As people become more health-conscious, beer volumes have dropped but customers are prepared to pay more for what they do drink – here is the analysis of the latest beer statistics.
Premiumisation. It’s an ugly word. Linguistically, anyway. For a pub business, that grotesque polysyllabic shell conceals an elegant beauty within: less is more.
Just look at the stats. Over the past four years, on-trade beer volumes have, according to CGA’s research, fallen 6.2%. The value of those sales, however, has risen 5.3%. Heineken UK calculates premiumisation is driving £380m extra cash sales through pub tills.
Yet there’s even more pubs could do to premiumise their beer oﬀer, essential in a market that’s never going back to the days when publicans lined up pints on the bar every night for thirsty industrial workers coming oﬀ shift. Success now is about value, not volume.
“People might not be going to the pub a few times a week for a pint. But when they do, they want a premium experience, and they will spend more,” explains Paul Bolton, senior client manager at CGA.
“So we’ve seen the huge success of spirits, especially gin, and we can see the same eﬀect in beer. It’s happening across the board.”
When it comes to beer, the word ‘premium’ has traditionally meant ‘stronger’. CGA, for instance, deﬁnes standard and premium lager by ABV.
But there’s a case for breaking out of the mindset that boozier means better. ABV has never bothered wine drinkers.
World beer commands a higher price than premium lager no matter its alcoholic strength and, of course, we now have craft, a category that embodies the idea that some things cost more because they are more interesting.
Even standard draught lager, which has lost 12.2% of volume sales during the past four years, down only 4.3% by value, thanks in large part to 4% ABV brands such as Amstel and Coors Light, “which are a bit more premium and to some extent compensate for the loss of standard lager volumes,” says Bolton.
Then there’s the example of Carlsberg, reformulated and relaunched to create “a more premium feel for the brand that consumers are willing to pay more for,” says Carlsberg UK as it reports that Carlsberg Danish Pilsner, as it is called now, has improved rate of sale, increased price per litre and is in 3% value growth in the on-trade over the last 12 weeks of recorded figures.
All this is important, since standard lagers still claim 45% of the draught beer market and are an automatic choice for many pubgoers.
Despite its continuing decline, cask beer, too, has been buoyed to a degree by a modest return to growth at the premium end.
And while premium lager is fairly ﬂat, we have world beer volumes up 63% in four years to reach 11% of draught sales.
It’s a sign beer drinkers want a pint that delivers a little more and says something about their discernment.
Craft beers write that trend large. Accounting for only 6% of on-trade beer they are growing fast, up 78% in the past four years.
According to CGA, one in ﬁve who go out to eat and drink might choose a craft beer. That’s 9.4m people.
Their success is feeding into traditional categories. Take keg ale. Its long-term decline has suddenly reversed to record a 14% volume growth in the past year, driven not only by taps given over to trendy craft IPAs but by cask brands, like Old Speckled Hen, being reinvented as premium keg.
Back-bar fridges are also being transformed by craft, evident in a swing from bottles to cans, once rejected by pubs as a cheap oﬀ-trade package, now a sign they take beer seriously.
“Cans are growing on the back of craft, driven by brewers like Camden and Beavertown, which have made the decision to come out of bottles,” says Bolton.
“They’re cheaper and lighter and look very attractive in the fridge. Cans are still a small part of on-trade volume, but I’d expect the trend to continue.
“There’s a clamour for craft but pubs should make sure they know who their customers are and who they want to keep coming. Most will need to balance it out. Remember, standard lager is huge and still a go-to drink for many consumers.”