Analyst suggests Catch-22 for big beer brands in one bid to boost sales

By Ben Bouckley

- Last updated on GMT

Related tags: Beer

(Picture Copyright: Luis Esnal)
(Picture Copyright: Luis Esnal)
Big beer brands face something of a double bind in trying to stem the tide of declining UK beer sales and entice new consumers to the category, in a market where simply taking over small, successful craft brands risks diluting their appeal, according to a Mintel analyst.

Statistics released by the research firm in December revealed that the UK market value of beer fell from £17.7bn (€21.3bn) in 2006 to £15.5bn in 2011 (lager alone accounted for £11.4bn that year) with overall volume sales down by 23% over this period.

Speaking to BeverageDaily.com, senior drinks analyst Jonny Forsyth told BeverageDaily.com that – along with the recession and high alcohol prices that had hit the on trade – beer sales had also suffered due to public health campaigns concerning the ill-effects of alcohol.

He said: “I also think people are more aware of healthy living, and being more prepared to sacrifice certain things to have a healthy lifestyle. Perhaps this never occurred to my father’s generation growing up in the 1960s and 1970s.”

Despite equally high taxes, the UK wine category posted a value sales increase of 15% between 2006 and 2011, which suggested that beer firms had been relatively slow to innovate to meet consumer demand, Forsyth said.

Beer was not seen as suitable for home drinking, food matching, relaxing or social/sharing situations, Forsyth said, mainly due to its predominating young male image that it was struggling to shed.

Lager for the ladies…

Nonetheless, Forsyth said there was a ready innovation pipeline to attract women, for instance to the category (with major NPD areas flavour and low-calorie beers), while Mintel research showed that 28% of UK lager drinkers were interested in sweet-tasting lagers, rising to 57% in the 18-24 age group.

Forsyth said: “There are a lot more beers coming onto the market. I’ve seen a lot more brands that are pilsners or pale ales, in between an ale and a lager. There are a lot more fruit beers around, and Carling have brought out a brand called Animee lager in three different flavours [standard, rose and citrus].

“There’s a lot of innovation suddenly going on – and lager is starting to go the same way as real ale. The industry is realizing that there’s a lot in that. Anime, for instance, is a Molson Coors brand.

“That’s one of the first examples of a mainstream company thinking ‘OK, we really need to innovate’, where a lot of innovation normally comes from smaller companies. The big firms are starting to pick up on that and purchase and promote brands.”

Small-scale innovation

But despite widespread product novation, there had not been much marketing to accompany innovative ales and lagers, since they mainly stemmed from smaller microbreweries, Forsyth said.

“I think that takes a while to filter up to the top. Beer is all about scale, because UK taxation is so high that to make really good revenues you need to be producing high volumes.

“So traditionally the beer companies consolidated to create global super brands that rode on this volume model. But they’re having to reassess this and think, ‘well consumers see these global brands as a little bit bland, boring and homogenised’.”

Such firms were investing in smaller brands, but this took the major players out of their comfort zone, because there was different model for say, advertising, Forsyth said, where a firm might need to create 10 more specific campaigns rather than one.

“However, one large company that’s done quite well on this model is SABMiller, which tends to buy up smaller local brands, and, rather than trying to turn them into global superbrands, encourages them in their local markets,”​ he added.

But Forsyth warned that, nonetheless: “There’s a bit of a contradiction for these major companies trying to support smaller brands, because people are interested in more ‘authentic’ non mass-produced brands with more interesting flavours.”

Consumer cynicism could easily set in when big firms took such brands over, he added, giving the US example of Chicago firm Goose Island and its brand 312 (a Chicago area telephone code) bought up by brewing giant Anheuser-Busch InBev.

The Belgian giant then sought to roll out the phone code concept to other US cities, but Forsyth said this upset fans of the beer in Chicago.

"It’s a really difficult one for the major players," ​he said. "Because almost by buying these local brands, they risk taking away what made them so popular in the first place."

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