Something’s Brewing

LAST MONTH BREWDOG OPENED A NEW BREWERY AND JOHN SMITH’S LOWERED ITS ABV… SO THERE IS PLENTY TO TALK ABOUT WHEN IT COMES TO BEER. SUSAN YOUNG REPORTS.

Beer, for years the bastion of Scotland’s pubs, has had its difficulties over the past few years. But it is not all doom and gloom, far from it. Craft beer is the category of the moment, while Scotland’s keg ale sector has livened up considerably following the introduction of Caledonia Best into the market 18 months ago. This launch heralded some innovation in the marketplace and gave licensees a real beer story for the first time in a few years. A new brand on the bar always creates interest, and when that new beer is challenging Scotland’s Champion Belhaven Best, there is even more chat at the bar. Share of voice should translate to beer sales, but unfortunately the keg ale market in Scotland continues to decline. But how much further it would have declined without the advent of Caledonia Best it’s hard to say. Figures suggest that it could be down by as much as 15%. Although it is still almost double the size of the cask ale market at 171,000 barrels compared to 93,000 barrels of cask. If we talk about beer as being all ale the league table for market share is led by Belhaven, followed by Heineken UK, Wells & Young and C&C.
Total ale sales in Scotland are now worth more than £200M at the till, and Caledonia Best, the first new launch from Tennent’s in a decade, has certainly taken a slice of the action. Paul Condron, Marketing Director at Tennent Caledonian, comments, “In little over 12 months from launch, the Caledonia Best brand has achieved 14% share of the Scottish Smooth Draught Ale market (CGA, 12 Weeks to 01/12/12) which is fantastic performance for a new brand in a mature and contracting market. Made with 100% Scottish barley, Caledonia Best is the fastest growing brand in the category and is now listed in around 1400 Scottish on-trade outlets. Based on our internal sales numbers we’re confident that, following incredibly strong Christmas period, the next issue of market performance data will show the Caledonia Best brand matching rate of sale of the market leader.”
He continued, “Performance like this in just over a year from launch has probably surprised a few people, but we’re not surprised at all – it’s a great pint and a strong brand from a brewer with an ale heritage dating back to 1556, and a commitment to invigorating the ale category in Scotland for years to come. Our focus on the ale category won’t stop with Caledonia Best and we’re already working on a number of new products to expand our offering – exciting times for the business and our customers.
We launched our first TV campaign for the Caledonia Best brand in December featuring the classic Dougie MacLean song ‘Caledonia’. Reaction to the new ad has been extremely positive and we’ll continue to invest in TV advertising for the brand in 2013. We have also just announced a major sponsorship initiative which sees Caledonia Best announced as the official beer of Scottish Rugby and we’ll be raising awareness of this around the 6-Nations matches in February and March. This builds on the success of our partnership with Scottish golfing icon, Sam Torrance and our ‘Seed Fund’ initiative where we donated 5 pence from every pint sold in the first six months to supporting grass roots initiatives in farming and brewing across Scotland. The 2012 ‘Seed Fund’ generated £58,000 and saw donations being made to seven emerging businesses. We’ve got big aspirations for the Caledonia Best brand and anticipate another great year in 2013 as we continue to grow market share.”
But Belhaven is fighting back. Belhaven is as keen to hang on to market share as Caledonia Best is to steal it. Dom South, Marketing Director of Greene King says,“ Belhaven will continue to support Belhaven Best with year-round consumer advertising through 2013 including the new topical consumer press adverts that broke recently, commenting on Burns Night and Andy Murray’s Australian Open performance. Along with a consumer campaign building on many years of accumulated brand equity, the year ahead 14 DRAM FEBRUARY 2013
will also see more emphasis on in-outlet activation, to help Belhaven stockists sell even more. Following last year’s successful launch of Belhaven Black, we are planning further innovation in ale with some great new beers in the pipeline.
“The final pillar of our plan is making sure we continue to deliver the unbeatable service that Belhaven can offer our customers day in and day out, making sure that our customers are supported to serve and sell great quality pints. With our own directly employed technical services, dray teams, customer services and of course our sales account managers, everyone involved with our customers understands and cares about the importance of the quality of a pint and is able to offer assistance and support to our customers. With the entry of Caledonia Best into the market, a lot of figures have been being quoted. One figure which is not in dispute is that Belhaven Best retains a very strong number one position in the Scottish ale market, with a 38% share of all keg ale and 24% of total ale in the on-trade. CGA data also show that Belhaven enjoys far and away the highest rate of sale among the top 5 keg ale brands in Scotland, as being able to command a higher average price per pint. That means a winning combination of volume throughput and margin for the publican and to put that into context, latest CGA data shows that each Belhaven Best stockist currently generates £100 more in sales per outlet per week than each Caledonia stockist.
Having said that, the total keg ale market volume has been in decline for some time. As the market leader, we are looking at a combination of increased in outlet activation on Belhaven Best and innovation to engage consumers and help the trade generate increased value in draught ale overall, despite the underlying category decline in keg ale.”
There’s no doubt its a win win for licensees who are benefitting from extra support from the brands… but Caledonia has a firm objective in mind. It is aiming to knock Belhaven off the top spot next year!
Although the Scottish keg ale market is dominated by Caledonia and Belhaven Best in terms of voice, McEwan’s is also a player. It was bought by Wells & Young’s just over a year ago, and it still commands around 20% of the keg ale market, with particular strong holds in the likes of Dundee, and the North East. Heineken’s John Smith’s is also a familiar font on the bar, and its recent ABV drop by 0.2% to 3.6%, will, I doubt, hardly have an impact on its drinkers, and says John Gemmell, Trading Director North, On Trade Sales for Heineken UK, “We have taken the duty savings and shared them with the licensees.” This year Heineken intends to give more support and exposure to its Caledonian Brewery in Edinburgh, the home of Deuchars IPA, the most popular cask ale in Scotland.
John Gemmell explains, “We haven’t focussed on cask for a while, but due to a shift in consumer perceptions, and a new era of cask drinkers, we believe that this side of our business offers real potential. Craft brewing is huge in the USA and Australia, and when cask last had its resurgence it was a completely different type of consumer. The old fashioned idea of a cask ale drinker with a woolly jumper and a beard, is gone. New consumers are younger, and have a keen interest in the back story. It’s no coincidence that hoppier beers are becoming more popular. Younger drinkers are looking for more complex flavours and that’s exactly what cask ale offers.”
Julian Grocock, Chief Executive of the Society of Independent Brewers, agrees with him and was recently quoted as saying,”There’s more of a sipping culture than supping culture with cask.” and he suggested that one of the reasons for the increased popularity of cask/craft was that it was a “middle class hobby” now, and there were less stereotypes of bellies, beards and sandals.”
There are two reasons that cask is enjoying a revival (plus 9%) one is that ex-chancellor, Gordon Brown, gave 50% tax relief to the smallest beer producers in 2002, and the second is that it has a trendy new name ‘craft’. In the US they don’t talk about cask they call it craft and its huge in the US. It accounts for some 6% of the total beer market in the U.S, (2011) compared to around 2% here. In fact there are just under 2,000 craft brewers in the States – but more than half of the beer comes from brew pubs. A trend that started here a few years ago. The most successful of which are undoubtably BrewDog’s pubs and West Brewery at Glasgow Green.
In Scotland, there is a wealth of good independent brewers who could quite comfortably fit in the trendy ‘Craft’ beer category. It’s difficult to say which brewery is the most successful, because it depends on how you judge it… Innis and Gunn certainly have the edge when it comes to exports, BrewDog has certainly engaged younger consumers and brought in new consumers to the category better than anyone else, and purely through social media and shock tactics, while West has created some great products, particularly St Mungo’s. Harviestoun is a good, solid business, which doesn’t court publicity like some others, and Sulwath also works away steadily. Obviously there are a wealth of others too – in fact 44 in total!
A new brewery which is already making its mark is the Eden Brewery in St Andrews, which is run by former Molson Coors and Glenmorangie man Paul Miller. He told DRAM, “It’s hugely exciting being able to innovate and bring new and fresh beer to the market. Consumers are looking for choice and more innovation rather than the same old. And in the craft category, consumers have a voice, and suppliers who listen to and reflect what consumers want can directly benefit.”
He continues, “There is also a great opportunity with cask/craft, especially when it comes to the tourist market – and I’m really looking forward to the likes of the 2014 Commonwealth Games, The Ryder Cup and the 2015 Open which takes place at St Andrews.”
In 2011, cask/craft volumes grew for the first time in 20 years. Variety it seems is the spice of life, and certainly cask/craft has had more coverage in the press due to the likes of BrewDog… and its aim to have the World’s strongest beers… although another Scottish brewery Brewmeister took that title in October with ‘Armageddon’, hailed as The World’s Strongest and priciest Scottish beer at 65% ABV and topping BrewDog’s ‘End of History’ brew at 55% ABV – mind you there were only a dozen bottles of the latter.
All this adds interest and gets people talking… which is where we came in.

Category: Features, News
Tags: Ale, Beer, Brewery, craft beer, real ale, Susan Young