PREMIUM BEER: Wish You Were Beer

As more of us travel to global holiday destinations, so our preference for ales and lagers from exotic locations increases, along with our willingness to part with more cash for premium and foreign beers. Clinton Cawood reports

There are a number of pressures currently affecting the UK drinks trade. Many of these will be felt particularly strongly by the beer category, although one sub-category is likely to fare better than others in what looks set to be a tumultuous future.
Premium beers, by their very nature, are in a better position to tackle issues of price. Price, for a number of reasons, is an increasingly important issue for the beer category in general. A duty hike in a few months’ time looks likely, despite pleas from industry bodies. Bad weather may be to blame for a downturn in sales in the last year, but is also likely to have a longer-lasting effect: raw material costs have increased and will almost definitely result in beer price rises in the near future. A glass bottle shortage in Europe will also no doubt have a direct effect on prices as well.
InBev’s Steve Kitching confirms: “All brewers are facing basic commodity inflation the like of which hasn’t been seen in a long time. This will affect the on-trade and take-home equally and across all brands.” While the impact will be felt in all channels, the differences between the on- and off-trade for beer mean that this will probably manifest differently. Kitching believes that the “on-trade market as a whole has made strides in continuing to differentiate itself from the off-trade market”. Nielsen’s figures prove this: it reports that the on-trade is responsible for an 80% share of beer sales by value, and only for 62% of volume sold (MAT 09.07).

“The value delivered through continued focus on delivering a safe and enjoyable social environment, delivering a quality draught experience and broadening the appeal through food and events is recognised by the majority of consumers,” Kitching adds.

Food pairing
This touches on a number of other relevant factors. It is widely accepted in the trade that the introduction of the smoking ban has necessitated a greater focus on quality, and on food in particular. This, in theory, results in a corresponding shift in drinking patterns and consumer choice. The obvious beneficiary of this shift is wine, but within the beer category, premium beer is best placed to benefit from this. Of those players involved in this part of the market, there are few that are not making food-pairing a significant part of their strategy.
Naturally, this varies in importance, depending on the brand. For marketing director of Surfax, Peter Karsten, food pairing is not a core concern, but is still important to a degree. Speaking about one of Surfax’s brands, Tusker, from Kenya, he says: “We’re not necessarily trying to associate it with food. It does incidentally go well with food, however.” For Karsten, the idea of associating beer with food makes perfect sense: “It’s more refreshing than wine, and it’s a longer drink.” The particular pressures brought on by the smoking ban are not a concern for Karsten, who, in addition to Tusker, works with Krušovice from the Czech Republic and DAB from Germany. For premium imports the smoking ban is probably a positive thing, he believes. “More potential consumers of premium products are going into the pub because of the cleaner environment.”
For Anheuser Busch’s marketing director, Vicki Kipling, an association with food is important for a number of the company’s beer brands. Harbin, like other Asian beers, benefits from its association with Asian cuisine. “Pairing with food is a good start – it’s a great opportunity for retailers to gain incremental profit,” she says.

For Anheuser Busch brand Michelob, however, Kipling places less importance on food pairing. “It has the target of the classic city worker, so we target where those guys would drink.”

A sunny future
Country of origin is a factor that is extensively used within the premium beer category to differentiate brands – to provide consumers with cues when making a choice within the extensive, and increasingly diverse, premium beer market. Kipling provides a broader category, however, referring to “sunshine or sun beers”, which she believes will continue to increase in popularity. This category, she believes, will see continued interest in the future. “As long as there’s some integrity behind it.”
For Bavaria UK’s marketing manager, Sarah Swainson, “Country of origin is something which is becoming increasingly important to consumers as they become more demanding.” Swainson goes on to raise one of the enduring, controversial issues within premium beer: “Consumers often feel misled by a brand if it gives the impression of brewing beer in its country of origin, but is actually brewing in the next town in the UK.” For Kipling, however, the most important thing “is that companies don’t try to hide where a beer is brewed”. For Christian Hamilton, Shepherd Neame’s brand manager for Asahi, which it brews under licence, there are arguments for brewing closer to home. “Fresh beer is very important. From the minute you brew a beer and put it into a bottle or keg it’s a race against time to get it into the consumer’s hands.”
There’s another factor that, for Hamilton, justifies production of Asahi at the Shepherd Neame brewery in Kent: “From a consumer point of view, I don’t know how important it really is. I’ve never had that question asked by a consumer.”

Those involved with imported premium lagers are just as opinionated on this matter. Nick Miller, sales director at Miller Brands, expresses the belief that “certain consumers are increasingly looking for genuinely imported premium brands rather than ones that are brewed locally.”
For Singha’s Donna Tirrell, “It is important to remember that the customer is not stupid. There are so many beers now brewed under licence and consumers are wary of paying too much for a speciality beer that is brewed in the UK.”
The fact remains that origin (of the brand or the beer itself), plays an important role, and is inextricably linked with cuisine. This point was clearly made at the recent official launch of Thai beer Chang in the UK. Despite having been available in the UK for some time now, a number of factors have motivated a much more concerted effort from the company when it comes to export markets. Roger Barrey, group director for beer at Interbev, the export arm of the company, confirms the initial focus for the brand on outlets with an appropriate food offering.
There is another factor that can drive sales of a beer such as Chang, according to Barrey. “The world is getting more accessible. That’s what drove the lager boom in the ‘70s and enabled European lager brands to become established in Britain. The difference today is that more people are going global. Places such as Thailand and Mexico are now the aspirational destinations as long haul travel becomes more widespread.”
Michael Cook, from speciality beer importer Pierhead, explains: “A lot of consumers are looking for something a bit different, a bit unusual, possibly something that reminds them of where they had their last holiday. If you’ve been to Greece recently, or are going there for your next holiday, you’ll look for a beer from there.”

There are other factors that influence consumers. As Cook says: “People that are entertaining want to offer their guests something more than just the cheapest beer on the shelf. You look for something novel. A lot of this is led by style bars and gastro pubs, who are all trying to vie with each other to have something different – different wines, beers… They don’t want to be seen as the same as the pub down the road or on the high street.” This does not exclude the importance of the off-trade, Cook emphasises. “Sometimes you’ve got brands and presentations that only work in the off-trade.”
Kipling agrees: “It depends on the brand. The standard is to build a brand in the on-trade, but with Michelob Ultra we’ve done it the other way round. The on-trade provides a window for consumers to trial new brands, but there are also now more and more specialist off-trade outlets.”
Regardless of where consumers are faced with the choice, it seems likely to become an increasingly diverse one within premium beers, even if they are likely to have to pay more for it. For the time being at least, there are other categories that will not fare nearly as well.

© db January 2008