The big chill
Beer suppliers are hoping a new wave of extra cold beers can revive a flagging premium lager market. John Harrington reports on their chances
The cold war is hotting up - and a new front has just opened. Cold variations of popular brands are nothing new, but recent months have seen the concept move into the unchartered premium lager category as brewers look to breathe life into the under-performing sector.
Carlsberg was the first major company to push the innovation in the premium arena, with the roll-out of Carlsberg Export Extra Cold three months ago. This month Scottish Courage responded by launching cold versions of all its draught brands, including Kronenbourg 1664 Cold Premiere. And Coors is following suit with trials of a cold version of Grolsch.
Proponents of the cold concept, which include Guinness brewer Diageo, point to the benefits of cold versions for boosting sales, not just for their own brands but for overall drinks sales in pubs.
Data from AC Nielsen shows that the standard lager category is growing by 2.5% year-on-year aided by the presence of brands such as Carling Extra Cold, Foster's Super Chilled and Carlsberg Extra Cold. Volume growth for premium lagers, meanwhile, is flat. Scottish Courage estimates that, where they are stocked, cold variants account for one in every three pints served.
Super Chilled sales take off
Pubs serving Foster's Super Chilled saw overall beer sales increase by 6%, ScotCo says, and stocking Super Chilled added incremental sales of £10,000 per year for each venue: an extra 5,000 pints for every pub. ScotCo expects similar returns for outlets that stock Kronenbourg 1664 Cold Premiere. 'That's a very significant impact for the pub, says ScotCo's customer marketing director David Goadby.
Carlsberg UK's customer development director Chris Phillips gives a similar argument. 'When we researched Carlsberg Extra Cold before we went fully national, we deduced there would be a 12% uplift within outlets when we put Extra Cold by the side (of regular Carlsberg). When we look at sales of Carlsberg in outlets that have Extra Cold, that's the kind of throughputs we are getting. He adds: 'In the last 12 months standard lager has performed better than the premium category. Part of that is because premium is dominated by one player (Stella Artois), which has had a slower year than previously, so extra cold is a way of getting consumers back to the premium lager category.
AC Nielsen says 37,000 UK outlets currently stock cold brands, but Stella brewer InBev, as well as Heineken, are the major players that have so far refused to play the extra cold game. Steve Cahillane, InBev's chief commercial officer, has been lukewarm on the move towards cold brands, arguing that cold beer can't kick-start growth on its own, adding that more innovation is needed.
Richard Bradbury, on-trade sales director for Heineken, points out that Heineken is meant to be served at 3°C to 5°C anyway. 'I'm not sure consumers are bothered about getting beer that's extra cold, they just don't want it warm, he says.
Neville Hall, on-trade sales director for Czech brewer Budweiser Budvar, says serving Budvar at a colder temperature than the current level of 3°C to 5°C is likely to detract from the flavour. 'When it has gone through a maturation period of 90 days, we think it would probably be counterproductive to make the beer even colder than it is, Hall says.
One argument for keeping premium lager out of the extra cold category is that it might detract from the beer's image. This was the rationale behind ScotCo giving its cold Kronenbourg the title Kronenbourg 1664 Cold Premiere. Similarly, Coors is considering a number of names for its cold draught version of Grolsch, currently being trialled at 60 pubs. One name being considered, Koud the Dutch for cold points to the brand's premium credentials. 'We are looking at how we can apply cold credentials to all of the brands and deciding how and when it's appropriate, says Bill Simcox, Coors director of marketing for mainstream brands.
But one buyer adds: 'I think we are paying a price for a premium product so you want premium quality. Having a constant temperature is an important part of that. But whether we tell people it's cold is another thing. Is that the right way to go? I'm not sure.
However, Carlsberg's Phillips, whose company is backing Carlsberg Export Extra Cold to replicate the success of the brewers' standard brand, refutes the view that premium lager drinkers cannot be won over to the cold format, even if an explicit 'extra cold tag is used. 'Evidence suggests consumers have their favourite brands and a high percentage will want to see extra cold, he says. 'I don't think there's a different mindset if you are a premium or standard lager drinker.
Brewers insist that to maximise sales, the cold format should be available on the bar alongside regular versions. But however much consumers like their beer cold, there will always be a proportion who stick with what's familiar.
Cold and regular is 50/50 split
Phillips reckons that for Carlsberg, the split is about 50/50 between drinkers who go for Extra Cold and those who stick with regular Carlsberg, depending on the type of venue. The split between John Smith's Extra Smooth and John Smith's Extra Cold is about the same. 'From a consumer point of view we need to have both on the bar, says Phillips. 'It increases the benefits for the whole brand because there's more presence, and it does a good job for the category.
Punch Taverns' category manager Stephen Martin says the only criticism he has of the move towards cold brands is the space needed to accommodate the different cooling devices for the various brands. The flash cooler unit is currently used for cold versions of Carling, Carlsberg and Guinness, while ScotCo's brands use a device called the pod. 'Retailers need to be aware of the space needs for devices dispensing cold brands, and brewers need to continue to work on more effective and space-saving cooling devices.
Coors' Simcox agrees. 'As more and more people have entered into the market, this issue of under bar foot space is something we have to address, he says. 'I sense a lot of frustration from the retailers about this, and it's something we are absolutely wrestling with.
Equally important is the problem of accommodating the different fonts on the bar, especially if cold and regular versions of the brands are to sit next to each other.
'I understand that concern and that's something we will have to watch, says Phillips. 'Pubs must have low performers on the bar, which they could remove to create the extra space. Operators will have to look at that option.
'But I still think there are opportunities to increase brand and category sales by having both, so it's a price worth paying.
l Brands, p20
Cold truths
Drinkers' satisfaction is maximised by serving drinks at 3°C, the benchmark temperature for 'cold brands, according to research by Scottish Courage. ScotCo found that drinkers associate coldness with refreshment and a crisper, smoother taste. That temperature also encourages punters to order a second pint, the research suggests. In contrast, warmer beers automatically appear flatter, more bitter and harder to drink. ScotCo points out that dispense temperatures have been falling over the past 15 years from 12°C to as little as 3°C with the introduction of cold lagers. 'Cold is now the number one factor in drinker satisfaction and taste preference for beer and cider drinkers alike, the company notes.
