Market insights. A world of beer CONSUMER. bar-expert.co.uk

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1 A world of beer Market insights WHAT DEMOGRAPHIC, ECONOMIC AND SOCIAL FACTS ARE OF INFLUENCE? WHAT ARE THE LATEST TRENDS IN CONSUMER BEHAVIOUR AND HOW DO THEY DIFFER PER OUTLET PROFILE? READ ALL ABOUT THE IN AND OUTS OF THE ON-TRADE. CONSUMER The UK demographic landscape has changed dramatically in the last 40 years; in 1971, the over 65s made up 13% of the population, which is in stark contrast to estimates for 2031 where 20% of the population is expected to be over 65 (Alcovision on-trade 2011) The economic outlook is also impacting consumers, with the average household having a 1/3 less disposable income to spend on leisure activities (Office National Statistics 2012) For the consumer the on-trade is still the prime place that they got to have fun, to be sociable and to spend quality time with friends and partners; this is in sharp contrast to in home drinking which is much more about unwinding and having time for myself (Alcovision on-trade 2011) Whilst the number of times per week the average consumer is going out into the ontrade has decreased, the number of drinks per visit has increased (Alcovision on-trade 2011) The weekend plays a pivotal role for the on-trade, where 44% of all alcoholic drinks are consumed (Alcovision on-trade 2011) We see the rise of the weekend millionaire where the consumer is looking for a real treat and reward from their on-trade visits; with this we see the rise in sale of more premium food & drink (CGA 2011) On the polar opposite we also see the rise of the value for money offering with meal deals or happy hours (CGA 2011)

2 Motivation for occasions to drink in the on trade Other motivations include: to wind down or chill out (12%), to have a break (8%), other (7%), to treat or reward myself (5%) to let go (4%), to refresh (4%), to have time for myself (3%), to recharge or invigorate (2%). Source: Alcovision On Trade 2011 MARKET In value terms, the total on-trade alcohol market is up and estimated to be worth 22 billion p.a. (CGA 2011) The beer category is the key category of all drink serves in the on-trade for consumers below 34 years old, followed by the spirit s category (Alcovision on-trade 2011) The beer category represents 55% of all drink serves for consumers between 35 and 49 years old (Alcovision on-trade 2011) Within beer, lager dominates the category making up over 75% of serves (Alcovision on-trade 2011) Whilst the total beer market is in decline mirroring the consumer trend to go out less, we see some successful categories; premium lager and premium ales are declining at a slower rate, again matching the consumer trends for more premium occasions (CGA 2011) The independent free trade sector still represents the largest percentage of all ontrade outlets, with community pubs & clubs making up the largest type of outlets (CGA 2011) The biggest average volumes per outlet are still coming from the high street and this is largely the domain of the managed retail operators (CGA 2011)

3 The managed sector remains buoyant and focusing largely on food & drink offers (CGA 2011) The leased pub market has in general suffered the most, with the rising rents and beer taxation making it hard for the smaller publicans to survive (CGA 2011) In general those outlets targeting a more affluent consumer with a more premium offering are winning in this tough economic environment (CGA 2011) Category share of volume by total adults Source: Alcovision On Trade 2011 OUTLET PROFILES Cafe Wine Bars 2nd biggest in beer volume terms Most outlets focus on premium & speciality brands Food plays a key role in this outlet Community/sport/social outlets The biggest volume for beer Focuses on draught standard lagers and ales Many of these outlets are the bedrock of their communities Food Pubs In these outlets wines as well as beer play a key role Meal deals and speciality nights (Steak Nights etc) have helped to drive footfall through value for money offerings

4 Hotels The biggest challenge for hotels is keeping their guests in their bars & restaurants Key here is having the biggest brands served with great quality at a reasonable price Restaurants A big sector in outlet numbers, with many speciality cuisines now available In beer terms many outlets offer ranges that match the food offering e.g. Cobra for Indian, Brahma for Brazilian Night Clubs Bottled products and spirits rule in this outlet Fruit based drinks such as Crabbies & Fruit Ciders have proved popular as well as Jaigermeister Outlet profiles 2011 Split Total 119, % Café Wine Bars 21, % Community/sports/social outlets 58, % Food Pubs 8, % Hotels 8, % Restaurants 21, % Nightclubs 2, % Source: CGA 2011 BEER CATEGORY The beer market stretches from lagers which are clean, refreshing beers with typically light aroma and flavour, through to ales which are complex, flavourful beers, served closer to room temperature with rich aromas The category is dominated by lager which can be subdivided based on alcoholic strength (ABV) and then by origin; e.g. standard lager 4% and below vs. premium lager 5% and above In recent years we have seen the advent of new categories within the traditional sectors; e.g. premium 4% draught lagers where the consumer is seeking a more premium product at a lower ABV; the biggest brand in this category is Becks Vier (CGA 2011) Another area of growth is premium world lager brands and speciality beers, which

5 have true provenance, authenticity and depth (CGA 2011) In comparison to the mainstream beer categories world lagers & speciality beers over indexes on both price premium & savour (CGA 2011) In addition to lagers, the premium ale category has also seen a resurgence with brewing heritage, fuelled by cask and craft ales (CGA 2011) Outside of the beer market, cider has seen the biggest growth of any long alcoholic drinks (CGA 2011) In recent times fruit flavours have come to the forefront; the growth in these fruit ciders has largely been at the expense of the ready to drink market which has seen substantial declines (CGA 2011) The speciality beer category is outperforming the total beer market, both in terms of volume (+24.7%) and value (+38%) (CGA 2011) As the drinker of these beers is prepared to pay more, speciality beers trades consumers up, creating greater cash margin (CGA 2011) On trade value mix by product type Source: CGA 2011