Thursday, 25 May 2017

Gotta lotta bottle

Discussions about the recent sale of Charles Wells’ beer brands to Marston’s rather exposed the lack of knowledge about the wider beer market from many commentators whose expertise was predominantly at the cask and craft end of the spectrum. For example, some were inclined to pooh-pooh my contention that market presence in the Premium Bottled Ales sector was, if not the main driver behind the deal, a significant consideration.

One commenter said “I'd be surprised if the market for bottled brown beer is growing.” Thinking this was probably wrong, a little Googling led me to Marston’s most recent Premium Bottled Ale Market Report. Now, obviously this is written with the intention of promoting their products, but there’s no reason to believe any of the hard facts quoted in it are incorrect.

In 2015, the Premium Bottled Ales market was worth £538m, having risen by 92% over the previous six years. In the next five years, up to 2020, it is predicted to grow to £1 billion, a further rise of 86%. Now that certainly looks like a growth market to me. In contrast, the latest Cask Report states that the annual value of the cask market is £1.7 billion, but over the past five years it has only grown by 6%. Currently, the PBA sector is worth 32% of cask, but if we assume the same level of cask growth to 2020, it will then be worth 55%.

The graphic below, taken from the Marston’s report, shows the Top 20 premium bottled ales by value. Nothing much there to excite the enthusiast, but that is what people out there beyond the beer bubble are drinking. It includes four Marston’s and four Greene King products, but only one from Wells, McEwan’s No.1 Champion Ale. It isn’t widely appreciated just how big a product this is.

The overall beer market in the UK is declining. In the five years to the end of 2016, according to the BBPA statistics, total barrels sold fell by 6.5%. But, within this figure, the on-trade declined by 13.7%, while the off-trade rose by 1.5%, and that trend is only going to continue. The report also points out that ale and stout only account for 16% of off-trade beer sales, compared with 36% in the on-trade, so there is huge scope for growth if the figures are to be brought more in line with each other.

Of course in recent years all the excitement has been over the growth of the “craft” sector, but the report points out that the entire craft bottle and can sector only amounts to 8.7% of premium bottled ales, and 41% of that is one product – BrewDog Punk IPA. Very often, the main distinction seems to be bottle size, and there are a growing number of beers available in 500ml and stocked on the PBA shelves that, conceptually, surely qualify as “craft”, such as Saltaire Cascade Pale Ale and Adnams’ Jack Brand Ease Up IPA, which delivers a powerful dose of New World hops. And, if sales of craft ales grow and become more mainstream, then they are likely to increasingly to be subsumed within PBAs rather than sticking within their own category.

It’s also incorrect to think that the PBA sector is overwhelmingly composed of established, mature brands. There has been a substantial churn, with many new products being introduced, most notably in the category of golden ales. The biggest new product launch of 2014 was Hobgoblin Gold, worth £2.95m a year, and of 2015 Guinness Golden Ale, worth £2.16m. You may not think much of them, and indeed I find many of them to be rather wishy-washy, but that’s what drinkers are going for.

They may not set enthusiasts’ pulses racing, but in terms of market share Premium Bottled Ales continue to overshadow craft, and in the coming years they are likely to be the biggest area of growth in the ale market, if not the entire beer market.

14 comments:

  1. I find all of Guinness's new bottled beers wishy-washy. Still love Guinness original though, and Foreign Extra. But, to make my pulse rate quicken, give me a Jet Black Heart milk stout by BrewDog.

    ReplyDelete
  2. Syd Differential26 May 2017 at 07:28

    To make my heart sink give me a Doom Bar.Every single one I've ever drunk has been fucking awful.( I know what you're thinking but they've all been bought for me and I'm far too polite to refuse them )

    ReplyDelete
  3. "I find all of Guinness's new bottled beers wishy-washy. Still love Guinness original though, and Foreign Extra."

    I'm with you there, Andy, although sadly I'd now add the bottled Original to the wishy-washy list, and their brewed for Belgium Special Export Stout to Foreign Extra as a beer still worth drinking.

    ReplyDelete
  4. The complete absence of GKIPA from any of the tables - bottles or can - is a bit odd, no? Does it not count as premium?

    ReplyDelete
    Replies
    1. I don't think the bottled version does that much business - it's too weak for the market. And the canned version won't count as premium.

      Delete
  5. Good business sense says mass-market products have to have the appearance of appealing to the discerning drinker, but by being targeted as the masses they must by definition be as inoffensive as possible, trading from their historic, but now undeserved, reputation. The figures speak for themselves with most of the top eight being shadows of their former selves.

    ReplyDelete
  6. I see too that Bombardier doesn't make the list. Admittedly McEwan's No 1 surprises me, but again, how much of this product or the £281 million market goes to the brewers.

    Still excellent business for Wells and a bit of a punt for Marston's.

    ReplyDelete
  7. I have long posited the view that going in pubs and shelling out £4 on a pint of lager is a mugs game when it's 50p a can in Tesco.

    Seems bitter drinkers also figure that going in pubs and shelling out £3 for a pint of bitter is a mugs game when bottles of the stuff are £1.25 down the Aldi.

    Your home, your sofa, the telly. No odd balls. It's not only cheaper, it's nicer than pubs.

    ReplyDelete
  8. Best of that list is the London Pride & the Badgers Ferret. Neck them myself from time to time. You can get them proper cold in your own fridge unlike in pubs where the ale is too warm & ruined by the pubs. Top bitter.

    ReplyDelete
  9. "The overall beer market in the UK is declining."

    Just personally, I've swung over to wine of late, don't know why. See what the summer brings.

    ReplyDelete
  10. What's striking in that table is the general lack of impact the global brewers are making, owning just two out of twenty beers in the product category, although I acknowledge Molson Coors's Doom Bar is the category leader.
    Heineken is in the top 20 with Newcastle Brown but AB Inbev (who own Bass) and Carlsberg (who own Tetley) are absent. Could the global brewers be tempted to make some acquisitions in the category if it is growing so much?

    ReplyDelete
    Replies
    1. PBAs were basically created by the independent family brewers - the Big Six never had much stake in the category even when they were big in cask. And Newky Brown is really an outlier as something that, like Guinness, already had an independent existence as a one-off product.

      Delete
    2. Good points. But if it's a growing and large category in an industry that is not growing, it's logical for global brewers to want to grab slice of the category.

      Delete
    3. The most likely way of doing so would be through acquisition, though, not developing brands organically. Having said that, it's impressive how Molson Coors have been able to grow Doom Bar to be #1 brand, despite nobody in the beer world having much positive to say about it.

      Delete

Comments, especially on older posts, may be subject to prior approval. Bear with me – I may be in the pub.

Please be polite and remember to play the ball, not the man.

Any obvious trolling, offensive or blatantly off-topic comments will be deleted.

See this post for some thoughts on my approach to blog comments. The comment facility is not provided as a platform for personal attacks on the blog author.