Foreign lagers are gaining popularity in the UK in the face of sluggish sales for other beers. Noli Dinkovski reports on the lure of imported brands
Although still only a small part of the overall UK lager market, there is little doubt that foreign lagers are a fast-growing one. Figures from CGA Strategy show that UK distribution of world lager - defined as "new wave" brands that customers perceive to be of world origin - grew by an impressive 29.7% for the year to March 2007.
Compare that to the lowly 1.8% increase in draught standard-lager distribution, and the figure becomes even more striking. CGA Strategy research manager Phil Tate explains: "Out of the top-10 world lager brands, all but one continued to achieve distribution growth last year. And with intelligent operators such as JD Wetherspoon dedicating prime fridge space to these brands it's likely success will continue."
Many consumers have a discerning eye when it comes to lager drinking. Thanks to greater media awareness and more opportunity for overseas travel, lager drinkers now come into contact with a far wider range of beers than ever before. As a result, foreign beer, whether imported or brewed under licence in the UK, is a target area for pubs.
InBev UK managing director of commercial and field operations Steve Kitching believes there are a growing number of quality-conscious consumers who are more inclined to pay extra for imported lagers. "They span all age groups, but the majority are 25 to 34-year-olds with a high disposable income who are keen to try new experiences. They are a growing proportion of the population and are driving key changes in food and drink."
According to John Harley, beer brands director at Global Brands, the culture of imported beer is linked to how people live their lives. He says: "We have celebrity chefs telling us all the time what's good and what isn't, and that environment, which existed around food, now exists around beer. People have grown up and they want to make their own decisions."
Some feel that there is a flipside to why foreign lagers are becoming more popular. "For the first time, drinkers in developed beer markets like the UK are showing signs of a massive rejection of the big brewing brands - particularly the ones that are brewed under licence," says sales and marketing director at Budweiser Budvar UK Neville Hall.
In March, Anheuser-Busch announced it was bringing Spanish lager Estrella Damm to the UK market. This followed the roll-out of Chinese lager Harbin last year as well as the recently re-launched Michelob as a genuine import from the US. Such moves suggest the brewer wants to be less reliant on its leading brand, Budweiser.
Anheuser-Busch UK marketing director Vicki Kipling says: "Consumers are looking for differentiation and it's up to the likes of us to provide them with it. We now have three good imported drinks that will play a part in this sector. We are constantly looking for new opportunities and will continue to speak to retailers to find out which brands they think will be of interest."
A logical strategy
Similarly, last month Carlsberg reintroduced its number one Danish beer, Tuborg, to the UK. "I think the decline of Carlsberg in the UK on-trade may be a key factor in the re-emergence of Tuborg with a mainstream abv," suggests Coors customer marketing director David Wigham. "It appears to be aimed at the largest and most robust segment of the UK
Last November, the Morning Advertiser highlighted the poor performance of three of the four major UK brewers. Trading statements for the three months to September showed InBev's, Coors' and Carlsberg's beer sales were on the slide, with only S&NUK managing to hold its own.
"The realities of life are that today's major brewers are being squeezed by increasingly powerful on-trade pub companies and multiple grocers in the off-trade," says AC Nielsen consultant Graham Page. "You can argue about what figures go into Companies House, and whether the brewer is globally-owned, but the truth is that most are failing to make any serious money."
Page believes that in the current climate, where money for new product development is scarce, it is a logical step for brewers to focus on their core brands - and from a global perspective, these are the lager brands. He says: "If you're going to develop and launch new products into the marketplace, you'd be very brave to do it with ale in a category that's declining by 8% to 9%. You wouldn't get a lot of backing from your financial advisors.
"So they will do it with lager brands; it's easier, simpler and cheaper to bring in brands that have known provenance and image from other countries, and to try to establish them in the UK, rather than to start from scratch."
So what does it take for an imported lager to get onto distribution lists?
Pub People Company operations director Andrew Crawford feels too many imported lagers take up fridge space. "It's a bizarre situation - super brands are created that competitors struggle against, and then they launch another product that the sales staff insist will be the next big thing." Crawford says he stocks some of the mainstream imported brands such as Budweiser, San Miguel and Corona, but avoids more niche products.
According to Page, the bigger the company backing the foreign lager, the more potential they have. He says: "The more muscle you've got in the marketplace, be it on a national or regional basis, the more chance you've got of creating something of a footprint for that particular product." Page cites Corona, massive in North America before its emergence in the UK, as a fine example of this.
Word of mouth
It could be argued that the rise of Budweiser Budvar proves that a major marketing spend is not always required for an imported beer to be successful. According to the Czech brewery, sales in the UK were up 11% year on year at the end of 2006. "Budvar has achieved this through word of mouth," says Hall. "It is beers like this that the individual can identify with and they are making in-roads into the big international brands."
The beer market is a far from easy environment to break into for an imported lager. Being imported is no guarantee of success - it has to be right for consumer demand. As long as the category continues to grow, the industry's major players will continue to want to get in on the act.
"If it is offering consumers something new and different, or has a long-established heritage, is from a popular destination for travellers, or a nation that is interesting in terms of culture, music or its personalities, then it has a good chance of succeeding," says Kitching.
Polish bridgehead expands
As the Eastern European community living in the UK continues to grow, so does the popularity of beers from the region. While these products have particular sentimental appeal for Eastern Europeans in the UK, British consumers are becoming increasingly interested in the region, both as a tourist destination and for its unique culinary heritage.
Pierhead Purchasing has recently launched two Polish lagers, Brok Sambor and Brok Strong. Director of imported beers Michael Cook says: "British drinkers are becoming more adventurous in their beer selections and visits to popular destinations such as Prague, Warsaw and Tallinn mean that Eastern European brews make an attractive alternative to mainstream brands back home."
Global Brands creative manager Andrew Bond believes the movement towards Eastern European beer is being driven mainly by consumer demand. "The market for all things Polish is partly down to a migrant community in the UK but, equally, as these products become more widely available, their mainstream appeal widens."
The success of Indian brands such as Cobra and Kingfisher in the UK have been well documented and now Chinese brands are hoping to follow suit. As well as the introduction of Harbin by Anheuser-Busch, Gl