great performance criteria in workplace

The UK long alcoholic drinks market – mature but evolving!

Agenda

• The last thirty years – Volume trends – Why did this happen?

• The current market – What is new in a mature market? – The new consumer

• The future?

Changes in a Mature Market

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Mill

ion

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olitr

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Lager

Ale & Stout

Actual UK beer market: ale & lager Lager has become the most popular beer type at the expense of ale

and stout and now accounts for 74% of the UK market

Source


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Off-tradeOn-trade

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The UK beer market: on/off trade On-trade - fallen by 50% as take-home consumption accelerates. Off-

trade now account for 50% of UK beer sales


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Num

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f bre

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Bee

r Pro

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m h

ls

UK Beer Production

Breweries (excl. micros)

The UK beer market: brewery rationalisation

Source


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Litr

es o

f 100

% a

lcoh

ol

FABs

Spirits

Wine

Cider

Beer

Source

The UK beer market: the competition!

The winners

• Wine • Cider • Spirits • FAB’s – but already passé?

– It took 10 years for Bacardi Breezer to be an over night success!

• It took 2 years to be marginalised – Brand life spans are now much shorter!

• And of course Coffee!

Oh, for a cup of coffee…

Presenter

Presentation Notes

6-Slide-Oh, for a cup of coffee Oh for a cup of coffee, for the innovation, the passion, the art, the distinctiveness, the barista, the aroma, the naturalness, the ethical dimension.....and that will be £3 for your vente sir...and yes that’s correct there is no excise in that price. Within our own industry we have magic to offer, the art, the science, the aromas, the flavours, the colours, the glassware, the history, the welcome and the recommendation, the experience , the craic.....as an industry we need to unite and educate by celebrating the diversity of beers available and we must celebrate beer’s inclusivity and craft, embrace the real diversity that exists in beer and align behind a common purpose : to stand up for champion and celebrate ALL of beer.

Why did this happen

• The decline of beer can be explained by the multiple pressures on the category – Drink and Drive – Loss of heavy industry – Demographics – Social expectations – Increased excise

• But – Wine grew – Cider grew – Spirits grew

Why did beer suffer relative to other long drinks

• Beer in the UK is heavily taxed relative to cider – As of 28th March beer duty is £18.57 per Hl degree – Cider is £35.87 per Hl below 5.5% abv – So at average 4% abv cider has a £38.41 per Hl advantage – Small brewers ( less than 5000 Hls ) have a 50% reduction

so also have an advantage of £37.14 per Hl at 4% abv • Beer has not innovated

– Very poor NPD – No development of image – Has not engaged with generation Y and not at all with

women

At least every 2 decades, you can rely on the music world to produce a startling innovation….

Where are beer’s iconic, game-changing innovations?

GRAMOPHONE

1880

HI FIDELITY

1927

45 RPM ‘SINGLES’

1949 THE SONY WALKMAN

1980

CASSETTES

1962 CDs popularised

1982

THE I-POD

2000

Presenter

Presentation Notes

11-Slide-Innovation timeline If we look outside the beer category and contrast our evolution with the market for prerecorded music we are left wanting...yet listening to music has been around longer than beer and is also one of life’s simple pleasures. There is a fascinating innovation timeline from the gramophone, through stereos, to the Walkman, to CD’s to the iPod to the iPhone..and no doubt something beyond this.

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1909

1914

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1924

1929

1934

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1969

1974

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1984

1989

1994

1999

2004

2009

Why has beer consumption fallen so dramatically in recent years …

Source: BBPA

mill

ion

barr

els

13

… here and in other mature markets

Source: BBPA

02040

6080

100120

140160

Germany Australia Ireland UK Netherlands

1980 2007

UK

litre

s per

hea

d

14

Have brewers lost touch with this generation?

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45

1953 1963 1973 1983 1993 20032,250

2,750

3,250

3,750

4,250

UK beer production 18-25 males

Source: National Statistics/BBPA

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… who now favour spirits

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101520253035404550

Total On Trade 'Up Tempo' Occasions

BeerSpiritsRTDs

Source: BBPA

Perc

enta

ge o

f alc

ohol

serv

es

On a ‘big night out’, spirits are now the drink of choice for 18 to 24 year olds

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…and made life very difficult for pubs

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1980 1985 1990 1995 2000 20050

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

Number of pubs On-trade beer barrels

Source: BBPA

mill

ion

barr

els

17

And UK beer consumption per capita has fallen

by 26% …

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100

120

140

1980 2007

Source: BBPA

litre

s per

hea

d of

100

% a

lcoh

ol

18

010203040506070

It is higher incalories than most

other alcoholicdrinks

It is made fromnatural ingredients

It can be part of ahealthy lifestyle

and diet

%Beer

Wine

Spirits

We have failed to communicate the wholesomeness of beer …

Source: ComRes

Beer and Wholesomeness

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… in a social occasion …

0102030405060708090

100

It is an ideal drinkfor socialoccasions

It has a widevariety of flavours

and styles

It goes well with awide range of

foods

% Beer

Wine

Spirits

Source: ComRes

Beer and Sociability

20

Good work has started, but we still have a long way to go …

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Key Q: - Will the next generation enjoy beer and pubs?

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1953 1963 1973 1983 1993 2003 2013 20232,250

2,750

3,250

3,750

4,250

UK beer production 18-25 males

Source: National Statistics/BBPA

mill

ion

barr

els

Why Wine and Cider

• The Wine Industry has spent 20 years grafting on image and access for all groups and both sexes – It has also convinced the consumer that ‘wine is good for

you’ , that ‘wine is sophisticated’, and that ‘wine is healthy’ • Cider

– Modern, cool, refreshing, great value, ‘local’, ‘real’, ‘light’, unisex, etc….

• In general – Perhaps beer lost its way due to its dependency on

traditional pubs • Consumers have favoured more contemporary retail offers

When will this end?

• Although main stream brewers continue to shed volume there are clear signs of a strong new opportunity – Cask ale brewed by craft brewers! – In the UK there are now over 700 small breweries

– and some of these now look like the regional brewers of the past

– The UK craft brewers now produce just over 1.7M Hls, 4% of the market

Is the UK alone?

• Well as you know - no! • There are vibrant craft brewing scenes in all

mature beer markets – USA – Japan – Aus/NZ – France – Scandinavia

USA Craft Brewers

• Over 1700 breweries now operating – 1000 of these are pub breweries but a growing number of them are regional's and indeed nationals – Some have grown to over 1.5M Hls and some to

over 3M Hls

• Total USA beer market in 2010, – 2.7% – Craft Brewers +11% to 16M Hls, now 5% share

• And they claim 7.4% value share

Will UK Craft Beer continue to grow?

• Yes – but at a slower rate • The excise duty rate has attracted many new

players but there are signs of cannibalism between them

• Growth will come from those that have the muscle to break through the 5000 Hls financial barrier

• Mainstream brewers will not sit and watch – Sharpes purchased for £20M - 12 times earnings! – And this week AB InBev buy the remaining 54% of

Goose Island in the USA for $22M

And what are is the IBD doing?

• Through our Beer Academy we are working with the industry on beer image and education – ‘Beer – The Natural Choice?’

• This publication was well received by the press and gained some useful headlines

– Training • The Beer Academy trained over 2000 retailers and

consumers last year • It has just recently launched a ‘Beer Sommelier’ scheme

which will recognise those that achieve minimum retailing and knowledge standards

The next five years

• Rate of pub closures and mainstream volume loss will slow but not stop

• There will finally be an industry wide push to improve the image of beer

• Off trade pricing will harden • Innovation will be critical – mainly in package

design and glassware

Thanks to…

• I have used slides presented by Jonathan Neame and Mark Hunter (CEO Molson Coors UK) at the International Brewing Convention

• I have used some slides used by Peter Ward (IBD Past President) at the IBD Asia Pacific Convention 2010

• Various stats from BBPA, BA and SIBA

Q and A

• I may not have the answers – but I will try!

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