Speaking in Pilsen at the Innovation Masterclass, organised by the Institute of Brewing and Distilling (IBD), Grant McKenzie said that unique concepts and products, exclusive to the on-trade, were needed to convince drinkers to go to the pub rather than staying at home.
“The on-trade is declining everywhere in all European countries, and there are people who think there is nothing we can do about it,” he said. “One of the main reasons for this, but also one of the things we can do about it, is pricing.
“When consumers are asked to pay two times the price in the on-trade than they pay in the on-trade, they are quite happy to do that; they understand and value the experience. However, when it gets beyond that, and it is three to four times the price of supermarkets they will start to think something is not right. Why are you asking me to pay so much more?”
Talking to The Morning Advertiser after his speech, McKenzie identified products such as cask ale and tank beer, and themed 'concept' pubs as two suggestions of things the on-trade could do better to combat falling beer sales, and bemoaned the beer service in UK pubs.
Serving quality 'remains a challenge'
“The main challenge for the UK on-trade remains the serving quality of the beer,” he said. “Here in the Czech Republic, the serving quality of the beer is held in the highest regard, and being a barman is a badge of honour. Many places I have been to in London you can pay £5-plus for a pint and it is served badly; too warm, or not enough foam. That really reduces people’s belief in the authenticity of the pub.
“Something like cask ale is so vital because for a lot of people that is the real reason to go to the pub. We’ve also introduced tank beer in London and that has also been a revelation. We deliver it in a tank and the beer has never touched the outside world, and what we see in a pub is that tank beer will increase the rate of sale of a product like Pilsner Urquell by 400%.”
“People’s houses have become better and more comfortable,” he continued. “It used to be the case that you would live in a small flat, with a tiny living room and an even smaller telly so you’d want to get out and go to the pub and watch the football or whatever.
“Now you’ve got a massive 80-inch TV, surround sound, a comfortable sofa and a good selection of craft beers that I have bought from the local supermarket. So why do I go to the pub? You’ve got to innovate, reinvent yourself and do something different. It is about having a point of difference that consumers will value.”
McKenzie also predicted that the low and no-alcohol beer market would be an area of growth in the UK in the future, pointing towards the Czech and Slovakian markets, where no-alcohol beer makes up 5% and 10% of the overall beer market respectively.
Alcohol-free is 'something cool'
“The alcohol beer market in Czech is flat, while the no alcohol category is growing by 10-15% and I believe it will eventually get to around 10% of the market,” he said. “People will re-evaluate alcohol-free as something cool that they want to drink."
On the subject of why low and no-alcohol has been slow to take off in the UK initially, McKenzie highlighted poor tasting products and a lack of understanding about the occasions in which no-alcohol beer ought to be drunk.
“There are two reasons in the UK people do not get no-alcohol beer,” he said. “The first is taste, because when they try no-alcohol beer they perceive that it doesn’t taste nice. However, that is changing massively; the craft guys have got into non-alcohol, and the way in which we are producing it here in Pilsen (The Plzensky Prazdroj brewery makes a range of no-alcohol beers under its Birell brand) with a special yeast strain tastes delicious.”
“The second reason is that people were uncomfortable with the reason or occasion for drinking it,” he continued. “They didn’t get when they would drink it. I think this will be natural growth driver in the UK because people are searching for adult soft drinks; alcohol consumption is declining yet the choice of adult alcoholic soft drinks remains quite poor. I think you will see exponential growth in this category in the future.”
McKenzie also added his support to the campaign to change UK legislation surrounding the labelling of low and no-alcohol products, describing the fact that a 0.5% ABV beer cannot legally be called no-alcohol as “absolutely crazy”.
“It makes no sense,” he said. “It should be taken from a basis of psychological effect. If you drink a product with that level of alcohol, your system will be clear of alcohol, so it should be marketed as a product with no alcohol.”
Earlier this month, UK low-alcohol beer brand Infinite Session described the current legislation surrounding low and no-alcohol beers as “functionally inappropriate”.
The Morning Advertiser attended The Innovation Masterclass as a guest of The Institute of Brewing and Distilling (IBD). To find out more about the IBD, and the services it provides to industry professionals, visit its website.