Hall and Woodhouse Insight report 2014

Page 1

Premium Ale INSIGHT REPORT

2014

Hall & Woodhouse Premium Ale Insight Report 2014


02

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

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

Hall & Woodhouse Premium Ale Insight Report 2014

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 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

Bottled Ale range Development:....................34 Bottled Ale Own Label.............................................................35 The Forgotten Bottled Ale Drinkers......................................38

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

Hall & Woodhouse Premium Ale Insight Report 2014

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

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


05

Category Performance Overview Beer Category 5 Year Volume Trend (indexed to 2008)

F

140

129

130

120

110

ollowing 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

100

90

88

80 2008 2009

■ Bottled ale

2010

2011 2012

■ premium canned ale

2013

Over ½ million new customers entered the category in 2013, adding bottled ale to their alcohol repertoire.

■ total beer

ACNielsen Scantrack MAT to 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


06

Category Performance Overview Ale Value Share of Beer Category On Trade vs. Off Trade

3%

7%

14%

25%

68%

83%

On Trade

Off Trade

■ Lager

■ ale

■ stout

A

le’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.

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

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


07

Category Performance Overview Bottled Ale Household Penetration Growth

W

24% 25

20

15

hereas 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 ÂŁ200million to bottled ale should category penetration reach this level.

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

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


08

Category Performance Overview Bottled Ale Brands % Value & Volume Market Share Total GB

+17% +7% +3% (1%) +11% +13% +32% +33% +2% +9% +15% (14)%

morland badger shepherd neame fullers wychwood marstons private label greene king newcastle brown adnams black sheep charles wells

0

1

9.0 8.8 7.7 7.6 7.6 8.5 6.3 5.8 6.1

B

ottled 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.

6.2 5.9 6.4 4.8 4.4 4.7 5.4 4.5 4.8 2.8 2.8

% Value Growth (Market +10.8%)

2.5 2.5 2.4 2.4 2

3

■ value share

4

5

6

7

8

...in particularly mixed ale multipacks which have grown by 67% in value.

9

■ volume share

ACNielsen Scantrack MAT 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


09

Category Performance Overview Premium Canned Ale Brands % Value & Volume Market Share Total GB

+16% 26.8 15.7 (7%) 16.0 +2% (2%) (4%) (4%) (13%) (4%) (4%) (12%) (34%) % Value Growth (Market -2%) (5)%

27.1

morland mckewans 6.9

greene king

6.9 6.4

badger

6.7 5.6

wychwood

5.7 5.0

fullers

4.9 5.0

charles wells

5.7 4.4

newcastle brown

4.5 4.0

bass

4.5 3.4

ruddles

3.5 2.9

marston’s

3.0 1.8

wadworths

1.8 0

A

lthough 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.

5

10

■ value share

15

20

25

30

■ volume share

Nielsen Scantrack MAT 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


10

Category Performance Overview Adding Value to BWS BWS Average Annual Spend Per Buyer £s

T

700

600 566

456

476

583 532

517

512

495

500

576

496

471

494

549

511

523

540

532

502 461

466 441

430

446

469

he 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 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

■ mat ya we 05.01.13

■ mat ty we 04.01.14

Cider

RTD

Stout

Standard Canned Lager

Premium Canned Lager

World Beer

Bottled Lager

Standard Canned Ale

Bottled Ale

0

Total Spirit

100

Total Light Wine

200

Premium Canned Ale

300

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

Hall & Woodhouse Premium Ale Insight Report 2014

Introduction


Executive Summary

Hall & Woodhouse Premium Ale Insight Report 2014

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.

Hall & Woodhouse Premium Ale Insight Report 2014

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

Hall & Woodhouse Premium Ale Insight Report 2014

BWS Category and Consumer Dynamics


14

Beer, Wine & Spirit Trends Performance by BWS Category (including duty and VAT)

A Total BWS £15,249m +3.1% YoY

Wine £6,604m +2.9% YoY

Total beer £3,606m +1.7% YoY

LADs £4,853m +2.9% YoY

Cider and perry £1.021m +7.9% YoY

Spirits £3,717m +3.8% YoY

RTDs £226m (0.7%) YoY

lthough 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

Hall & Woodhouse Premium Ale Insight Report 2014

BWS Category and Consumer Dynamics


15

Beer, Wine & Spirit Trends Beer Category Trends

12

11

-5

-8

-6

Premium Canned Ale -3

-2

Bottled Ale

-6

7

-6

-1

Ale

Beer

-3

0

Lager

-1

0

2

2

3

3

Canned Ale

6

Standard Canned Ale

9

A

fter 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.

-9

■ Vol % Chg

■ £ % Chg

ACNielsen Scantrack MAT 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

BWS Category and Consumer Dynamics


16

Beer, Wine & Spirit Trends Ale Category % Value Share by Pack Format

T

he 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.

100%

90%

80%

70%

46.7%

60%

50.7%

54.3%

50%

40%

30%

20%

53.2%

49.2%

45.4%

2011

2012

2013

10%

0

■ canned ale

■ bottled ale

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

Hall & Woodhouse Premium Ale Insight Report 2014

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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


18

Bottled Ale Category Trends Bottled Ale Performance

N

+18,483,089

(3,122,589)

(7,013,164)

(2,122,436)

ew 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.

-20,000k -10,000k 0 10,000k 20,000k

■ trip volume contribution (52w) ■ frequency contribution (52w)

■ Price 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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


19

Bottled Ale Category Trends Bottled Ale Source of Value Shifting Gains / Losses % Actual %

total: -1219

mkt pen: 44

Actual / Index

-0.5

Standard canned lager

978

90

stout

233

180

ale keg

-78

9335

4 -1

rtd -146 152

-2

standard canned ale

-181

180

-3

all other

-199

162

-3

0.3

repetoire: 4364

shifting: -6271

A

0.0

awop: 644

16

s this shifting is not growing the ale category overall, this trend risks having a negative impact on ale category margins.

1.9

-2.7

cider -222 41

-4

premium canned lager

-598

208

-10

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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


20

Bottled Ale Category Trends Bottled Ale Multipacks

+26.4%

9%

+9.4%

â– multipacks

Hall & Woodhouse Premium Ale Insight Report 2014

91%

â– single bottles

B

ottled 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.

...multipacks offer customers an average saving of 16% whilst commanding higher manufacturing costs for suppliers. Ale Category Performance & Trends


21

Bottled Ale Category Trends Own Label Bottled Ale Source of Value Actual

%

total: 416

4.7

mkt pen: 207

2.4

awop: -862

repetoire: 912

shifting: 158

R

etailer 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.

-9.8

10.3

1.8

basis = £(000)s

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.

Source: Homescan MAT 4th Jan 2014 vs YA

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


22

Bottled Ale Category Trends Lower Alcohol Bottled Ale

T

he 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%

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


23

Bottled Ale Category Trends Lower Priced Bottled Ale Source of Value Actual

%

total: 1055

9.5

mkt pen: -9

-0.1

awop: -145

T

he 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.

-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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


24

Premium Canned Ale Category Trends Premium Canned Ale Performance

-10,000k -5,000k

+7,829,706

(3,207,032)

(575,375)

(3,776,540)

A

lthough 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.

0

■ trip volume contribution (52w) ■ penetration contribution (52w)

5,000k

10,000k

■ Price Contribution (52w) ■ Frequency Contribution (52w)

...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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


25

Premium Canned Ale Category Trends Premium Canned Ale Shifting Gains / Losses Actual / Index

Bottled Ale

1057

331

473

Standard canned lager

251

31

113

all other

178

71

80

standard canned ale

144

91

65

stout 11 11

T

he 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.

%

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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


26

Ale Kegs Ale Kegs Source of Value Shifting Gains / Losses % Actual

%

Actual / Index

total: 697

268.6

mkt pen: 0

awop: -19

Branded premium bottled ale

96

1494

branded standard bottled ale

48

6092

branded standard canned ale

23

603

7

branded premium canned ale

22

904

7

branded all other

-1

42

15

0.0

A

0

-7.3 Edlp -2 221

repetoire: 398

shifting: 317

30

comparatively 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 ÂŁ1.5m 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.

-1

153.6

122.3

Sales of kegs reached ÂŁ1.5m 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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


27

Trade Channel & Retailer Trends Performance by Channel

D

100%

90%

80%

70%

77% +0%

75% +1%

89% +0%

23% (3%)

25% (4%)

87% +9%

90% (6%)

89% (7%)

91% (3%)

60%

espite 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%

11% (8%)

10%

0

13% (6%)

10% 11% (11%) (13%)

9% (5%)

Addressing this could potentially double the ale category within impulse, increasing sales by £70million!

BWS beer ale bottled ale canned ale standard premium canned ale canned ale

■ impulse

■ grocery multiples

Nielsen Scantrack MAT to 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


28

Trade Channel & Retailer Trends Retailer Bottled Ale Value Shares

87%

30%

25%

■ total beer

+£0.6m

pba over/ under trade

+£0.3m

■ pba

6.9% 5.7%

2.1% 5.9%

15.1% 10.9% asda

waitrose co-op

(£2.7m)

discounters morrisons sainsburys

+£8.3m

tesco

+£21.9m

(£8.2m)

0

(£9.1m)

5%

13.4% 13.7%

10%

12.0% 12.1%

15%

6.3% 16.4%

27.5% 23.7%

20%

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

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


29

Trade Channel & Retailer Trends Bottled Ale Shifting Between Retailers Co-ops bottled ale

D

+739k waitrose bottled ale

discounters bottled ale

(£531.9k)

+821.4k

iscounters 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

all other

(£792.9k)

(£740.5k)

Brand Shifting Gains Loss 14.6k asda bottled ale

tesco bottled ale

+2,500k

(£1,300k) sainsbury’s bottled ale

(£766.5k)

251.4k 272.2k 465.7k 770.4k

Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs.YA

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


30

Trade Channel & Retailer Trends Retailer Bottled Ale % Category Conversion

A

lthough 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.

100% 9.5 8.8

90%

9.5 9.0 8.7 8.0

80%

7.5

7.8

7.7

7.9 7.6

70% 6.5

6.4

6.2

60%

50% 4.5 3.9

40%

30%

20%

10%

0

Tesco

aldi

sainsbury’s

lidl

■ 2012

waitrose

morrisons

asda co-op

■ 2013

Category Conversion: % of total footfall converted to category. Source ACNielsen Homescan MAT to 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


31

Trade Channel & Retailer Trends Retailer Premium Canned Ale Value Shares

M

orrisons’ 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.

40% 35% 30%

sainsburys

morrisons

asda

■ total beer

+£0.1m

pba over/ under trade

+£3.8m

+£6.4m

6.9% 3.3%

2.1% 4.5%

discounters

waitrose co-op

(£2.3m)

tesco

+£1.5m

(£2.7m)

0

15.1% 5.0%

5%

(£0.8m)

10%

13.4% 15.3%

15%

12.0% 7.8%

27.5% 37.4%

20%

6.3% 19.4%

25%

■ pCa

Source: Total Beer PanelVision 17.09.13, *PBA ACN Homescan MAT 14.09.13

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


32

Trade Channel & Retailer Trends Canned Ale Shifting Between Retailers Co-ops canned ale

W

(£79.4k) waitrose canned ale

discounters canned ale

+239.4k

+371.1k

morrisons canned ale

all other

(£1,200k)

+46.0k

aitrose 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

tesco canned ale

(£450.3k)

(£400.9k)

105.4k 251.7k

sainsbury’s canned ale

393.9k

+1,400k

511.9k

Nielsen Homescan Market- Total G.B, Time Period-MAT to 04.01.14 Vs.YA

Hall & Woodhouse Premium Ale Insight Report 2014

762.3k

Ale Category Performance & Trends


33

Trade Channel & Retailer Trends 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

1.3

1.2

1.2

1.0 0.8 0.7 0.6

0.6 0.5

0.5

0.3 0.1 0 Tesco

sainsbury’s

waitrose morrisons

■ 2012

asda

aldi co-op

lidl

■ 2013

Category Conversion: % of total footfall converted to category. Source ACNielsen Homescan MAT to 04.01.14

Hall & Woodhouse Premium Ale Insight Report 2014

Ale Category Performance & Trends


Bottled Ale Range Development

34

Bottled Ale Own Label............................................................................... 35 The Forgotten Bottled Ale Drinkers.......................................................... 38

Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Range Development


35

Bottled Ale Own Label Own Label Bottled Ale Value Market Share & Performance

+32% 4.8%

+10%

■ branded

Hall & Woodhouse Premium Ale Insight Report 2014

95.2%

O

wn 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.

...producing an own label offering that attracts bottled ale customers presents a number of challenges.

■ own label

Bottled Ale Range Development


36

Bottled Ale Own Label Right Image • Skill • Tradition • Heritage • Authentic

Stories • Engage • Involve • Enrich Occasion • Reward • Relaxation • ‘me’ moment

Nostalgic, ‘romantic’ • Bygone era • Country pub • Holiday

Having sense of ‘self • Identity • Exclusive ‘club’

Things ‘done properly Discovery • Interest / excitement • Choice • Hobby

R

etailer’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.

What’s so great about bottled ale?

Quirky but never fake, superficial or pretentious

Hall & Woodhouse Premium Ale Insight Report 2014

Provenance • Brewery • Locality (NB. not necessarily local to consumer)

Bottled ale consumers are savvy, they know that retailers do not brew ale.

Bottled Ale Range Development


37

Bottled Ale Own Label 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

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

Own Label Bottled Ale

• Bottles should not be generic ‘own-label’; they should reflect the style of ale or Brewer

• Promote alongside branded bottled ales within category activity to encourage trial outside of core consumers ‘banker’ brands

Hall & Woodhouse Premium Ale Insight Report 2014

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. Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Range Development


39

The Forgotten Bottled Ale Drinkers

NPD Innis & Gunn Thornbridge Brewdog Adnams Ghost Ship Snakes Bite S.Neame IPA

Light

Honey Dew

Innis & Gunn

Badger England’s Own

• •

Badger Golden Champion

Badger Tanglefoot

Tribute

• •

Brakspear Oxford Gold

Badger Blandford Flyer

• • • • • • • • • • • • • • Badger Hopping Hare

Marstons Old Empire London Pride Badger Golden Glory Banana Bread Bishops Finger

Badger Fursty Ferret Ruddles County Directors Abbot Ale Old Speckled Hen Pedigree Badger First Gold Brakspear Bitter

Black Sheep Spitfire

• •

Landlord

Fuller’s ESB

• •

Newcastle Brown Ale

Bombardier

Hobgoblin Badger Poacher’s Choice McEwans Broadside

NPD Theakstons Hodgshead (Increased availability of Doombar & Banks Bitter)

Old Peculier

Dark

Hall & Woodhouse Premium Ale Insight Report 2014

••

NPD Premium higher ABV e.g. Fullers Vintage Abbot Reserve Crafty Hen King Goblin

Complex

Traditional

L

ooking 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.

Full Bodied

Easy Drinking

NPD GK IPA Gold Old Golden Hen Golden Mixed Packs Adnams Sole Star Robinson’s Dizzy Blond

Complex

Refreshing

The forgotten consumers

Key:

• • •

Fruity Hoppy Other

...there has been very little product development or innovation within darker quadrants where the key, established ‘market classics’ sit. Bottled Ale Range Development


40

The Forgotten Bottled Ale Drinkers The importance of the forgotten consumers Bottled Ale Performance By Style

24.4% value

38.2% value

+8% YoY

+8% YoY

+14% YoY

+23% YoY

19.3% value 18.1% value

W

■ Light & refreshing ■ dark & traditional

hilst 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.

Over 60% of sales are generated by dark ales and 15 of the top 20 bottled ale brands are darker styles.

■ 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

Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Range Development


Bottled Ale Merchandising

41

Merchandising by Brand vs. Style............................................................ 42 Key Findings.............................................................................................. 43 Conclusions & Recommendations............................................................ 44

Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Merchandising


42

Merchandising by Brand vs. Style 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.

P

revious 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...

Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Merchandising


43

Key Findings 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

Hall & Woodhouse Premium Ale Insight Report 2014

Bottled Ale Merchandising


Conclusions & Recommendations • 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

Lead product

>

• 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

Lighter variants

>

Darker variants

44 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...

Hall & Woodhouse Premium Ale Insight Report 2014

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.

Hall & Woodhouse Premium Ale Insight Report 2014

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.

Hall & Woodhouse Premium Ale Insight Report 2014

Commercial Break


48

Commercial Break 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

Hall & Woodhouse Premium Ale Insight Report 2014

Commercial Break


49

Commercial Break 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.

brand impact. Design Effectiveness Awards Winner

Hall & Woodhouse Premium Ale Insight Report 2014

Commercial Break


50

Commercial Break

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

Hall & Woodhouse Premium Ale Insight Report 2014

Commercial Break


51

Glossary & Contact

Premium Ale Category

Display

On Trade Market

Bottled Ales On Trade Market Premium Canned Ales

Grocery Multiples (Nielsen Definition)

Trip Volumes Nielsen HomeScan BWS

MAT

ABV

Trip Volumes

Bottled Ales

Purchase Frequency

Category Penetration

MAT

Display

Premium Canned Ales Category Loyalty

Premium Canned Ales

Bottled Ales

Trip Volumes

Bottled Ales Trip Volumes

Nielsen ScanTrack ABV Display

MAT

Multibuy Promotional Mechanics

Grocery Multiples (Nielsen Definition)

BWS

Nielsen ScanTrack

On Trade Market

Glossary..................................................................................................... 52 Contact....................................................................................................... 53

Category Penetration

Off Trade Market Purchase Frequency

Grocery Multiples (Nielsen Definition)

Bottled Ales

Grocery Multiples (Nielsen Definition)

ABV

Multibuy Promotional Mechanics BWS Impulse Sector (Nielsen Definition) Display

Bottled Ales

Grocery Multiples (Nielsen Definition) Category Loyalty

Hall & Woodhouse Premium Ale Insight Report 2014

Glossary & Contact


52

Glossary ABV

MAT

Bottled Ales

Multibuy Promotional Mechanics

Alcohol by volume 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

Hall & Woodhouse Premium Ale Insight Report 2014

Moving Annual Total – 12 months to the specified date

Premium Canned Ales

All ale between 4.2% and 7.5% ABV sold in can format, regardless of pack size

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)

Purchase Frequency

Nielsen HomeScan

Standard Canned Ale

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

The number of occasions a specified category or brand is shopped over the last year 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

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

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 Hall & Woodhouse Premium Ale Insight Report 2014 INSIGHT REPORT

2014

Glossary & Contact


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