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What’s brewing in the European Beer and Cider market?

15/09/2017

Europe remains an attractive market for beer and cider, consuming 20% of global beer volumes with the average annual consumption rate of 67 litres per capita, making it the second largest beer market in the world.  

Yet the beer market is changing. 

Falling customer demand, increased competitiveness, heightened requirements by retailers and ever more discerning consumers are just some of the varied challenges facing the beer market. 

Between 2007 and 2014 beer consumption in Germany, France and the UK fell significantly. The per capita consumption by the beer loving nation, Germany, dropped by a third since 1976. The leading reasons for the marked decline includes a change in demographic preferences and the emergence of alternative categories, such as wine and cider. 

 

The Rise of Cider

In recent years, Cider has captured consumer’s attention. Basking in the halo effect of the healthy gluten free trend appealing particularly to younger women, and coupled with the introduction of new quaffable fruity flavours, the global cider market is expected to be worth US$12.9 billion by 2020. 

Europe is the world’s largest cider market; but as a country the UK consumes the highest percentage of cider in the world. The Eastern European cider market remains small (4% of global volume),however Eastern European market size currently ranks sixth out of seven regions world-wide and this is expected to increase to fourth out of seven by 2020. The Eastern European cider market is still led by the Baltic states, which accounts for (26%) of total sales followed by Poland (22%) and Ukraine (15%).  

In the Czech Republic, Strongbow worked with EFMP partner PPM Factum on a multichannel campaign marketing its Cider by positioning it as a natural product.  All elements of the campaign reiterated this ‘natural’ message, from the ecologically friendly roadshow samplings, to electro bikes, and even to branding a Nissan Leaf as the appropriate car to use for the activities.  The team also created natural zones at selected music festivals where the visitors could, for example, take a picture of themselves lying comfortably on a real moss surface with real apples all around them, and share this on social media. The campaign captured consumer’s attention and tapped into their desire for a more natural alcoholic beverage.

Consumers have a growing awareness around health and are looking for ways to carry that through into the alcohol they consume. Cider is able to do just that.

In Ireland 22% of adults consume cider once a month or more, however there has been as reduction in recent years. Monthly consumption is more prevalent in males (27%) under the age of 24. 

In the past Cider was regarded as the poor cousin of a lager, however with the “beerification” of the cider market, it has now become an acceptable drink for men. 

The cider market is dominated by mid and premium brands. In the UK and Ireland there was a 35% increase in cider launches during 2016. Cider producers are riding the crest of the wave with cider as a healthy alternative to other alcoholic spirits, which is expected to drive gains in the market.

 

 

Growth of Craft Beer:

Craft beer is the rising star of the beer industry, registering a triple growth rate of the total beer market between 2015- 2016. In the last two years, craft beer has grown by 14% in Western Europe. There has been a substantial increase in smaller markets such as Italy (17%), Spain (35%) and Denmark (6%). The Polish Craft beer market rose by (16%) in 2016 compared to the (2%) for non-craft beer. The UK has seen double digit increases since 2011 with a (22%) increase in craft beer product launches in 2016. It is estimated that the increase in demand for craft beers will boost the beer market in Europe through to 2020.

The key driver is new product development. Consumers are drawn to innovative flavours and demand for speciality beer and low non-alcoholic beers has been increasing in Europe. 

Markets such as UK, Romania and Poland have seen an increased demand for flavoured lager. 

Our EFMP partner, Promo Sapiens, based in Belgium have been doing some fun, creative in-store demonstrations with Mort Subite who are known for their fruit beers. The agency set up a pub in-store with real bartenders to serve customers. This fun campaign got customers to sample the products and buy the fruit flavored beers.  It is estimated that 40-60% of consumers who purchase sample packs also buy full size packs.

 

Premium lager makes up about 70% of the volume sales of flavoured lager. Despite the premium and super premium segments experiencing strong growth, the competitive pressure at this end of the market has intensified as economies of scale and barriers to entry are significantly lower making it easier for niche brands to compete successfully.

 

Although total beer sales on-trade in 2017 is estimated at 1.6m Euro and lager is still the dominant sector, demand for standard lager has seen a decrease, even though it is a preferred category in countries such as Czech Republic, Poland and Slovakia. 

 

Option One, the EFMP partner based in Poland have been working with Grupa Zywiec, the Polish subsidiary of the Heineken Group and the second largest beer producer in the country for the last 4 years. Option One are responsible for merchandising in modern retail complexes nationwide. Covering several hundred stores, the task is to ensure shelves are always fully stocked; they install various point of sale materials, check best before dates and remove any products with defective packaging. Currently the project employs over 200, people and by using mobile planning and data capture system the client has real-time access to all the data.  

 

The popularity of the craft offering has fragmented many markets, capitalising on the “premiumisation” trend to shift to drinking less but better. The demand for craft ales and stout is growing across Europe due to decreasing prices and more private labels. 

Low alcohol and non-alcoholic beers are in high demand across Europe focusing on female centric branding and educating consumers on the benefits of low alcohol content and low calories. 

While lager sales growth is predominantly flat, many of the larger breweries have been acquiring smaller breweries to tap into the craft market, while others have looked to reclaim their craft heritage. They have also looked for ways to cut costs and focus on product innovation, continuous creativity in packaging, and retail availability.  

While many of the craft beer brands play on the fact that small scale brewing is synonymous with a high quality, the larger brewers are having to become more effective with how they engage the on-trade and off-trade market. ABinBev, one of the largest brewers in the world have been working with EFMP partner, Europromotions, in Belgium. In addition to the traditional field marketing activities such as merchandising, they have set up a Facebook group for their off-trade segment, so that they are able to effectively share best practices and incentives to further emphasise the quality of their product and service.   

As retail is a dominant route to market it has become increasingly important to develop ‘shelves of the future’ which can include effective point of purchase display stands. Grolsch, another premium beer has done just this. G7, our EFMP partner in Romania were tasked with making this premium beer, that is usually consumed on-trade, to appeal to the off-trade market. The quality in-store stands and enticing competition prizes resulted in making this an extremely successful campaign. It encouraged customers to buy Grolsch in-store for home consumption as opposed to only buying it on-trade. 

Another growing trend is coupling beer and food combinations. Championing this premium lifestyle-themed approach is Heineken, who have been working with the Spanish EFMP partner, Grupo A, to execute premium publicity events in leading Spanish cities. Events include a James Bond movie sponsorship, with actors re-enacting scenes from the movies accompanied by live music. Guests received gifts which included a ‘Shopping Night in Barcelona,’ followed by a hostess-serviced beer and food pairing.

Brewers of premium beer, Leffe have positioned their beer as part of a ‘gastronomy experience’. To further leverage its positioning they worked with our Dutch partners, PSfm. The campaign involved a stylish, custom-made beer truck that served beer on tap and was a talking point at the food and music festivals throughout Holland. Dutch beer is a firm favourite in The Netherlands followed by Belgium and German beer. The popularity of beer has grown significantly. A survey conducted by The Dutch Brewery Association with 1000 participants showed that 80% of respondent’s drank lager every month, 30% drank craft beer and 24% drank non-alcoholic beer. 

Our EFMP partners already work with some of the leading beer brands across multiple countries. Our knowledge of the market and our ability to share best practice combined with creative solutions and accountable reporting make us an obvious choice for brands looking to succeed in this challenging market.

 

 

The larger more established beer brands realise that innovation in how they position and market themselves is imperative to continued success. Some of the smaller brands will find the market become increasingly tougher and it’s only those brands that are able to tap into the sales potential and appeal to the consumers on a larger scale that will live to tell the tale.

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