'Disloyal' and 'promiscuous' consumer drinking habits pose key challenge to licensees

Author: Daniel Woolfson

Licensees face a key challenge in keeping their beer and cider offer fresh in the face of ‘disloyal’ consumers and disruptive operators encroaching on their market share, according to a leading on-trade expert.

Speaking at the Publican’s Morning Advertiser’s Future Trends Beer & Cider Summit on Wednesday (22 June), Graeme Loudon, commercial director of CGA Strategy, told the audience that while the rate of innovation in beer and cider has never been faster, licensees needed to learn to understand consumers better.

He said: “The key challenge is how to keep an offer fresh. How do you stock brands that are cool and new, as well as keeping traditional favourites on?
“Our challenge is understanding consumers better – we have a very promiscuous consumer who is 18% more likely to try new brands than two years ago and the average consumer has 12.2 drinks brands within their repertoire.”

Disloyal to brands
CGA research revealed that 22% of consumers now considered themselves ‘disloyal’ to drinks brands and were actively looking to try products they had no previous experience of, he said.
However, 18 to 24-year-olds exhibited the most ‘promiscuous’ behaviour when it came to choosing drinks, he added.
“They are looking for something unfamiliar, so licensees need to keep it fresh. For me, sampling is a really good way to get around this.”
Indeed, he said, one in three business leaders quizzed by CGA said they planned to invest in sampling during the next year, adding that the challenge for drinks brands was to make themselves stand out in what was fast becoming a saturated market.

Product quality key
“Consumers need to make sure that they’ve heard about your brand – they need to understand it and it needs to deliver on taste. Price needs to be appropriate and visibility is key. You need to make sure that you’ve got a position where the consumer can see you.”
When looking for new beers and ciders to stock, licensees were increasingly basing their buying decisions on product quality rather than purely price point.
“Some 84% of licensees say product quality is key. They recognise they need to meet demand for local products and something different. Not just from a product perspective but customers are looking for a different experience from the on-trade as a whole.”
‘Disruptive’ on-trade events such as street food markets and rooftop parties had massive pull among consumers and it was important for the traditional on-trade to adapt to create a similar atmosphere, he added.

State of play
Despite wine, spirits and champagne stealing market share from beer, innovation was hitting the mark, Loudon said.
Total beer sales were down 2.8% over the past year. However, this was a far better state of play than in previous years, he explained. The cider market was growing at 1.3%.
“[In beer] people are drinking less but better [quality], so volume is down but value is performing ahead of that,” he said.
There were 2,277 new product launches in beer and cider over the past three years compared to fewer than 1,000 new spirit brands.
Within beer, ‘craft’ continued to grow, with a quarter of licensees saying it was the most successful new product they had invested in. However, ‘craft’ beer was still only available in a third of outlets.
Premium world lager was growing at 7.5%, he said, adding: “Consumers are showing they are willing to pay more if they understand the heritage and the authenticity of the world lager category.”

New products
And despite the fact that more than 50% of new product releases over the past year were ‘craft’ beer, accounting for roughly 34% of sales, there were 10 times fewer new cider releases but cider was responsible for an equal market share of 34%.
He said: “These [ciders] do have a high rate of sale and are delivering from a volume perspective.”
And despite apple and pear cider being in decline, innovation in draught hazy and cloudy ciders had been particularly successful, he added.


This article first appeared in the Publican's Morning Advertiser on 23.06.16                                    © 2016 - William Reed Business Media Ltd