Beer Summit

Threats to beer: ‘draught cocktails and soft drinks’

By Nicholas Robinson

- Last updated on GMT

Threat: beer is in good health, but there are real threats
Threat: beer is in good health, but there are real threats

Related tags Beer

The emergence of draught cocktails on the bar could pose a real threat to beer sales in pubs as font space becomes ever tighter in an increasingly competitive market, a leading analyst has warned.

Speaking to delegates at The Morning Advertiser’s ​Beer Summit in Manchester today, CGA commercial director Graeme Loudon said there is currently a wealth of positive news and opportunity for beer in pubs, but there are also many emerging issues.

“Beer has a 41.9% value share of sales, a fall of 0.4% on the year and down 1.9% compared with four years ago,” said Loudon.

“Cocktails are continuing to fly out, spirits is stealing the share of beer and that’s accelerating and we need to be aware of that.

“Draught cocktails are in vogue and a number of producers are trying to get their draught cocktails on the bar.”

Speed of service was the biggest downfall for cocktails, putting many pubs off serving them, he added. However, as producers perfect dispense methods and the quality of products, that is less of an issue.

‘By the glass Prosecco could steal volume’

“By the glass wine like Prosecco is also something that could steal volume share,” Loudon continued. “Also, draught flavoured cider is taking away space from beer; the average outlet now has two cider fonts compared with one a few years ago and these outlets aren’t getting bigger cellars, they’re taking other brands off the bar.”

Though there are a lot of brands for operators to choose from, particularly within the craft segment, stocking anything and everything is not the right approach, explained Loudon, who added not all pubs are craft friendly.

Although there are several potential threats to beer sales on the bar, it has been a long time since the state of the pub trade was as healthy as it is now, said Loudon,

“For the first time in my living years there’s a good news story in the market. Licensed venues are declining by just 0.3% to 122,221 sites between 2016 and 2017.

“The number of closures has gone right down,” he added. “The ones that closed were the poorer wet-led and the ones we’re left with are strong.”

The gap between wet-led venues and food-led venues is also closing, with Loudon saying he was optimistic there would be some real growth in the number of wet-led venues in the future.

‘Wet-led declined’

“Dry-led licensed outlets had grown in number to 45,290 from 39,446 since 2010. Wet-led declined from 77,498 to 65,401 for the same period,” he said.

“We’ve got to a point now where the gap has closed and the number of outlets are coming together.”

A higher proportion of wet-led operators (34%) say they have high growth expectations compared with 21% of food, Loudon said.

That resurgence isn’t on a London basis either, pubs are performing ahead of restaurants across the UK.

“Casual dining is down 1.2% within the M25. We’re seeing market saturation and that’s up against flat consumer footfall,” he explained.

“You have the same number of eating out visits, but more outlets. Their cost bases are going through the roof because of skills shortages and shortage of space. I think, unfortunately, that this is the start and not the end of a trend.”

The Beer Summit was brought to you by The Morning Advertiser in association with Diageo and law firm TLT.

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