Premium Alcohol Drinks:
Cider Focus
April 2011
Contents
Market Environment
The entry of AB Inbev could be just what
the cider market needs
“The main thing which AB Inbev will bring to the table is a substantial distribution network combined
with marketing savvy. This combination has helped Stella Artois to become the number one selling
lager brand in the UK off-trade and number three in the on-trade.”
•
Grown its volume sales from 574 million litres in 2005 to
840 million litres in 2010, a rise of 46%.
•
Recent legislation which requires that ciders should contain
a minimum of 35% juice content is a major win for the cider
category in terms of encouraging premiumisation
30%
There are signs that the cider bandwagon is beginning to
roll to a halt with sales growth slowing in the past few years.
•
Magners, whose “over ice” innovation stimulated the
category’s growth in 2005, has struggled to maintain its
momentum and has needed to invest significantly in
marketing in order to get sales back on track.
•
Cider has benefitted from an increasing consumer interest
in lighter and fresher drinks, something which has helped
the rise of rosé and Prosecco sparkling wine among others
Source: Mintel
Volume sales % growth
•
26%
25%
20%
15%
11%
10%
5%
0%
2005-2007
2008-2010
Market Insights
•
Magner’s apparently ‘reinvented cider’ as contemporary again, by introducing cider in premium
bottles with the ‘on ice’ serve, the category has continued to innovate to good effect
•
The market has been given further impetus by the popularity of pear cider, which has become
worth £100m in a short space of time. Cider is the only major alcohol category to have grown its
user base over the past five years
•
Recently, other fruit cider has meant even more innovation around flavour, meaning that variants
such as Jacques Fruits des Bois cider and Kopparberg Elderflower and lime are now available in
the mainstream UK market
•
The cider industry has benefitted hugely from the coalition government’s decision to scrap
Labour’s proposed 13% rise in cider duty in 2010, as well as its decision to suspend any further
duty increase on alcohol for the rest of 2010
•
Less welcome will be the 2011 rise of VAT from 17.5% to 20%, as well as the Coalition
government’s decision to retain Alistair Darling’s controversial ‘tax escalator’, which applies duty
at 2% points above inflation each year until 2014
Source: Mintel
“
“
The challenge for the market going forward is where will the next innovation come from? A
danger of continually innovating around flavour is that the product is increasingly entering into
alcopops territory, where its colourful look and sweeter taste combined with the high ABV of
many ciders would not look out of place. The alcopops market has suffered from negative
media coverage and flavoured/fruit cider market needs to beware this association
Mintel
Market Size and Forecast
•
Mintel forecasts that the total cider/perry market will continue to see growth over the next 5 years albeit not at
the exponential rate of the previous five years
•
Mintel’s estimate is that the market will be at the higher range of performance in 2011 and 2012, helped by the
growth of pear and fruit ciders, combined with the rising popularity of niche, fashionable premium-packaged
brands
•
The rise in cider retail prices means that volume sales (+23%) will rise more slowly than value sales (+45%)
between 2010 and 2015
Forecast of the value sales for the total UK cider/perry market, 2010-2015
4,000
Best case (£m)
3,832
Market value (£m)
3,500
Mintel forecast (£m)
3,133
3,000
(£m)
2,168
2,500
Worst case (£m)
2,444
2,000
1,500
Confidence intervals
1,000
5000
2005
95%
90%
2006
2007
2008
2009
2010
2011
2012
2013
Est.
Actual
Source: HM Customs/Mintel
2014
2015
70%
50%
Forecast
Market size/forecast - segmentation
“
“
Mintel forecasts that by 2015, off-trade cider value sales will have overtaken on-trade sales,
as consumers continue to drink more at home to save money
Trends for cider on-trade value sales compared to off-trade, 2005-2015
Being a British product
also has commercial
advantages, with major
supermarkets such as
Tesco’s increasingly
looking to stock British
brands to show that they
are supporting local
businesses
•
The rise of in-home drinking has been particularly pronounced over the past decade, with the price differential of
alcohol in the on- and off-trade channels widening as supermarkets have maintained low costs of alcohol
products, mainly due to discounting; something which the on-trade cannot afford to do
•
A government ban on below-cost pricing means that this price differential is unlikely to get much wider over the
next few years.
Source: HM Customs/Mintel
Cider is steadily shedding its summer-only image
While cider does see an uplift in the warmer months, it has continued to grow its user base
regardless of the season
Trends for rolling annual total of proportion of UK cider drinkers, 2006 Q4 – 2010 Q1
30%
28%
Q3 is the hottest time of the
year, encompassing July –
September
26%
24%
22%
20%
2006
Q4
2007
Q1
2007
Q2
2007
Q3
2007
Q4
2008
Q1
2008
Q2
2008
Q3
2008
Q4
2009
Q1
2009
Q2
2009
Q3
2009
Q4
2010
Q1
Base: adults aged 18+
• The de-seasonalisation of cider has been one of the key reasons why the category has been able to grow so
exponentially in recent years, ensuring that cider is not overly reliant on UK summers
• Cider nevertheless is seen as particularly refreshing, meaning it becomes more ‘top of mind’ during summer months,
when pub attendances increase.
– The category is therefore now doing more to innovate around winter, with warm-serve winter ciders now available from Aspall’s and
Rekorderlig
Taken from the TGI survey of around 25,000 adults
Source: GB TGI, Kantar Media UK Ltd 2006-10 /Mintel
Advertising Market & Traffic Trends
Drink Advertisers Spend by Media Type
• For the most part, ‘Drink’ advertisers tend to spend the most on advertising in the
Press and on TV followed traditionally by Outdoor
• On average the industry currently spends around 1% on Internet advertising (not
including search).
Source: NNR adDynanix : 2009 v 2010
The top spending beer/cider brands on advertising
•
Guinness benefits from being the top spending brand – as well as having iconic advertising
•
Strongbow is a big spender and scores well on many brand cues but like Carling is positioned as massmarket rather than premium
•
Peroni, Kronenbourg 1664 and Grolsch perform particularly on being rated premium despite a minimal
outlay relative to the market
Top 20 spending beer/cider brands on above-the –line advertising between 2008-2010
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
Source: Nielsen Media Research
Brand
£m
%
Carling
24.5
8.2
Guinness
23.4
7.8
Magners Original
22.9
7.7
Fosters
18.1
6.0
Strongbow
17.6
5.9
Stella Artois 4%
16.6
5.5
Artois beer range
14.7
4.9
Bulmers
13.2
4.4
Budweiser
12.5
4.2
Stella Artois
11.1
3.7
San Miguel
7.5
2.5
Heineken
7.4
2.5
Grolsch
6.9
2.3
Carlsberg
6.8
2.3
Kronenbourg 1664
6.8
2.3
Coors
6.7
2.2
Peroni
5.1
1.7
Magners - Pear Cider
4.9
1.6
Fosters - Super Chilled
4.0
1.3
Crabbies - Alcoholic Ginger Beer4.0
1.3
Others
64.3 21.5
Total
299.0 100
Display Advertisement Publisher Location: Ad
Impressions v Unique Users (Retail – Food/Drink)
• Microsoft sites have continued to delivered the highest number of unique visitors for Food Retailers.
Source: ComScore adMetrix : February 2011
Display Advertisement Publisher Location: Share of
Impressions v Frequency (Retail – Food/Drink)
• Microsoft sites also have the highest share of Food Retailers ad impressions, and the average
frequency continues to be less than eBay, Yahoo!, Glam Media and AOL.
Source: ComScore adMetrix : February 2011
Alcoholic Drinks Search Traffic KPIs
Traffic
• Searches for alcoholic drink generics increased by
+43% between 2009 and 2010
•
Searches for food & grocery generics increased by
+3% Jan & Feb 2011 v Jan & Feb 2010.
Top Insights:
• Guinness represented 18% of the
total search volume of the top 15
alcoholic brands in 2010.
• In the Cider battle, Magners
slightly out paced Bulmers with 4%
vs. 3% respectively.
1. Microsoft Advertising Intelligence Tool
Alcoholic Drinks Demographics and Daily Trends
•
Monday has been the largest traffic driving day
(16%) over the last 2 months only slightly
beating Tuesday, Wednesday and Thursday’s
however. Saturday seems to be the least
popular day for food searches.
•
•
•
•
Could potentially be attributed to purchasing food
online and delivering during the week before
weekends
The 35-49 age brackets are the main age
groups for traffic with 32% .
25-34 year olds are higher than the 18-24 year
age bracket with 27% of Search traffic coming
from this age group
Gender breakdown is evenly split between
both Males and females with 49%, however
2% of searches the gender is unknown.
1.Microsoft Advertising Intelligence Tool – December 2010 to Feb 2011 data
Industry Insights
Consumer Usage for Cider
Cider has increased its proportion of drinkers rapidly over the past five years, and in the past
year was drunk by just over a quarter of the population according to TGI figures
Trends for cider consumed in the past 12 months, among 18+ adults in Britain, 2006-10
• Mintel’s analysis shows that its advantage is in being able to target men and women,
meaning unlike beer it is not restricted by gender stereotyping
• It is also strongly favoured by 18-24 year-old drinkers for whom cider’s sweeter taste, and
constant innovation are hugely appealing, and who, unlike older generations, are unfamiliar
with cider’s past baggage as an unfashionable choice
Taken from the TGI survey of around 25,000 adults
Source: GB TGI, Kantar Media UK Ltd Q3 2006-10 (Jul-June)/Mintel
Consumer Usage for Cider - by type
• Almost half of cider drinkers consume both traditional apple and pear/other fruit cider
• There are also 2.3million cider drinkers – primarily 18-24 year-old women – who are being
attracted to the newer pear/other fruit ciders while eschewing drinking traditional variants
Cider drinkers, by cider type, August 2010
Base: 396 18+ drinkers of any cider in the past year
Source: Mintel/Toluna
Consumer Attitudes to cider – Non-cider drinkers
• While cider attracts quite a high proportion of women, there are still a substantial amount of
females put off by the volume of the bottle/draught serve
Reasons why people have not drunk cider in the past year, indexed (100 = average), by gender, August 2010
Base: 450 internet users aged 18+ who have drunk alcohol but not cider
Source: Mintel/Toluna
Targeting the Cider Potentials
• Cider has the potential to convert three in five UK drinkers of alcohol who have not drunk it in the
past year
• The two in five who are not open to drinking cider are put off most by the taste but also perceive
cider to be lacking in quality and refreshment compared to competitors
• Mintel’s research shows that there is plenty of interest among older discerning male drinkers, who
are especially likely to drink red/white wine and whisky
• The research shows that there is slightly more potential for cider to convert wine drinkers
compared to beer drinkers
The proportion of Cider Potentials and Cider Rejecters among non-cider drinkers, August 2010
Cider
Rejecters,
41%
59%
• The 25-34 age group will see a
double-digit growth over the
next five years.
Cider
Potentials,
59%
Base: 450 Internet users aged 18+ who have drunk alcohol but not cider in the past year
Source: Mintel/Toluna
• It is key that cider retains these
younger drinkers rather than
lose them to competing
categories
Premium means different things for different drink categories
Source: Mintel
What premiumisation means in the cider market
•
Similar premium footprint to lager but quality ingredients is a more important cue
•
People trust Strongbow the most for delivering quality – although only marginally
•
Magners’ greatest strength in creating its premium perception is its attractive packaging
•
Both Bulmers and Magners are seen as more of a treat than Strongbow. While this could be perceived as a positive, it
could also mean that cider drinkers view them as something for special occasions but Strongbow – which is enjoying
excellent sales – as their standard default when ordering cider
Top 3 ranked cider brands (ie ABV of 4%) scored on premium quality cues
*low sample
size(80-100)
Base: 93 cider drinkers who have experience of Strongbow and rate it as premium/175 for Magners/111 for Bulmers
Source: GMI/Mintel
Frequency of Drinking Alcohol
By gender, age and social grade
“Which of these best describes how often you do each of the following activities? Drink alcohol”
Source: nVision Research, 2010
Base: 1,000 online respondents aged 16+, GB
Perceived alcohol content of various drinks
Mean response for each of the following drinks, by gender, age and social grade.
“Do you know how many units of alcohol each of the following drinks contain? Please give us your estimate,
even if you are not 100% certain”
Source: Charity Awareness Monitor (nfpSynergy)/nVision, 2010
Base: 1,000 online respondents aged 16+, GB
Consumer perceptions of the 10 most premium
alcoholic brands
•
Spirits brands dominate the list
•
There are no lager or cider brands, mainly due to product perceptions, rather than weak branding
Rank of highest perceived premium alcohol brands
Average score for alcohol
brands perceived as
premium = 6.1
0 = Not premium
/low quality
Mean score
Base:
1. 1,357 beer/cider drinkers who rate at least one beer/cider brand as premium;
2. 1,293 spirits drinkers who rate at least one spirits brand as premium;
3. 1,223 wine drinkers who rate at least one wine brand as premium
Source: GMI/Mintel
10 = Very premium
/ high quality
Consumer perceptions of the 10 most premium beer/cider
brands
•
Guinness is the only brand to make the overall alcohol top ten list
•
Evidence that the Stella Artois brand has re-found its mojo
•
Lower alcohol lagers (e.g. Stella Artois 4% and Beck’s Vier) still being held back by perception of
premium as meaning stronger ABV (4.3%+), despite their premium positioning
•
Magners is the only cider brand included in the top five
•
No ale brands made the list, due to fragmentation of the market and a small sample size for brand
leader John Smith’s
Rank of highest perceived premium alcohol brands
Average score for
beer/cider brands
perceived as
premium = 5.7
0 = Not premium
/low quality
Mean score
Base: 1,357 beer/cider drinkers who rate at least one beer/cider brand as premium
Source: GMI/Mintel
10 = Very premium
/ high quality