Ales and Stouts - UK

The decline continues in the UK ales and stouts market with a 6% volume drop to 1.4 billion litres and value down 3% to £5.5 billion forecasted in 2008 - however, this masks a cask and bottled ale revival.

Pub closures, declining pub visits, reduced consumption and an increasing emphasis on food-led sales are creating a challenging on-trade environment for ales and stouts.

Key themes of the report:

• Although dominant with a 70% market share of ales and stouts, the on-trade has lost 4% to retail stores over the last two years as customers turn to in-home entertainment.
• Sales may fall post-ban but removing smoke from pubs could also reawaken customers’ taste buds and bring new custom, offering greater opportunities for ales and stouts.
• Consumer demand for products with provenance and heritage is driving growth among regional brewers, and inspiring the revival of traditional brews and new products.
• Studies indicate ‘beer bellies’ are a myth and brewers could perhaps do more to emphasise ales’ natural ingredients, tapping into rising demand for healthier, less artificial drinks

Issues in the Market

Key points

Key themes

Definitions

Market in Brief

Pub troubles drive market decline

Cask and bottled ales are growing

Ad strategies refocused regionally or below-the-line

Opportunities in provenance, heritage and women drinkers

Future

Internal Market Environment

Key points

Consumers seek goods with provenance and heritage

Pub visits on the wane

Figure 1: Ever visit pubs for a drink or a meal, 2003-07

Breweries invest in quality initiatives to improve customer satisfaction

Recession likely to fuel in-home entertainment

Broader Market Environment

Key points

No Darling to the pub sector

Figure 2: UK excise duty rates on beer, 20003-08

Calls to reinstate guest-beer legislation

A new Government bill offers lifeline to pub sector?

Brewers face rising input costs

Smoking ban may dent pub trade but boost ale sales

Industry distances itself from ‘lager louts’

Ales go ‘eco’

Uses for leftover ales

Younger drinkers need to be attracted into the category

Figure 3: Percentage of Change in the age structure of the UK population, 2003-08 and 2008-13

Tackling the ‘beer belly’ myth

Seasonal factors impact on trade

Figure 4: Average summer temperature and total number of sunshine hours in the UK*, 2002-07

Competitive Context

Key points

Health conscious consumers cut down on alcohol intake

Figure 5: UK volume sales of alcoholic drinks, by type, 2005-07

Figure 6: UK value sales of alcoholic drinks, by type, 2005-07

Could ales jump onboard the cider bandwagon?

Figure 7: Trend analysis of netted alcohol types, 2003-07

Lager no longer stealing share?

Speciality imports serve up premium competition

Brewers target wining and dining opportunities

Sophisticated soft drinks challenge on-trade ales

Strengths and weaknesses in the market

Strengths

Weaknesses

Market Size and Forecast

Key points

Market size

Total market decline continues as pubs suffer

Figure 8: UK volume and value sales of ales and stouts, 2003-07

Ale fares better than lager

Brewery sector expands as regional trend prevails

The future

Forecast

A market unable to arrest its decline

Rapid short-term decrease stabilises from 2010 onwards

Figure 9: Estimated volume and value of the ales and stout market, 2008-13

Ales & stout going premium

Figure 10: Estimated price per litre of ales & stouts, 2008-13

Factors used in the forecast

Market Segmentation

Key points

Figure 11: UK volume sales of ales and stouts, by type, 2003-07

Draught baring the brunt of declining fortunes

Cask - reports of a revival fail to stem overall decline

Figure 12: UK volume and value sales of cask-conditioned ales, 2001-06

Bottled sales are leading growth by packaging format

Figure 13: UK volume and value sales of ales and stouts, by type of packaging, 2003-07

Organic sector continues to grow

Burgeoning export trade

Market Share

Key points

A bad year for the big players

Figure 14: Brewers’ volume shares in the UK ales and stouts market, on- and off-trade, 2005 and 2007

Figure 15: Brewers’ value shares in the UK ales and stouts market, on- and off-trade, 2005 and 2007

On-trade brand shares

Figure 16: Leading on-trade draught ale and stout brands, by volume and value, 2005-07

Top 10 losing market share to smaller brewers

Off-trade brand shares

Figure 17: Leading off-trade ale and stout brands, by volume and value, 2005-07

S&N’s off-trade dominance proves a winner for the group

Bottled beers

Figure 18: Leading bottled ale brands, by volume and value, in the off-trade, 2005-07

Bottled ales flying off the shelves

Canned beers

Figure 19: Leading canned widget ale brands, by volume and value, in the off-trade, 2005-07

Figure 20: Leading canned non-widget ale brands, by volume and value, in the off-trade, 2005-07

Stouts

Figure 21: Brand shares in the total UK stouts market, by volume and value, 2007

Guinness investment propels the stout market

Companies and Products

Figure 22: Brand audit, 2007

Company profiles

Scottish & Newcastle plc (Heineken)

Carlsberg UK

Diageo GB

Coors Brewery Ltd

InBev UK Ltd

Marston’s

Greene King plc

Shepherd Neame Ltd

Fuller, Smith & Turner plc

Hall & Woodhouse

Wells and Young’s

Refresh UK plc (Marston’s)

The Black Sheep Brewery

Own-label

Brand Communication and Promotion

Key points

Spend trend of decline

Figure 40: Main monitored media advertising expenditure on ales and stouts, 2004-07

Major campaigns

Figure 41: Main monitored media advertising expenditure on major ale and stout brands, 2005 and 2007

Guinness’ Tipping Point

John Smith’s leads ale ad spend

Bombardier: Drink of England

Greene King IPA: ‘The pint with nothing to prove’

Whatever you do, take (London) Pride

Tetley don’t do things by halves

Sports sponsorship dominates below-the-line activity

Channels to Market

Key points

Creep towards off-trade continues

Figure 42: Distribution of ales and stouts, by volume, in the UK, 2003-07

Efforts underway to revive flagging pub trade

Cask is the future for Punch and JD

Off-trade in ales gathers momentum

Off-licence share in growth too

The Consumer - Consumer Typologies

Figure 51: Agreement with statements regarding ales and stouts, March 2008

Four key attitudinal groups emerge

Traditionalists (13%)

Discerning (17%)

Non-Drinkers (56%)

Uninterested (14%)

Appendix

Advertising data

Abbreviations

Appendix: The Consumer - Consumer Typologies

Figure 62: Agreement with statements regarding ales and stouts, by demographics, March 2008

Figure 63: Agreement with statements regarding ales and stouts, by demographics, March 2008

Figure 64: Demographics of the 4-attitudinal groups

Figure 65: Differentiating groups based on attitudes to ales and stouts, March 2008

Figure 66: Attitudinal groups and the top adjectives with which they describe ales and stouts, March 2008