Regional tastes may offer UK brewer lifeline

By Neil Merrett

- Last updated on GMT

Related tags: Beer

As the UK beer industry continues to threat over falling consuming spending amidst the economic downturn and increased taxation of alcohol, local cask or real ales could be helping to curb wider sales falls, suggest news reports.

In a report expected next week from British Beer and Pub Association (BBPA), off-trade alcohol retailers, previously thought to be benefiting from discounting brands, are expected to post their first ever double digit sales falls for lager and beers, reports the Financial Times newspaper.

Amidst similar concerns over lager sales from multinational brewers, groups such as UK-based Marston’s Beer company, which offers cask or ‘real’ ales, suggests it has recorded a 16 per cent increase in the segment due to premium brands sales this year.

Overall our brands performed well and increased market share in a weak beer market, reflecting the increasing popularity of regional cask ales in our pubs and a strong second quarter in the off-trade,”​ stated the group in a trading update released earlier this month.

The company added that sales volumes of its standard ales had dropped during 2008, falling six per cent on the previous twelve months.

Marston’s figures appear to reflect wider optimism of the cask ale segment.

Recent research backed by a number of national trade organisations and brewers linked to the segment suggests strong demand for seemingly ‘quality’ local beers was offering some relief to the industry.

Ale report

In findings from the most recent 2008-2009 Cask Ale report, the market share of regional ales at on-trade premises such as pubs was up by five percentage points to 44 per cent, compared to three years earlier.

Although sales were still have found to have dropped over twelve months up to May 2008, with volume falling 1.3 per cent and value down by 0.3 per cent, the report found them better positioned than lager and premium lagers, citing figures by analyst Nielsen.

“This compares to a total beer market decline of eight per cent, and means cask ale is doing better than not only keg and smoothflow ales, but also standard and premium lagers,”​ stated the report. “Cask ale is therefore growing its share of the total beer market - up from 11 per cent to 12 per cent [in 2008].”

Though regional ales are often seen as the domain of smaller, less multinational brewers, Heineken-owned Scottish and Newcastle (S&N) suggest that they are currently the largest distributor of cask ales in the UK.

In order to attempt to maintain the tradition of these cask brands, the company said that it had actually opted either to sell or contract out the operations to brewers such as Wells Young's​and Theakstons.

Although S&N stressed that it retained brands such as Magnet Ale and Deuchars IPA in its portfolio of on-trade available beer, the strategy was designed to better ensure the segment’s success.

"We believe that the brands will best prosper under the stewardship of regional cask ale brewers,"​ stated a spokersperosn for the company.

Multinational headaches

More recently, major brewers have suggested certainly difficulties in 2009 linked to sales of branded lager and other alcohol.

Since the turn of the year, SABMiller said that sales volumes of its lager brands were down by a single per cent globally.

The claim reflected similar concerns by groups like Diageo, which suggested back in January that it was ‘re-evaluating’ a €650m investment plan in its production first unveiled in 2008 to test feasibility in the economic downturn.

The company produces Guinness and a number of branded ales and spirits.

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