Premium Ale INSIGHT REPORT 2014
Contents 02 Introduction:... 03 A few words from Anthony Woodhouse...04 Category Performance Overview Beer Category 5 Year Volume Trend...05 Ale Value Share of Beer Category...06 Bottled Ale Household Penetration Growth...07 Bottled Ale Brands % Value & Volume Market Share...08 Premium Canned Ale Brands % Value & Volume Market Share...09 Adding Value to BWS...10 Executive summary:...11 BWS Category and consumer dynamics:...13 Beer, Wine & Spirit Trends Performance by BWS Category...14 Beer category trends...15 Ale Category % Value Share by Pack Format...16 Ale Category Performance & Trends:...17 Bottled Ale Category Trends...18 Bottled Ale Performance...18 Bottled Ale Multipacks...20 Own Label Bottled Ale...21 Lower Alcohol Bottled Ale...22 Lower Priced Bottled Ale...23 Premium Canned Ale Category Trends...24 Premium Canned Ale Performance...24 Ale Kegs...26 Trade Channel & Retailer Trends...27 Performance by Channel...27 Retailer Bottled Ale Value Shares...28 Retailer Premium Canned Ale Shares...31 Bottled Ale range Development:...34 Bottled Ale Own Label...35 The Forgotten Bottled Ale Drinkers...38 Bottled Ale Merchandising:...41 Merchandising by Brand vs. Style...42 Key Findings...43 Conclusions & Recommendations...44 Hall & Woodhouse Commercial Break:...45 Glossary & Contact:...51 Glossary...52 Contact...53 Contents
Introduction 03 A few words from Anthony Woodhouse... 04 Category performance overview Beer Category 5 Year Volume Trend...05 Ale Value Share of Beer Category...06 Bottled Ale Household Penetration Growth...07 Bottled Ale Brands % Value & Volume Market Share...08 Premium Canned Ale Brands % Value & Volume Market Share...09 Adding Value to BWS...10 Introduction
A few words from Anthony Woodhouse 04 Bottled ale enjoyed another exceptional year in 2013, with strong growth ahead of most other BWS categories. Increased innovation by brewers, and retailer focus, have driven levels of customer engagement and experimentation within the category. Conversely, the premium canned ale category fell into decline in 2013. Whilst levels of promotional investment have increased, this has not attracted new customers into premium canned ale and, in the longer term, risks driving value out of the category. Anthony Woodhouse Managing Director, Hall & Woodhouse Ltd Introduction
Category Performance Overview Beer Category 5 Year Volume Trend (indexed to 2008) 05 140 130 120 129 Following a very strong year, bottled ale continues its longer term trend of sustained growth, against a backdrop of a declining off trade beer category. Over ½ million new customers entered the category in 2013, adding bottled ale to their alcohol repertoire. Premium canned ale continues to struggle; intensive promotion activity on smaller pack sizes has failed to drive volume growth and the category has now also fallen into value decline. Premium canned ale has lost customers and reduction of activity on larger packs has reduced volumes purchased each shopping trip. 110 110 100 90 80 2008 2009 2010 2011 2012 2013 Bottled ale premium canned ale total beer 88 Over ½ million new customers entered the category in 2013, adding bottled ale to their alcohol repertoire. ACNielsen Scantrack MAT to 04.01.14 Introduction
Category Performance Overview Ale Value Share of Beer Category 06 On Trade vs. Off Trade 7% 25% 3% 14% Ale s value share of the total beer category in the off trade has remained flat since last year due to the decline of standard canned ale and the improvement in lager sales during the summer. There remains a significant opportunity for growth of premium ale however, as there is a 400million undertrade in the off trade versus the on trade. As more ale drinkers move to at-home consumption, the off-trade ale category has the potential to double to 900 million. 68% 83% On Trade Off Trade Lager ale stout As more ale drinkers move to at-home consumption, the off-trade ale category has the potential to double to 900million Off Trade: ACNielsen Scantrack MAT to 04.01.14 On Trade: Brand Index MAT to 30.11.13 Introduction
Category Performance Overview Bottled Ale Household Penetration Growth 07 25 20 24% Whereas the premium canned ale category has lost customers in 2013, bottled ale penetration grew from 22% to 24%. Almost 1 in 4 households now buy bottled ale as a result of 500,000 customers entering the category last year. There remains significant headroom however, as bottled ale penetration remains very low in comparison to other alcohol categories. Bottled lager penetration currently stands at 41.2% of UK households, an opportunity worth an incremental 200million to bottled ale should category penetration reach this level. 15 11% 10 5 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Almost 1 in 4 households now buy bottled ale as a result of 500,000 customers entering the category last year. ACNielsen Homescan MAT to 04.01.14 Introduction
Category Performance Overview Bottled Ale Brands % Value & Volume Market Share 08 Total GB morland badger shepherd neame fullers wychwood marstons private label greene king newcastle brown adnams black sheep charles wells +17% +7% +3% (1%) +11% +13% +32% +33% +2% +9% +15% (14)% 2.8 2.8 2.5 2.5 2.4 2.4 4.8 4.4 4.7 4.5 4.8 5.4 6.3 5.8 6.1 6.2 5.9 6.4 7.7 7.6 7.6 8.5 % Value Growth (Market +10.8%) 9.0 8.8 Bottled ale grew by 27m last year driven by new category penetrants. These new customers are predominantly coming into bottled ale through single bottles, although some individual brands are being driven by other trends within the category. Multipack bottled ales continue to grow well, in particularly mixed ale multipacks which have grown by 67% in value. Own label bottled ale is also in strong growth although represents less than 5% of the total category value versus 23% on average across total beers, wines & spirits....in particularly mixed ale multipacks which have grown by 67% in value. 0 1 2 3 4 5 6 7 8 9 value share volume share ACNielsen Scantrack MAT 04.01.14 Introduction
Category Performance Overview Premium Canned Ale Brands % Value & Volume Market Share 09 Total GB morland mckewans greene king badger wychwood fullers charles wells newcastle brown bass ruddles marston s wadworths 6.9 6.9 6.4 6.7 5.6 5.7 5.0 4.9 5.0 5.7 4.4 4.5 4.0 4.5 3.4 3.5 2.9 3.0 1.8 1.8 +16% (7%) +2% (2%) (4%) (4%) (13%) (4%) (4%) (12%) (34%) (5)% 15.7 16.0 27.1 26.8 % Value Growth (Market -2%) Although some of the newer Brewers to enter the premium canned ale market, such as Shepherd Neame & Black Sheep, have performed well in 2013, most of the larger brands are in decline. The largest premium canned ale brand, Morland Old Speckled Hen, has invested heavily in this increasingly competitive category, although has failed to stem the loss of customers which has led to premium canned ale s decline. 0 5 10 15 20 25 30 value share volume share Nielsen Scantrack MAT 04.01.14 Introduction
Category Performance Overview Adding Value to BWS 10 BWS Average Annual Spend Per Buyer s 700 The average price of a litre of beer fell slightly in 2013 to 1.86, driven by reduced pricing of standard lager. Premium lager prices have increased, but the category has lost customers as a 600 500 456 430 495 476 471 512 566 576 517 583 466 511 496 494 549 532 523 502 540 532 461 441 446 469 result. Conversely ale prices have increased across all formats without the loss of any customers. In fact, ale buyer numbers increased from 7.7million households to almost 8.2 million in 2013 despite prices increasing by an average of 4.4%. Ale purchasers are also important to the wider BWS category, with a higher annual spend on total alcohol than purchasers of most other categories. 400 300 200 100 0 Total Light Wine Total Spirit Bottled Ale Premium Canned Ale Standard Canned Ale Bottled Lager World Beer Premium Canned Lager Standard Canned Lager mat ya we 05.01.13 mat ty we 04.01.14 Stout RTD Cider In fact, ale buyer numbers increased from 7.7million households to almost 8.2 million in 2013 despite prices increasing by an average of 4.4%. Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA Introduction
Executive Summary 11 Executive Summary
Executive Summary: Bottled ale has been the success story of the BWS category over the last year, with ½ million customers entering the category, driving 27million of growth. Category loyalty has also improved and bottled ale shoppers are becoming more valuable to the whole BWS category, with high and increasing annual alcohol spend. Premium canned ale continues to struggle with sales declining slightly. Increased investment and intensifying competition has failed to stem the loss of customers from premium canned ale. This is simply limiting value growth, threatening category margins and risks replicating the commoditisation which occurred within standard canned ale and canned lager. 12 Driving lower margin formats within premium ale such as bottled ale multipacks and premium canned ale is increasing pressure on the total premium ale category, without driving penetration. Customers are being attracted into premium ale via single branded bottled ale. Driving this pack format with increased display, a relevant range, consistent availability and sustainable promotional activity will continue the growth trend the bottled ale category has enjoyed in recent years. Own label bottled ale can be a valuable part of the range in order to deliver a unique offering by the retailer. It is not, however, driving category penetration, just being added to existing purchaser s repertoires. Own label bottled ales need to be positioned carefully to avoid simply trading down customers and devaluing the category. Parity with branded bottled ales is possible if the provenance, authenticity and heritage of own label ales are highlighted sufficiently. Executive Summary
BWS Category and Consumer Dynamics 13 Beer, Wine & Spirit Trends Performance by BWS Category...14 Beer category trends...15 Ale Category % Value Share by Pack Format...16 BWS Category and Consumer Dynamics
Beer, Wine & Spirit Trends Performance by BWS Category (including duty and VAT) 14 Total BWS 15,249m +3.1% YoY Wine 6,604m LADs 4,853m Spirits 3,717m +2.9% YoY +2.9% YoY +3.8% YoY Total beer 3,606m Cider and perry 1.021m RTDs 226m +1.7% YoY +7.9% YoY (0.7%) YoY Although almost ½ million households stopped buying wine last year, those remaining spent more and purchased more often. The category has also been driven by the continued success of sparkling & British wine. Spirit sales remain in good growth. Innovation within the more niche sub-sectors such as noncream liqueurs & imported whiskey, plus increased consumer interest and retailer focus on cocktails, have increased spend and purchase frequency. Cider growth has accelerated; over 900,000 households entered the category, particularly over the warm summer when the category grew by 21% versus summer 2012. Average prices are also rising as premium ciders gain share of the category. Although still in decline, RTD performance has improved this year, again benefitting from the summer boost when sales grew by 12%. 2013 saw an improvement in the performance of the total BWS category. With increasing prices the main driver, the alcohol category increased by c 460m. Nielsen ScanTrack Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA BWS Category and Consumer Dynamics
Beer, Wine & Spirit Trends Beer Category Trends 15 12 9 6 3 2 2 3 Canned Ale Standard Canned Ale Premium Canned Ale 7 11 After a year without growth in 2012, total beer sales moved forward in 2013 as new customers entered the category. As with most other long drinks, beer sales, particularly lager, accelerated over the summer. Unlike other BWS categories, price inflation has played little part in beer sales growth as standard lager prices fell by 4.5%. Following two years of penetration decline, customers returned to lager this year through standard bottled lager. The emerging flavoured lager segment, including the lower alcohol range extensions and spirit flavoured lagers such as Heineken s Desperados, are also attracting new shoppers into beer, particularly younger consumers. 0-1 0-1 -6-5 -8-6 -3-2 -3 Beer Lager Ale Bottled Ale -6-9 Vol % Chg % Chg ACNielsen Scantrack MAT 04.01.14 BWS Category and Consumer Dynamics
Beer, Wine & Spirit Trends Ale Category % Value Share by Pack Format 16 100% 90% 80% The total ale category is growing in value, driven by the success of bottled ale. Innovation by brewers in the craft beer category has fuelled customer interest and encouraged increased levels of experimentation, in turn growing bottled ale penetration. Over the last two years, bottled ale has grown to dominate the ale category and now represents over 54% of total ale category value. 70% 60% 46.7% 50.7% 54.3% 50% 40% 30% 20% 10% 0 53.2% 2011 49.2% 2012 canned ale bottled ale 45.4% 2013 Over the last two years, bottled ale has grown to dominate the ale category and now represents over 54% of total ale category value. AC Nielsen Scantrack MAT to 04.01.14 BWS Category and Consumer Dynamics
Ale Category Performance & Trends 17 Bottled Ale Category Trends... 18 Bottled Ale Performance...18 Bottled Ale Multipacks...20 Own Label Bottled Ale...21 Lower Alcohol Bottled Ale...22 Lower Priced Bottled Ale...23 Premium Canned Ale Category Trends... 24 Premium Canned Ale Performance...24 Ale Kegs... 26 Trade Channel & Retailer Trends... 27 Performance by Channel...27 Retailer Bottled Ale Value Shares...28 Retailer Premium Canned Ale Shares...31 Ale Category Performance & Trends
Bottled Ale Category Trends Bottled Ale Performance 18 New customers buying bottled ale has driven strong category growth this year, outperforming most other BWS categories. Growth has predominantly come from BWS buyers adding single bottled ales to their repertoire, although some sales have shifted to other categories. With premium canned ale becoming an increasingly competitive category, some bottled ale customers are shifting to canned formats that are, on average, 25% cheaper. (2,122,436) (7,013,164) (3,122,589) +18,483,089-20,000k -10,000k 0 10,000k 20,000k trip volume contribution (52w) Price Contribution (52w) frequency contribution (52w) penetration Contribution (52w) New customers buying bottled ale has driven strong category growth this year, outperforming most other BWS categories. Nielsen Homescan MAT 04.01.14 Ale Category Performance & Trends
Bottled Ale Category Trends Bottled Ale Source of Value Shifting Gains / Losses % Actual % Actual / Index Standard canned lager 978 90 16 19 As this shifting is not growing the ale category overall, this trend risks having a negative impact on ale category margins. total: -1219-0.5 stout 233 180 4 ale keg -78 9335-1 mkt pen: 44 0.0 rtd -146 152-2 awop: 644 0.3 standard canned ale -181 180-3 all other -199 162-3 repetoire: 4364 1.9 Cider -222 41-4 premium canned lager -598 208-10 shifting: -6271-2.7 Bottled lager -649 168-10 premium canned ale -1057 1681-17 total spirit -1804 77-29 total wine -2548 72-41 Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA Ale Category Performance & Trends
Bottled Ale Category Trends Bottled Ale Multipacks +26.4% 9% 20 Bottled ale multipacks have continued to be a key growth trend in 2013. Single brand multipacks are increasing weight of purchase, but there is a degree of shifting from single bottles formats of the same brand. Again this could threaten category margins, as multipacks offer customers an average saving of 16% whilst commanding higher manufacturing costs for suppliers. The impact of mixed brand bottled ale multipacks has been more positive; these are being added to existing bottled ale customer s repertoire, and are also attracting bottled lager customers. +9.4% multipacks 91% single bottles...multipacks offer customers an average saving of 16% whilst commanding higher manufacturing costs for suppliers. Ale Category Performance & Trends
Bottled Ale Category Trends Own Label Bottled Ale 21 Source of Value Actual % total: 416 4.7 mkt pen: 207 2.4 awop: -862-9.8 Retailer own label bottled ale remains in strong growth, +32% in value, and is gaining share of the total category. In comparison to total BWS however, own label still represents a very small proportion of total sales with a share of less than 5%. This growth is not as a result of attracting new customers to bottled ale, but from existing branded bottled ale customers adding own label to their repertoire. Although own label helps to differentiate a retailer s offer, care must be taken to ensure that positioning of own label bottled ale ranges do not devalue the category by trading down existing shoppers. repetoire: 912 10.3 shifting: 158 1.8 basis = (000)s Source: Homescan MAT 4th Jan 2014 vs YA Although own label helps to differentiate a retailer s offer, care must be taken to ensure that positioning of own label bottled ale ranges do not devalue the category by trading down existing shoppers. Ale Category Performance & Trends
Bottled Ale Category Trends Lower Alcohol Bottled Ale 22 The low alcohol trend has failed to make significant inroads in bottled ale to date. Although, as an emerging sector, growth rates are good, they make up less than 1% of category value sales and rates of sale of individual skus are amongst the lowest in the category. < 1 % Ale Category Performance & Trends
Bottled Ale Category Trends Lower Priced Bottled Ale 23 Source of Value Actual % total: 1055 9.5 mkt pen: -9-0.1 The bottled ale brands that are positioned as on-going, lower priced options such as Banks s bitter, Marston s EPA & Jennings Bitter are driving brand penetration, with growth of 35% in 2013. Failing to attract new customers to ale however, their growth is driven by existing customers adding lower price brands to their repertoire or shifting from premium bottled ale, arguably trading down bottled ale customers at a cost to the category of over 2million last year. awop: -145-1.3 repetoire: 579 5.2 shifting: 631 5.7 basis = (000)s...arguably trading down bottled ale customers at a cost to the category of over 2million last year. Source: Homescan MAT 4th Jan 2014 vs YA Ale Category Performance & Trends
Premium Canned Ale Category Trends Premium Canned Ale Performance 24 (3,776,540) (575,375) (3,207,032) +7,829,706-10,000k -5,000k 0 5,000k 10,000k trip volume contribution (52w) Price Contribution (52w) penetration contribution (52w) Frequency Contribution (52w) Although it has gained share of the total canned ale category, due to the continued sharp decline of standard canned ale, premium canned ale value sales fell by 2% in 2013. Household penetration fell from 5.1% to 4.8%, driving a significant proportion of the decline and a shift of investment from large packs to 4pks has reduced trip volumes. Although purchase frequency is in growth as a result, this has failed to offset the overall drop in sales. Premium canned ale lost customers to RTDs, lager and cider last year, triggered by warmer weather over the summer, but sales have also shifted from bottled ale into premium cans as intensive promotional activity on cans has widened the price disparity between the two categories....sales have also shifted from bottled ale into premium cans as intensive promotional activity on cans has widened the price disparity between the two categories. Source: the nielson company Ale Category Performance & Trends
Premium Canned Ale Category Trends Premium Canned Ale 25 Shifting Gains / Losses Actual / Index % Bottled Ale 1057 331 473 Standard canned lager 251 31 113 The leading premium canned ale brewer, Greene King, has further driven their dominance of the sector over the last year, with Morland Old Speckled Hen growing by almost 3million. They have driven the brand s value share from 23% to over 27% with increased activity on the 4pk format, but have failed to grow the category as a whole. all other 178 71 80 standard canned ale 144 91 65 stout 11 11 5 ale keg -11 6606-5 total wine -56 8-25 total spirit -176 38-79 rtd -189 1001-85 premium canned lager -249 440-111 Bottled lager -250 327-112 Cider -488 457-218 Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA Ale Category Performance & Trends
Ale Kegs Ale Kegs Source of Value 26 Actual % total: 697 268.6 mkt pen: 0 0.0 awop: -19-7.3 Shifting Gains / Losses % Actual / Index Branded premium bottled ale 96 1494 30 branded standard bottled ale 48 6092 15 branded standard canned ale 23 603 7 branded premium canned ale 22 904 7 Branded all other -1 42 0 edlp -2 221-1 Acomparatively new trend in premium ale, 5litre kegs became more prevalent in 2013, with kegs from major brewers such as Greene King gaining distribution following the success of regionally listed brands such as Bath Ales and Adnams. Sales of kegs reached 1.5m last year but do not appear to be bringing customers into the ale category. Growth of ale kegs is predominantly coming from ale customers adding them to their repertoire. There is some shifting, mainly from bottled ales and particularly, from bottled variants of Keg brands. repetoire: 398 153.6 shifting: 317 122.3 Sales of kegs reached 1.5m last year but do not appear to be bringing customers into the ale category. Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA Ale Category Performance & Trends
Trade Channel & Retailer Trends Performance by Channel 27 100% 90% 80% 70% 60% 77% +0% 75% +1% 89% +0% 87% +9% 90% (6%) 89% (7%) 91% (3%) Despite the growth of Convenience, ale continues to lose share within the impulse sector. Increased bottled ale and premium canned ale ranges, improved merchandising and signage, a greater share of display space and increased investment are driving share within grocery multiples. Inadequate ranges and lack of information in the impulse sector are failing to satisfy customer demand, particularly as core premium ale shoppers have a higher propensity to shop in this sector. Addressing this could potentially double the ale category within impulse, increasing sales by 70million! 50% 40% 30% 20% 10% 0 23% 25% (3%) (4%) 11% 13% (8%) (6%) 10% 11% (11%) (13%) Bws Beer ale bottled ale canned ale standard premium Canned ale canned ale impulse grocery multiples Nielsen Scantrack MAT to 04.01.14 9% (5%) Addressing this could potentially double the ale category within impulse, increasing sales by 70million! Ale Category Performance & Trends
Trade Channel & Retailer Trends 28 Retailer Bottled Ale Value Shares 30% 25% 20% 15% 10% 5% 0 pba over/ under trade 27.5% 23.7% tesco discounters morrisons sainsburys asda waitrose co-op ( 8.2m) 6.3% 16.4% + 21.9m 12.0% 12.1% + 0.3m total beer 13.4% 13.7% + 0.6m pba 15.1% 10.9% ( 9.1m) 2.1% 5.9% + 8.3m 6.9% 5.7% ( 2.7m) 87% of bottled ales are sold through the grocery multiple trade sector, a category worth almost 235million, growing by 12.7% year on year. A quarter of sales go through Tesco and, although there remains a significant undertrade in this retailer versus share of total beer, this gap has been narrowed by almost 3million since the end of 2012, with the growth of multi packs and increased display allocated to the category. There is also a big opportunity in Asda; bottled ale is in strong growth although still undertrades versus lager and standard canned ale. Asda are also benefitting from sales shifting from all the other major retailers. 87% of bottled ales are sold through the grocery multiple trade sector, a category worth almost 235million, growing by 12.7% year on year Source: Total Beer PanelVision 04.01.14, *PBA ACN Homescan MAT 04.01.14 Ale Category Performance & Trends
Trade Channel & Retailer Trends 29 Bottled Ale Shifting Between Retailers waitrose bottled ale ( 531.9k) Co-ops bottled ale +739k discounters bottled ale +821.4k Discounters continue to gain share of the category, driven by growth in Aldi who are attracting more customers and converting more of them to bottled ale. morrisons bottled ale ( 792.9k) all other ( 740.5k) Brand Shifting - Gains Loss 14.6k asda bottled ale +2,500k sainsbury s bottled ale ( 766.5k) tesco bottled ale ( 1,300k) 251.4k 272.2k 465.7k 770.4k Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA Ale Category Performance & Trends
Trade Channel & Retailer Trends 30 Retailer Bottled Ale % Category Conversion 100% 90% 8.8 9.5 9.0 9.5 8.7 Although Sainsbury s has seen some shifting to other retailers, they have increased the percentage of their shoppers who buy bottled ale by increasing display significantly. 80% 8.0 7.5 7.8 7.7 7.9 7.6 70% 6.5 6.4 6.2 60% 50% 4.5 40% 3.9 30% 20% 10% 0 Tesco aldi sainsbury s lidl waitrose morrisons asda co-op 2012 2013 Category Conversion: % of total footfall converted to category. Source ACNielsen Homescan MAT to 04.01.14 Ale Category Performance & Trends
Trade Channel & Retailer Trends 31 Retailer Premium Canned Ale Value Shares 40% 35% 30% 25% Morrisons share of the premium canned ale category dropped in 2013. Although their grocery penetration grew last year, the percentage of customers shopping the category fell significantly. Morrisons rationalised their premium canned ale range in 2013, leading to customers leaving the category and sales shifting to other retailers. The remaining premium canned ale shoppers are becoming less loyal to the category, indicating that the reduced range is not satisfying customer demand for a wide range of brands. 20% 15% 10% 5% 27.5% 37.4% 6.3% 19.4% 12.0% 7.8% 13.4% 15.3% 15.1% 5.0% 2.1% 4.5% 6.9% 3.3% 0 tesco sainsburys morrisons asda discounters waitrose co-op pba over/ under trade + 6.4m + 3.8m ( 2.7m) + 0.1m ( 0.8m) + 1.5m ( 2.3m) total beer pca Source: Total Beer PanelVision 17.09.13, *PBA ACN Homescan MAT 14.09.13 Ale Category Performance & Trends
Trade Channel & Retailer Trends 32 Canned Ale Shifting Between Retailers morrisons canned ale ( 1,200k) waitrose canned ale +239.4k Co-ops canned ale ( 79.4k) discounters canned ale +371.1k all other +46.0k Waitrose is the only retailer to increase the proportion of their customers buying into the premium canned ale category and some sales are being gained from other retailers. Despite this, their category is in decline year on year as a reduction of multibuys has caused customer weight of purchase to drop. Asda are losing sales to Sainsbury s and category penetration is slightly down year on year; growth however remains strong as their remaining customers are buying in greater volumes and they have corrected the 2.5million undertrade vs. total beer they had at the end of 2012. Brand Shifting - Gains Loss 3.2k asda canned ale ( 450.3k) tesco canned ale ( 400.9k) 105.4k 251.7k sainsbury s canned ale +1,400k 393.9k 511.9k Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs. YA 762.3k Ale Category Performance & Trends
Trade Channel & Retailer Trends 33 Retailer Premium Canned Ale % Category Conversion 3.0 2.6 2.6 2.5 2.1 2.0 1.8 1.5 1.4 1.3 1.2 1.3 1.2 1.0 0.8 0.5 0.7 0.6 0.5 0.6 0.3 0.1 0 Tesco sainsbury s waitrose morrisons asda aldi co-op lidl 2012 2013 Category Conversion: % of total footfall converted to category. Source ACNielsen Homescan MAT to 04.01.14 Ale Category Performance & Trends
Bottled Ale Range Development 34 Bottled Ale Own Label... 35 The Forgotten Bottled Ale Drinkers... 38 Bottled Ale Range Development
Bottled Ale Own Label Own Label Bottled Ale Value Market Share & Performance +32% 4.8% 35 Own label has historically struggled within the bottled ale category. Despite successes in other BWS categories such as wine and spirits, producing an own label offering that attracts bottled ale customers presents a number of challenges. Current growth of own label bottled ale remains strong, with most major retailers launching new or revamped ranges over the last couple of years, but it still only makes up a very small proportion of the category. There is a conflict between an own label bottled ale offering and the reasons that customers buy the category. Bottled ale consumers are more likely to engage with brands that are authentic, help reflect their sense of self and help him make their me time as good as it can possibly be. +10% 95.2%...producing an own label offering that attracts bottled ale customers presents a number of challenges. branded own label Bottled Ale Range Development
Bottled Ale Own Label 36 Right Image Skill Tradition Heritage Authentic Nostalgic, romantic Bygone era Country pub Holiday Things done properly Discovery Interest / excitement Choice Hobby Quirky but never fake, superficial or pretentious What s so great about bottled ale? Stories Engage Involve Enrich Occasion Reward Relaxation me moment Having sense of self Identity Exclusive club Provenance Brewery Locality (NB. not necessarily local to consumer) Retailer s own label offering has historically focused on the style of the liquid or regionality. Whilst important, this fails to adequately communicate the key attributes that attract consumers; authenticity, provenance and heritage. Bottled ale consumers are savvy, they know that retailers do not brew ale. As mentioned earlier in this report, own label does not attract new customers into the category; growth is mainly being driven by existing customers adding it to their repertoire. To avoid devaluing the category, and the consumers own sense of reward, own label bottled ale would benefit from being positioned on a par with branded offerings. Bottled ale consumers are savvy, they know that retailers do not brew ale. Bottled Ale Range Development
Bottled Ale Own Label 37 To develop an effective own label bottled ale range the following recommendations should be considered: Range circa 4 skus to build retailer brand identity and present a unique offering, whilst not detracting from the core brands delivering over 90% of the category sales Positioning Need provenance and locality offered by named brewer as manufacturer Pricing / Promotion On a par with branded range (or nominal saving), to avoid de-valuing consumer reward and trading down existing customers who add own label to their repertoire. Large price differentials can be a negative to consumers and have not driven category penetration Promote alongside branded bottled ales within category activity to encourage trial outside of core consumers banker brands Ale Styles Across different styles, 2-3 Light skus, 1-2 Dark skus to maximise appeal across different tastes (porters & stout do not appear to be successful in own label) Packaging Primary messages should be provenance / authenticity and style of ale Regionality is not the key factor but customers like the idea of ales having a locality (secondary message) Clear glass should be used where possible, especially for lighter ales Bottles should not be generic own-label ; they should reflect the style of ale or Brewer Own Label Bottled Ale Bottled Ale Range Development
The Forgotten Bottled Ale Drinkers Dark and light bottled ale drinkers 38 Recent research has determined that being experimental for bottled ale drinkers isn t necessarily about trying something completely different each time. Core bottled ale consumers are more likely to experiment within a particular type of beer, e.g. darker or lighter, than to opt for a completely new style. Experimentation does not tend to be extreme, as the risk of not enjoying the beer and ruining their important moment is significant. Experimenting within a brand is also seen as a safer route than opting for a completely new experience, reassured that other beers from the same brewer will also be good. Core bottled ale consumers are more likely to experiment within a particular type of beer, e.g. darker or lighter, than to opt for a completely new style. Bottled Ale Range Development
The Forgotten Bottled Ale Drinkers The forgotten consumers 39 Traditional Refreshing Easy Drinking NPD GK IPA Gold Old Golden Hen Golden Mixed Packs Adnams Sole Star Robinson s Dizzy Blond Honey Dew Badger England s Own Badger Golden Champion Light Badger Tanglefoot Tribute Brakspear Oxford Gold Badger Blandford Flyer Badger Hopping Hare Marstons Old Empire London Pride Badger Fursty Ferret Ruddles Banana Bread County Bishops Finger Directors Abbot Ale Old Speckled Hen Pedigree Badger First Gold Brakspear Black Sheep Landlord Spitfire Bitter Fuller s ESB NPD Theakstons Hodgshead (Increased availability of Doombar & Banks Bitter) Newcastle Brown Ale Dark NPD Innis & Gunn Thornbridge Brewdog Adnams Ghost Ship Snakes Bite S.Neame IPA Innis & Gunn Badger Golden Glory Bombardier Hobgoblin Badger Poacher s Choice McEwans Broadside NPD Old Peculier Premium higher ABV e.g. Fullers Vintage Abbot Reserve Crafty Hen King Goblin Complex Complex Full Bodied Key: Fruity Hoppy Other Looking at the current landscape for bottled ale drinkers, there has been a lot of focus and product innovation within lighter ales, which are enjoying substantial rates of growth as a result. By contrast, there has been very little product development or innovation within darker quadrants where the key, established market classics sit. Within the dark & full bodied style ales, there have been some range extensions, but these tend to be higher ABV, premium vintage or reserve ales rather than core, mainstream products....there has been very little product development or innovation within darker quadrants where the key, established market classics sit. Bottled Ale Range Development
The Forgotten Bottled Ale Drinkers The importance of the forgotten consumers Bottled Ale Performance By Style 19.3% value 18.1% value 24.4% value 38.2% value 40 Whilst lighter ales are in strong growth, darker style consumers are vital to the bottled ale category. Over 60% of sales are generated by dark ales and 15 of the top 20 bottled ale brands are darker styles. Lack of development within darker ales is creating bored consumers, with restricted repertoires which can lead to a reduction in purchase frequency. It is key for credible trusted brewers to renew their focus on these styles of ale to offer variety and excitement to Darker style consumers. +23% YoY +14% YoY +8% YoY +8% YoY Over 60% of sales are generated by dark ales and 15 of the top 20 bottled ale brands are darker styles. Light & refreshing dark & traditional light & complex dark & complex Source: ACNielsen ScanTrack Grocery Mults MAT to 09.11.13 Based on Top Btl Ale Brands making up 82% cat value Bottled Ale Range Development
Bottled Ale Merchandising 41 Merchandising by Brand vs. Style... 42 Key Findings... 43 Conclusions & Recommendations... 44 Bottled Ale Merchandising
Merchandising by Brand vs. Style 42 Last year, Hall & Woodhouse ran a store trial across a number of superstores. The purpose of the trial was to design and produce in-store point of sale to clearly communicate the differences and similarities in style across the bottled ale range, whilst retaining brand-blocking, to determine the impact on category and brand performance. Previous research had indicated that shoppers navigate the fixture by brewer/brand, but would benefit from a secondary overlay of style information; the trial objective was to test this hypothesis. The current bottled ale range was analysed and each ale categorized into one of four styles. At the fixture, a coloured shelf label, with the appropriate glass motif, was inserted to provide information on the ale style to shoppers. Additional point of sale included shelf strips, aisle fins, bottle carriers and leaflets providing examples of each style....in-store point of sale to clearly communicate the differences and similarities in style across the bottled ale range... Bottled Ale Merchandising
Key Findings 43 Category Sales of bottled ale declined in trial stores versus control stores by 3.2% Trial stores did not attract new customers although the number of customers retained (bought in previous period plus during trial) increased Overall trip volumes & spend fell in trial stores versus control stores Dark & Full and Light & Easy styles saw an uplift in sales; attracting new & retained customers although they spent less Badger Brand Sales increased by 2.5% in trial stores Badger did not attract any new customers or drive frequency; but existing shoppers bought 4.5% more per trip During the trial there was a 30.4% increase in Badger solus purchases Change in shelf position may have been a contributory factor There was an increase in the number of customers who purchased a wider range of unique skus Shoppers who purchased one style in the previous period had an increased repertoire across styles in the trial period compared to the control stores Bottled Ale Merchandising
Conclusions & Recommendations 44 There is no indication that brandblocking, or merchandising by style, impacts significantly on category performance Brandblocking does however have a positive effect on brands with a strong cohesive image across their range, such as Badger The trial reinforced the fact that position on shelf has the strongest relationship with product performance Within retailers who merchandise by style, it should be possible to introduce an element of brandblocking within the style restraints, by ensuring skus of the same brand are together where possible, and/or by vertical brand blocking Within retailers who do merchandise brands together, merchandising principals can be adopted to follow the progression that customers instinctively expect, to introduce style logic into the brandblock Lead product > Lighter variants > Darker variants There is no indication that brandblocking, or merchandising by style, impacts significantly on category performance...position on shelf has the strongest relationship with product performance Within retailers who merchandise by style, it should be possible to introduce an element of brandblocking within the style restraint... Bottled Ale Merchandising
45 Commercial Break
Commercial Break 46 New label approach In Spring 2014 Badger will be launching their new portfolio architecture, continuing their design relationship with award-winning agency BrandOpus. Commercial Break
Commercial Break 47 Following on from the successful launch of their bespoke bottle design in 2012 and consumer research in 2013, Hall & Woodhouse have refined their approach to consumer communication on-pack. New bottle labels see beer style and taste cues brought to the front of the bottle for greater clarity and ease of navigation of the range. Whilst coloured crowns have been used to denote style and occasion with black signalling the core range and gold, discovery beers. This clear and simple ranging approach will help consumers to navigate the portfolio and encourage cross-purchase. Commercial Break
Commercial Break 48 Badger mixed and multipacks have also been refreshed to complement the new architecture, as well as the canned Badger beers. Our recent work to bring the Badger canned ales in line with the core design has successfully unified the Badger portfolio. The new mixed & multipacks provide an eye catching and iconic design, that delivers the quirky Badger personality on shelf, and differentiates from competition. CLAIRE MARSHALL Design Director BrandOpus Commercial Break
Commercial Break 49 Awards Badger Ales has won a Silver Award in the recent 2014 DBA Design Effectiveness Awards and the Brand Campaign Beer, Wines and Spirits category in the 2014 Brand Impact Awards, the first of its kind. Both awards acknowledge the success of the brand identity created by BrandOpus, which includes the roll-out of the design strategy across the Badger bottle, cask and canned beer range, as well as pub signage, lorry livery and social media. Design Effectiveness Awards Winner brand impact. Commercial Break
Commercial Break 50 The identity, launched in 2012, has created a strong on-shelf presence for the bottle portfolio, encouraging consumers to explore and discover the world of Badger beer. By building on the brand s countryside roots, BrandOpus has developed a distinctive identity with an iconic character at the heart of it, which is easily identifiable in a cluttered fixture. OUR PARTNERSHIP WITH BRANDOPUS HAS PROVIDED CONSISTENCY AND CLARITY TO THE BRAND WITH A STRONG BRAND IDENTITY AND RANGE ARCHITECTURE. NOT ONLY HAS IT PROVIDED A STRONG FOUNDATION TO STRETCH THE BRAND, BUT ALSO MAINTAIN OUR POSITION AS ONE OF THE TOP THREE PREMIUM BOTTLED ALE BRANDS IN THE COUNTRY. ANNA CORBETT Brand Marketing Manager at Badger Commercial Break
Glossary & Contact 51 Glossary... 52 Contact... 53 Nielsen ScanTrack On Trade Market Purchase Frequency MAT Bottled Ales MAT Multibuy Promotional Mechanics Display Premium Ale Category Grocery Multiples (Nielsen Definition) Trip Volumes Premium Canned Ales Display BWS Category Penetration ABV Display Bottled Ales Multibuy Promotional Mechanics Bottled Ales Trip Volumes Premium Canned Ales BWS Category Loyalty MAT Grocery Multiples (Nielsen Definition) Nielsen ScanTrack Display Impulse Sector (Nielsen Definition) Category Loyalty Grocery Multiples (Nielsen Definition) Trip Volumes Nielsen HomeScan Bottled Ales Category Penetration ABV Trip Volumes On Trade Market Bottled Ales On Trade Market Bottled Ales BWS Grocery Multiples (Nielsen Definition) ABV Premium Canned Ales Off Trade Market Purchase Frequency Grocery Multiples (Nielsen Definition) Glossary & Contact
Glossary 52 ABV Alcohol by volume Bottled Ales All ale sold in a bottle, regardless of alcoholic strength, bottle size or pack size Category Loyalty The proportion of a shopper s total spend that is spent on a specified category BWS Beer, Wine & Spirits Category Penetration The % of UK households who have purchased from the specified category over the last year Display Any secondary siting of a product in store in addition to its standard shelf position Grocery Multiples (Nielsen Definition) Tesco, Asda, Sainsbury s, Morrisons, M&S, Iceland, Co-op, One Stop & Booths Impulse Sector (Nielsen Definition) Remainder of UK retail trade Managed Impulse, Symbol groups and Independents MAT Moving Annual Total 12 months to the specified date Multibuy Promotional Mechanics A quantity of products offered at a fixed price (e.g. 3 bottles for 5) or offered for the price of fewer units (e.g. 3 bottles for the price of two) Nielsen HomeScan Measures the Why Behind the Buy. Panellists scan their takehome purchases to provide consumer measures such as weight of purchase and penetration, and to generate more complex analyses, for example switching and repertoire Nielsen ScanTrack Provides a read of the retail Off Trade market, reporting on What People Buy. The data combines weekly EPoS scanning data for all key Grocery Multiples with the most up-to-date read of the Impulse market On Trade Market Alcohol sold for immediate consumption in pubs, bars, restaurants, etc. Off Trade Market Alcohol sold for later consumption through retailers Premium Ale Category Total bottled ales and premium canned ales Premium Canned Ales All ale between 4.2% and 7.5% ABV sold in can format, regardless of pack size Purchase Frequency The number of occasions a specified category or brand is shopped over the last year Standard Canned Ale All ale between 2.9% and 4.1% ABV sold in can format, regardless of pack size Trip Volumes The average volume purchased by consumers during a single shopping trip Glossary & Contact
Contact 53 For further information about this report, please contact: Melinda Bowles Category Controller Hall & Woodhouse Ltd marketing@hall-woodhouse.co.uk Premium Ale Glossary & Contact