Beer Summit

Supermarket beer: a real threat to pubs?

By Nicholas Robinson contact

- Last updated on GMT

Off-trade beer: Richard Lee from Kantar Worldpanel talks supermarket sales
Off-trade beer: Richard Lee from Kantar Worldpanel talks supermarket sales

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Craft beer sales in the off-trade have leapt significantly by 48% in the past year, with 4.6m households in the UK buying into the category, which is worth £136m to the off-trade.

Supermarket customers buying craft beer also spend 36% more per visit, equating to £29 more spend per shopper, said Kantar Worldpanel consumer insight director for alcohol Richard Lee at The Morning Advertiser​’s Beer Summit in Manchester this month.

Retailers have also significantly bolstered the space dedicated to craft in their aisles to 406 stock keeping units (SKUs).

Five key trends in alcohol:

  • Moderation:​ increasingly we’re thinking more deeply how we consume alcohol, the brands we choose, etc.
  • Low and no:​ there has been a rise in producers launching beer into this space, but also in wine and spirits. In the past year, there were five new SKUs in this space
  • Fragmentation:​ there are more places for consumers to buy alcohol, such as in the traditional retailers, discounters or online
  • Premiumisation:​ this is a manifestation around moderation and fragmentation. If you’re consuming less often, then you can consume less but better and that’s a trend across every category
  • Sweeter palates:​ there is an ever-sweetening tooth of British consumers in the on and off-trade. Slightly less noticeable in beer, but there are some brands in the area

Craft beer, premium lager, stout, world lager and alcohol-free beer are in growth and fit into these five trends

Richard Lee, consumer insight director for alcohol, Kantar Worldpanel

“Tesco has increased its craft range in big shops and small. Waitrose has increased its range and this isn’t just premium retailers, but also the discounters,” said Lee.

Though the major multiples are accused of using beer as a loss-leader, which is the case for wider beer category, with an average discount of 14%, craft beer fares better with an average discount of 3%, said Lee.

He said: “Retailers have taken a lean approach to craft in relation to the likes of mainstream beer, which experienced discounting over the years.”

Promotions on craft

Lee continued: “Just under 30% of craft products are bought on promotion, compared with 47% of world lager.”

One of the biggest trends driving off-trade sales of beer, despite lower overall alcohol consumption, is the fact consumers are going out less.  

“The GB consumer is increasingly moving their drinking occasion to the off-trade from the on-trade and, if that continues, this will play in the favour of supermarkets," said Lee.

This could be set to increase further, he pointed out, consumers – on 194m occasions – said they had considered staying at home rather than going out.

“Beer continues to benefit and drive performance in the off-trade and this is something retailers have adapted to by identifying the trends and drive consumer purchases despite a drop in people drinking alcohol,” he said.

However, pubs do have the advantage of creating experiences around alcohol, which is where the retailers fall down.

Also, there is some speculation that off-trade beer sales don’t stack up when compared with the amount of shelf space the category is given.

Ben Lockwood, beer and cider procurement manager for Mitchells & Butlers, said: “Will the off-trade craft beer range grow as quickly as ours? I was taking to an off-trade buyer who said it’s only 4% of their sales mix, but is taking up 15% of shelf space.”

Work directly with brewers

Ben Lockwood
M&B's Ben Lockwood outlines what the on-trade has going for it

Pubs also have the added advantage of being able to work directly with brewers and alcohol brands to create bespoke brews and activations.

“Brewers actually brew speciality beers for us, which you can’t really do in the off-trade because there isn’t that atmosphere,” he added.

Lockwood pointed out that the off-trade was clearly winning in terms of volume sales, but the on-trade wins easily when it comes to value.

“We always look for beers that aren’t available in the off-trade,” said Lockwood. “In the on-trade we can bring experience.

“We’re in a positive place in terms of value. We’ve got to work to create experiences by collaborating with brewers.”

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

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