste profile.

Tasting notes and food matching suggestions support the beers, while cross-category four-for-three promotions encourage shoppers to broaden their repertoires.

The hard work from retailers and suppliers is paying off. The premium bottled ale (PBA) category is now worth £275.6 million to the off-trade, up 10.8% on the previous year.

PBAs led the rest of the beer market over Christmas.

“Ales continued to perform well, up 4.6% in value, driven by sales of premium,” says analyst Helen Stares, who adds that standard lager was down 1.1%.

Premium bottled ale sales grew £6 million over Christmas (Nielsen, 12 weeks to January 4), outperforming total alcohol and the beer market as a whole.

It now accounts for 15% of total beer sales but most of the market’s growth as it continues to eat away at lager’s share and attract new consumers.

Neil Jardine, retail sales director at Greene King, believes the ale category is firmly on course to return to the glory days of the 1980s.

He says: “It feels like ale has come of age – again – and is coming back, in terms of importance to the beer category, to the levels we saw 20-30 years ago when ale dominated the beer market. We are coming from a lower base but its importance to beer has increased significantly.”

Within a category bursting with star suppliers displaying excellent growth, Greene King is outperforming many.

It accounted for 63% of the growth in the PBA category over Christmas, according to Nielsen, with 21.6% PBA market share by value and 23% by volume, putting it comfortably ahead of overall market leader Marston’s over the 12-week period.

“We are delighted with that performance,” says Jardine. “It vindi- cates a lot of the focus and invest- ment we have put behind premium ale for a number of years.”

Greene King claims more than half the advertising spend in the PBA category.

In the past year, Greene King’s off-trade sales surged 21.5% to £39.9 million (Nielsen, year to January 4). This puts it in the number two spot behind Marston’s, which also showed strong annual growth of 13.3%, leaving its value sales for the year at £47.2 million.

Third-placed Hall and Woodhouse enjoyed 6.9% growth.

Jardine is confident these trends will continue if the PBA category is given the shelf space it deserves.

“We are pleased with the space our customers gave PBAs this year,” he says. “The amount of space PBAs are given has risen 30% in recent years but it still has a way to go.

“Retailers are looking for catego- ries that show growth and they want to support them. PBAs provide a very strong commercial proposition.

“They are sold at a premium to other beers, offer greater margins and are less dependent on price promotions.

“In 2011, the category sold 60% of volume on promotion in the four weeks to Christmas, but this year it was 49%.

New shoppers

“It is bringing new consumers into beer. Old Speckled Hen brought 140,000 new shoppers to the ale category in the Christmas period, according to Kantar.”

Retailers can help drive further growth and boost profits by selling more PBAs in multipacks and giv- ing the category extra space in the convenience channel, according to Jardine.

Smaller breweries are also driving growth as record numbers of quirky craft breweries and microbreweries have sprung up in recent years.

In the past year, Brewdog showed the most impressive growth, with retail sales up 68.8% to £2.5 million as it ramped up its off-trade focus.

Cheshire brewer Robinsons was up 59% to £2.1 million, driven by the launch of Trooper, an ale brewed in conjunction with rock band Iron Maiden.

Morrisons hailed the beer’s impact as “phenomenal” and said it became its bestselling new ale of all time after listing it in July.

It has now been listed by Sainsbury’s and Robinsons has doubled production to cope with demand.

The third fastest-growing craft brewer was St Austell, with sales up 53.4% to £4.5 million.

The leading brand was Greene King’s Old Speckled Hen, with sales growing 7% to £14 million, followed by Newcastle Brown, which grew 1.4% to £12.4 million (Nielsen, year to January 4).

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