Dark days for lager
Despite a substantial market share, lager is in decline, with only good weather and top sports events seemingly able to slow the slide. Nigel Huddleston reports
Once the shining star of the beer market, lager has lost some of its sparkle over the past couple of years.
The smoking ban, the rise of cider, cask ale's resurgence, and unreliable weather, have all done their bit to take the wind out of the lager market's sails.
Successful innovations such as "extra cold" have turned into exercises in managing decline, rather than adding huge incremental value and volume to the market.
The latest set of British Beer & Pub Association (BBPA) figures do not make happy reading — total lager volumes are down 7.7% for the year to March. Standard lager is down 7%, while premium lager appears to be faring even worse with a 9.4% drop — not a great trend when you consider that premium cask ale has declined only 2.7% in the same period.
With an on-trade sales value of
just under £8bn, lager is still a substantial market, and accounts for over half of total long drinks.
But the on-premises share is being chipped away by take-home, which is continually increasing its share of the lager market by volume — up 2.1% overall for the year to March, according to the BBPA figures.
While some of this can clearly be put down to the wider problems pubs are having getting people through the door, it's not an affliction affecting some rival categories.
Nielsen figures for the year to January show that cider sales were up 10% in the year to January, and even the maturing wine category added another 2% to its sales.
Chris Duffy, customer marketing controller at Heineken UK, says that issues such as the weather and a lack of interest in this summer's big football tournament (Euro 2008) should not be used as excuses.
"I don't want to underestimate the contribution they can make," he says. "A good summer and sports events can help drive footfall. But it is a very sad state of affairs if the industry is relying heavily on the weather and sporting events to guarantee the long-term health of the category."
Among the best-selling lager brands, most have been finding it tough and many are in decline across the total market. Brand figures for the chart-toppers show only Carls-berg, Carlsberg Export and Beck's, plus Tennent's in Scotland, putting in anything resembling a positive performance.
Chris Lewis, director of marketing at Red Stripe and Corona firm Wells & Young's, says: "Consumers are probably just getting a bit bored of the major brands. Ten years ago, the top 10 brands had a 60% share of the market and today they have about 90%. People are now looking for something a bit different."
For today's real success stories in lager, you have to look outside the top 10 towards premium imported brands such as Corona and Peroni Nastro Azzurro.
Nick Miller, sales director at Peroni supplier Miller Brands (UK), says: "People will drink lagers in the on-trade if they're getting quality and a good drinking experience, with a drink served at the right temperature in the right glass. So that's where a lot of our marketing focus goes. Corona did a great job in creating a serving ritual with the lime in the top of the bottle."
While the impact of Euro 2008 and the weather shouldn't be over-estimated, there's little doubt that a hot summer could reignite lager's fortunes — and that the job would be a lot easier if any of the home nations had made it to the Euro 2008 finals.
"The weather has more influence on the performance of the beer category than major sports events," says Steve Kitching, managing director of commercial and field operations at InBev UK.
This view is reinforced by Nick Miller at Miller Brands. He says: "With the hot weather at the start of May, we just weren't able to get hold of enough Peroni and we had to try to speed up supplies."
Shaun Heyes, head of category marketing for Scottish & Newcastle UK (S&N UK), says the trade needs to take an overall view of the long alcoholic-drinks market rather than focus on micro-battles between cider, lager and other categories.
Heyes adds that licensees need to associate long drinks with the food opportunity, appeal to female customers and introduce a "care and control" element of low alcohol or low-calorie products, to make the holistic approach work.
But the worry for lager brewers, at least in part — with the exception of Strongbow-owning S&NUK — is that a long, hot summer will simply continue to fuel the growth in cider, a buoyant category that's been busy mopping up at least some of the drinkers lost by the lager market.
"What the cider-makers have done with the over-ice serve, they've done very well," says Miller. "Lager, arguably, has had the most to lose, but brewers have invested a lot of money in the likes of branded glassware and improving the serve.
"You have to work extra hard to make sure that such improvements are used correctly and get a good-quality of serve at the bar."
What are the main lager trends and how should pubs respond to them?
David Wigham
Portfolio activation director
Coors Brewers
"With beer sales reacting when the sun shines, a hot summer is potentially more impactful than a major sporting tournament. Brand representation in outlet is key. We supply branded, nucleated glassware to be certain of the best possible consumer experience, as well as ensuring extra-cold dispense every time.
"Our challenge as a brewer is to innovate and drive value back into the beer category through offering a range of differentiated brands that meet changing customer needs, tastes and broadening repertoires.
"This strategy accounts for lighter-tasting lagers such as Coors Light and Sol, the launch of mid-strength Carling C2, and the extension of the Grolsch portfolio, with Grolsch Blond, a lighter-tasting 4% abv Continental lager, and Grolsch Weizen, a German-style premium wheat beer."
Steve Kitching
Managing director of commercial and field operations
InBev UK
"It is important that retailers take account of new opportunities, such as the emerging 4% abv offering. Research shows that this is being driven primarily by premium lager drinkers, who like to switch to lower-abv lagers on certain occasions, such as midweek, when they want to limit alcohol intake.
"Retailers should also remember that visibility is the number-one factor determining purchase because 55% of customers are undecided, and their purchase can be influenced at the point of connection. So it's important to make profitable products more visible in terms of the font and the fridge, and to avoid clutter and over-ranging.
"Product quality is more important than ever because a large proportion of customers in community food-led and city-centre pubs are regular drinkers. Research shows that up to 41% of these will go to a different outlet if the quality is poor."
Chris Duffy
Customer marketing controller
Heineken UK
"Despite gloomy economic forecasts, we believe the main lager trends in the last few years - the growth in popularity of imported and world beers and the trading up to better-quality lagers — will continue long-term.
"People are well-travelled, having new experiences and keen to continue experimenting when they return. They've also had more disposable income to trade up to better lagers. Both of these factors could be affected by an economic downturn, but there's no evidence to suggest this at the moment."
What are the main lager trends and how should pubs respond to them?
Alistair Kemp
UK sales director
Anheuser-Busch
"There is a continued interest among consumers in cold lager and there has been growth of the standard extra-cold category and condensing fonts. We've long recommended a serve of between 2°C and 5°C and our consumers pretty much expect that anyway. We've just never particularly shouted about it.
"The other area that's seeing growth is genuinely differentiated imported lagers. People go to B
