Home' Brewers Guardian Digital Magazine : November 2014 Contents T
he global beer market is currently growing at a modest 2% per annum
and is forecast to maintain a very similar trajectory for the foreseeable
future. Whilst it is probably too early to state that we have reached the
endgame in terms of consolidation, the pace has slowed markedly.
However, beneath this apparent stability there are three key megatrends
that are influencing the shape of the market. These are: premiumisation; the “craft
beer” phenomenon; and the growth of flavoured beers and beer mixes (Radlers).
Premium beers have consistently outperformed the overall market. On a global
scale they are growing at 3.6% (5 year CAGR), compared to the aforementioned 2%
overall market growth.
Defining premium is potentially a very contentious issue. The simple use of the
word premium on a label or in a brand name does not in itself confer premium
attributes on a product. The concept of premium is ultimately subjective in the
mind of the consumer, but can be distilled to the 5 P’s:
Product, Packaging, Provenance, Promotion, Price
Clearly the product is an important element of the mix. A premium beer will
typically offer something different from a mainstream beer. It could be a different
style – many ‘craft’ beer brands and specialties will have a premium position.
Alcoholic strength is also important, both in terms of providing consumers with
‘more bang for their buck’ but also because stronger beers typically attract higher
excise duties and therefore a higher price.
However, some strong beers command a high price but have a downmarket image.
Sift through acres of research data and you’ll most
likely get lost in the trees without being able to see
the forest. Welcome, then, Kevin Baker, who argues
here that there are three trends in the brewing
industry that are of undeniable global significance
These brands could be described as ‘functional
Packaging can also confer a premium image on
a brand. In the UK, for example, the use of clear
‘flint’ glass bottles for ales is an indicator of
premium. Conversely cans, which are perceived as
a mainstream pack in the UK, are seen as premium
in markets in Central & Eastern Europe. Pack size is
a factor as well, with premium beers often sold in
smaller pack sizes.
Provenance plays a key part in the image of a brand.
Beers from markets with a strong beer heritage
(such as Germany, Belgium and the Czech Republic)
are often viewed as premium; beers from more
exotic locations can provide consumers with a sense
of discovery. In many markets (especially mature,
developed markets) a premium priced ‘world beer’
category has emerged.
A lot of the image of a beer is the result of skilful
advertising and promotion by brand owners. Iconic
advertising, like the “reassuringly expensive”
campaign for Stella Artois in the UK in the 1980s
and 1990s, can create a premium aura around a
brand. The distribution of a brand, both in terms of
being stocked in high profile, trendsetting outlets,
and in restricting access to a brand to outlets that
are seen as appropriate, helps to build a premium
image. In recent years, SABMiller have been careful
to limit distribution of Peroni Nastro Azzurro in the
UK to outlets that meet certain criteria.
Price is ultimately the most important determinant
of premiumness. The ability of a brand to command
a significant price premium over mainstream
brands ultimately determines whether a brand is
premium or not. The other 4 P’s all enable a brand
to command a higher price, but alone they do not
necessarily mean a brand is premium.
Although premium beers were not immune from
the effects of the global economic crisis, volumes
of premium brands recovered much more rapidly
than mainstream brands and a number of premium
brands have experienced significant growth during
the downturn. This is a pattern seen in previous
Essentially there are two key reasons for the
resilience of premium brands. Firstly, premium beer
drinkers tend not to be those most severely affected
by a reduction in spending power, and secondly, as
belts are tightened consumers seek better value for
money, and are prepared to spend a little extra for
what they perceive as a superior product.
The craft phenomenon
Despite all of the hype surrounding the success of
craft beer, there is a lack of consensus as to what
“it” actually is. Whilst it is relatively easy to state
what it doesn’t encompass, defining exactly what
the category comprises is actually quite difficult.
In the United States, the Brewers Association has
a three-point definition of craft beer: An American
craft brewer is defined as being small, independent
Whilst this definition has worked very well in the
US, transferring it to other markets is problematic.
For example most consumers would define a brand
such as Leffe as a craft beer. However, the brand
is produced by AB InBev and therefore would be
excluded under the American definition.
Similarly, the independence criteria means that
following the recent acquisition of Goose Island in
the US by AB InBev, that brand ceased to be a craft
beer overnight despite no change to the production
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