Younger drinkers are changing the beer and cider market and retailers that do not alter their range will miss out, writes Chris Dillon.
The growth of world and craft
It has not been an easy few years for the beer market, but that doesn’t mean that there isn’t plenty of opportunity for independent retailers.
The market’s decline is well reported – there are 1.1million fewer standard lager drinkers than five years ago, with ‘traditional premium’ drinkers facing a deficit of nearly 500,000. But at One Stop Mount Nod in Coventry, beer sales have never been better.
“We’ve just had a range review and increased our range of craft and world beers, and the fixture has been remerchandised to encourage shoppers to buy more expensive lines,” says owner Aman Uppal.
Young adults are not looking for the same things from the category as previous generations. They are drinking less, but when they are drinking they want premium products. David Lette, premium brands director for Heineken, says: “Consumers are looking for something different and new. Premium global brands like Birra Moretti can meet this demand.”
The growth in these areas is providing respite to the price war that has gripped the market in previous years. Steve Ricketts, head of sales at Brewdog, says: “In 1997, you could buy eight cans of Foster’s for £6. Fast-forward 20 years and multiple duty increases and you could still find that price today. The value growth has not been there for independents.”
At Aman’s store, his range has now been integrated into the main fixture. “We used to have a dedicated craft ale stand, but now those products are in the fridge we can use the stand for promotional items,” he says.
Increased costs for convenience stores means it’s crucial to increase your margins and craft lines are a great way to begin to do this.
“Craft beer is bringing in people that have never bought beer before and they’re spending more,” says Ricketts. “You can sell four cans of standard lager and make a small margin, or one or two craft beer bottles and make the same amount. Invest in the future,” says Ricketts.
One Stop Mount Nod’s range of local suppliers has been given a stronger focus on its own display. “We’ve retained our link with local suppliers. We work with two – Twisted Barrel Ale and Byatt’s Brewery,” says Uppal. “We have our local range on a dedicated display, so we can show how passionate we are about that local offer.”
The changing face of mainstream beer
Despite the growth in world and craft, mainstream beer is vitally important to the category and still makes up 75% of sales.
Big brands have refreshed their packaging over the past couple of years to promote their heritage, history and quality to meet demand.
Carlsberg Export rolled out a new design last year to drive sales. Liam Newton, marketing vice president for Carlsberg, says: “If you tell people where beer is from it makes it more premium. When you talk to consumers they currently see all mainstream lager as the same.”
This is the area where price is key. One of the biggest changes in One Stop’s range review is the addition of more lines into its three-for-£5 offer. “The offer runs on our 550ml bottles, but we’ve now got more 710ml in the range. This is a supermarket-standard offer and we’re happy we can offer it at a great margin,” says Uppal.
As well as mainstream brands appealing to shoppers’ experimental tastes, some are also opting to appeal to consumers wanting to drink less. Earlier this year, Heineken launched a 0% beer, backed by a £2.5m campaign.
“People are moderating for different reasons than before; they now want a healthier lifestyle. I think we will see shelf space for low-ABV drinks increasing. In Spain, 10% of the beer category is low or no alcohol,” Lette told Retail Express.
“You’ll get people who want to see taste and craft within low and no alcohol. People want to moderate, but they still want to moderate with great quality and taste.”
Changing cider tastes
The trends towards authenticity and premium can be seen in cider too, but there are important differences between the two markets. Craft beer is more about small start-up brewers, whereas craft and heritage cider is recognised in the quality of the fruit, the land and its heritage.
Emma Sherwood-Smith, cider director at Heineken, says: “Shoppers know that apples only come from certain regions, so cider is similar to wine in the way shoppers think about it.”
The company launched Bulmers Orchard Pioneers earlier this year, which includes Kier’s Cloudy and Sarah’s Red to appeal to this demand.
Flavoured cider is still an important area of the category and Smirnoff Cider is extending its range again this year with Mandarin & Pink Grapefruit. Daf Pugh Williams, senior innovation commercialisation manager at Diageo, says: “Spirit ciders are the next stage of premium ciders’ evolution. The first was a glass bottle served over ice, the second was flavour such as pear.”
Glen Friel, sales & marketing director for Aston Manor Cider, says: “One in five independent convenience cider shoppers only buy cider in bottles, however, cans are growing in importance for many shoppers.”
This is reflected at One Stop Mount Nod. “We’ve got more 330m cans in cider too like Rekorderlig and Old Mout, whereas before we only had Kopparberg in small cans,” says Aman Uppal.
Premium sharing and the future of cider
Cider’s association with summer means that it is a drink that is well suited for sharing. Aston Manor’s Glen Friel says: “If temperatures are only three degrees warmer than average and the sun shines all day, cider sales can rocket by as much as 40%.”
Brands like Stassen have already appeared in supermarkets, selling cider in a bottle that is more associated with wines. Kopparberg followed earlier this year in Asda with Sparkling Rosé Strawberry and Raspberry cider.
As these lines become available to convenience retailers, creating links with food is a great way to drive sales. Shepheard Neame’s Claire Young says: “Look at pairing bottled cider with food. Angry Orchard Crisp Apple cider pairs well with barbecued meats and pulled pork.”
The other area of cider that manufacturers are investing in is modern craft cider – brands that look like craft beer brands, while still having authenticity. Heineken rolled out Orchard Thieves in the on-trade in March, but these lines could be in independent retail by the end of the year.
“A lot of our younger customers are happy that we’ve introduced products that they’ve seen out in bars. It’s more relevant to them now. That’s the main reason to do it,” says Uppal.
Helping shoppers trade up
If you want to make more money from emerging craft cider you should arrange your fixture in a way that encourages shoppers to trade up. “Before cider was merchandised horizontally across the shelf, but now we’ve blocked them up in one section,” says Uppal.
Multiples are waking up to the opportunity in craft cider, so you should too. Claire Young, national off-trade controller at Shepherd Neame, says: “Until recently craft cider was enjoyed regionally by local consumers but it seems the multiples are now waking up to the craft cider revolution.
Quality apple cider is the area that shoppers are willing to pay more for, so a range of brands with heritage, like Thatchers Heritage, Aspall, Caple Rd and Orchard Pioneers at the top of the chiller will drive sales.