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MP15147

MAPS THE UK BEER MARKET SEPTEMBER 1997

Overview

Table of Contents

Executive Summary

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EXECUTIVE SUMMARY

The beer market has experienced a decline over the last twenty years although segments within the market are now experiencing growth. Several macro-environmental trends are making an impact on beer sales and will continue to influence the market into the future.

In the immediate term high levels of personal disposable income and high street spending continue to drive the market but spending may be slowed by government actions in the near future. Looking further ahead the beer market will feel the impact of the ageing population as its heaviest user group, those thirty five years and under, continue to diminish. Over the last five years the number of breath tests have risen by 47 percent acting as a deterrent to stop drink driving and adversely on influencing licence sales. Trends in healthy living are causing consumers to cut back on alcohol consumption, but uncertainty in the labour market and life pressures work to increase demand levels.

The Beer Orders and the effect of the European Single Market have both had an effect upon the beer market and have opened the doors to greater threat rather than increased benefits. They have produced a swing of power to the retailers away from the brewers and allowed an influx of cheap personal beer imports from the continent.

Branding is becoming increasingly important as some beers go into decline and others gain popularity. Brands are being used alongside TV advertising and sponsorship to reinforce the position of the market leaders.

Despite an 18 percent market contraction from 1980 to 1993 causing the downward trend of volume beer products, beer production for 1992 to 1997 is up. The premium lagers, premium packaged lagers and the repositioning of stouts have predominantly fuelled this growth. Consumer expenditure on beer also rose by 21 percent from 1992 to 1997.

Beer market segmentation is becoming more complicated as the market continues to fragment due to many new products being rolled out. Pricing and packaging are becoming increasingly important in terms of targeting through distribution channels. The key markets of ales and stouts, standard lagers, and premium lagers remain intact. The fastest growing segments are premium draught lagers, premium packaged lagers in non-returnable bottles and stouts, bitters and standard lagers in cans.

Market Assessment have commissioned exclusive NOP research into the beer market. The highest demand for beers is displayed by C2’s that are unmarried, in full time work and under thirty five years of age. In terms of product type bitters found some popularity across socio-economic groups with largest concentrations in C1’s, C2’s and DE’s. Lagers were in highest demand with C1’ and C2’s under thirty five years of age. High levels of demand were still showing for lagers in the 3.4 percent to 4.2 percent abv group, indicating that the markets still has life in it, especially through distribution in cans. Premium beers above 4.2 percent abv attracted 45 percent of all those under 24 years of age. The most popular form of packaging generally is in cans. The sample also indicated a swing towards purchases from off licences, but the highest volumes are still consumed in on licences.

There has been much activity within the brewing industry over the last few years with acquisition and diversification strategies being implemented by the large breweries. Scottish and Newcastle currently have the largest market share within the beer market at 29 percent. However, Bass Plc are the largest brewing group placing them in a powerful position for the future.

In terms of distribution, on licences are still finding success especially through themed pub chains. Distribution through off licences is growing quickly, fuelled by trends in home entertainment. This dynamic will continue to erode beer sales in the on licence sector. Another important trend is that moving towards sociable eating out and away from drinking as a past time. This trend has facilitated the growth of restricted licence premises such as restaurants. This has also opened the channel for increased beer sales but competition is intense with wine products.

Market Assessment expects standard lagers and bitters to continue to decline in to the future. We also expect premium packaged lagers to continue to experience fast growth through the medium term. They will have to be effectively positioned against wines and spirits if they are to take advantage of demographic trends. The off trade will continue to grow and consequently so will sales of beers in bottles and cans through this outlet.

Text © 1997 MAPS

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