Innovation remains at the heart of growth- especially for the beer category, and this innovation continues to drive on-trade sales – with opportunities in Premium Lager including Light, Craft draught beers, and the No and Low category.
With brewers trying to recoup their losses and consumers returning to the bar and drinking more than anticipated, bar tap space has been at a premium – especially during the re-openings of 2021. On top of this, at the point when no brewer needed it, C02, energy and packaging costs were rising.
Craft Beer
By the end of 2021 the end of independent craft brewing was predicted by some after 2020 saw the number of UK breweries declining for the first time in 18 years. And yet we now see the sector recovering – in the on-trade craft draught sales now take almost 8% of all draft beer sales
The top-selling craft breweries in the UK in 2021 include Camden Town Brewery, owned by AB InBev, Beavertown (part-owned by Heineken), Brewdog, and Marston’s Shipyard (owned by Carlsberg who recently re-branded the ale as Shipyard).
In Scotland the likes of Cold Town Brewing, Fierce Beer, Williams Bros and Bellfield – to name but a very few, are also doing well and are winning awards.
Louise MacLean Business Development Director for Signature Group the group behind Cold Town Brewing says, “Our craft beer is sessionable – we call it gateway craft, if you are not sure you like craft beer try Cold Town Beer. We now have a core range of four beers plus seasonals which as you would expect are seasonal! We let our brilliant team of up and coming brewers come up with recipes and then put them on tank in Cold Town House and see how they do.
She continues, “Recently they came up with a Smoothy beer, and a mango sour called ‘When it goes Sour let the man go!‘ and an orangey one called “Take the pith’. Although we do distribute to the off-trade and do Aldi and Lidl’s craft festivals we are a brand that was bar raised and we will always be an on-trade brand primarily and we have Inverarity Morton distributing it to pubs and bars.
Light, Low and No Alchohol
When brands like Kaliber, Barbican and Swan Light first paved the way for low-alcohol and alcohol-free beer in the late 1970s, the customers were those who primarily wanted to avoid drinking and driving.
The beers lacked flavour and body, and other than the ability to drive, there was almost no real or perceived benefit (or enjoyment) from the drink itself. This is no longer the case.
Drinking Low and No alcohol is not only seen as ‘normal, but consumers are even viewing it as a ‘treat’ on days when they don’t want to drink. HEINEKEN note that “Alcohol-free beer is performing in ways that alcoholic beer doesn’t – it has poached consumers from the wine category (where choice and availability is considered limited) and is more popular as an alcohol-free product than an alcoholic one for many women this is the first time they have switched to beer and they are loving it.”
Brand is the most important factor for consumers when deciding which no-and-low product to buy – ahead of calories, ingredients, taste claim and ABV. There a number of familiar brands here, Budweiser Zero, Heineken 0.0, Brewdog Punk AF, Birra Moretti Zero, and Guinness 0.0 to name some of the best sellers.
All are premium options that build on the success of their parent brands and are growing significantly in the no-and-low category – some with triple-digit growth across both volume and value.
This market is buoyed by strong consumer demand from Generation Y and Z drinkers, an increasingly health-conscious audience, and although they drink less, when they do consume alcohol, they are looking for no and low or lighter-tasting, more premium options according to HEINEKEN’s Beer Report.
This report highlights the opportunity in the premiumisation for light lager, and it points out that 2 out of 3 pubs serve lighter lager at 10p more than the cheapest lager on the bar. Meanwhile, the gap in price between continental and light lager is 51p. They estimate that an additional £5,200 can be earned per outlet by switching to a premium lighter lager. “Light Lager has yet to fully capitalise on these areas.
Value sales of Light Lager have grown from 3.7% in 2017 to 4.8% in 2021, while the segment’s share of the market has increased by 40% over the last five years”. Molson Coors saw volume sales of Coors bounce back in 2021, growing 51% year on year. Perhaps this is one of the reasons that Heineken has invested in light lager with the launch of Heineken® Silver, which they say is “an extra-refreshing 4% ABV lager with low bitterness and an easy, lighter drinking profile”.
Premium
Premiumisation has been a long-term trend in the lager category and it isn’t showing any signs of weakening with super-premium now seeing some of the fastest growth around the world.
Budweiser Brewing Group, which brews beers including Budweiser, Stella Artois, and Corona, is forecasting that by 2025, 70 per cent of total beer consumption will be of brands in the premium or super-premium category. The trend towards premiumisation is also replicated in the no-and-low category.
Premium Lager on-trade sales values grew by 5.7% year-on-year in 2021, and again the HEINEKEN Beer Report found that consumers were identifying Continental Lagers as the lead sub-segment in the category. “Continental Lagers have seen an incredible recovery – for example, value sales of Birra Moretti grew +109% year-on-year to £516m while Estrella Damm saw value sales rise 89% to £131m over the same period.”
Draught Lager and Beer
Draught world lager has been driving growth in the on-trade over the last few years, growing to nearly 30% from just 5% in 2009 of the draught lager volume with the likes of Birra Moretti, San Miguel, Peroni and Madri Excepcional leading the charge. Brendan Napier, Sales & Operations Director for the Scottish On-Trade at Molson Coors Beverage Company comments, “To tap into the growing world lager category – which is up by 17.6% in value1 over the past year in Scotland –we teamed up with La Sagra Brewery in Madrid to create Madrí Excepcional, a crisp, clean and refreshing lager that captures “El alma de Madrid” or “The Soul of Madrid” for pubgoers here in the UK.
“Since launching in October 2020 Madrí Excepcional has broken into the top 10 draught lagers by sales value2, and currently has the highest value and volume rate of sale per venue in the world lager category3. “Madrí Excepcional is the most successful on-trade launch since CGA On-Premise records began, delivering the highest value sales of any alcohol brand in its first year since launch4.” But we can’t forget about our ‘core standard lagers’ – the likes of Tennents, Carlsberg, Fosters, and Carling – even though they have felt the greatest impact, these lagers still account for up to 45% of sales value.
And draught is likely to become ever more popular with licensees once the Deposit Return Scheme is introduced in Scotland – but this will lead to more competition on the bar. Stephen Watt On-Trade Director from Heineken comments, “The last two years have been tough for the trade but the good news is that data suggests the market has bounced back and customers are thirstier than ever. “Punters are being driven into pubs because they’ve missed out on socialising, the atmosphere, and of course a great pint of draught beer is something that simply can’t be replicated at home.
Steven Sturgeon Belhaven’s Marketing Director has this to add, “Traditional drinkers are slowly coming back out but the occasion is shifting from meeting mates after work, to groups eating out. Meaning that although frequency is down, hopefully value is up. “We’re seeing a genuine interest in drinks with genuine heritage and provenance, which could possibly explain why customers and drinkers trust Belhaven, as Scotland’s oldest working brewery.” What is also important is the quality of the pint. And one company that is ensuring that pubs and bars draught product is worth drinking is Clear Brew.
Jim Marshall Managing Director for Clear Brew line cleaners said, “For us, the line cleaning industry has bounced back, and is actually quite buoyant for a couple of reasons.
“Pre-Covid our customers were happy with our service, and were also happy with how Clear Brew looked after them during the crisis, and are happy to continue.” He continued, “With the loss of a number of staff in the industry and difficulty recruiting staff across all sectors, it would be very easy to let standards slip, that’s where companies like Clear Brew can help ensure Health and Safety protocols are being observed by fully trained staff.”
1 CGA data for Total Scotland On Trade, 52 weeks ending 26/03/22 2 CGA data for Total GB On Trade, Draught World Lager brands by sales value, 12 weeks ending 21/05/22 3 CGA data for Total GB On Trade, Draught World Lager brands by sales value, 12 weeks ending 23/04/22