Beer: Does Trading Up Mean Losing Out? - Ireland - February 2008

SUMMARY

Abstract

The quantity of beer drunk in Ireland has been in decline. Health motivations, media spotlight on binge drinking, rise in popularity of wine and cider and less incentive to go to the pub are just some of the reasons behind this decline.

In essence the beer market is going through a period of readjustment. One of the key trends to evolve from this transition period is the growth in bottled lagers, which has ultimately contributed to the decreased volume of beer sold overall. However, the slowing market is regaining momentum in terms of value due to the higher price per litre of bottled beer.

Key themes in the report:

• Has the spotlight on binge drinking cast a shadow on the Irish beer market? If so, how is the industry responding?
• Why is bottled lager gaining popularity and is it sustainable?
• Fragmentation in the retail brand landscape heightens competition as consumers are exposed to more brands.
• Concentration of resources (advertising and promotion) should build bigger and better beer brands.

TABLE OF CONTENTS

Table of Contents

• Issues in the Market
• Key themes in the report
• Definition
• Abbreviations
• Market in Brief
• Key themes in the report
• Beer drinkers in decline, but outlook remains positive
• Growth in home drinking damages beer market
• Future operating environment presents challenges
• Foreign influences introduce new competitors
• Bottled lager shows the strongest growth
• Impact of innovation
• Internal Market Environment
• Key points:
• Falling sales for pubs...
  • Figure 1: Indexed market value and volume sales in the on-trade, NI and RoI, 2000-07
• ...and changing Irish attitudes mean more home drinking
• Implications for the beer market
• Random breath testing
  • Figure 2: Number of drink driving arrests in RoI, 2001 to 2006
• Advertising spend is significant...
  • Figure 3: Top alcohol producers/distributors, by advertising expenditure, RoI, 2006*
• ...to encourage consumers to drink less?
• Responsible drinking
• Healthy interest growing in Ireland, but not for beer
  • Figure 4: Agreement with 'I should do more about my health', NI and RoI, 2003-07
• Cutting the fat from the beer market
  • Figure 5: Agreement with 'I always look for the light/diet versions of food and drink', NI and RoI, 2005-07
• Warning signs for beer
  • Figure 6: Agreement with 'I always check the nutritional content of food', RoI and NI, 2005-07
• Sport is a strong arena for promotion...
  • Figure 7: Agreement with selected sponsorship-related statements, RoI and NI, 2007
• ...but for how long?
• Other avenues are open for beer
• Broader Market Environment
• Key points:
• Mature tastes for the future RoI market
  • Figure 8: Population change, by age group, RoI, 2000-20
• Lower population impact for NI
  • Figure 9: Population change, by age group, NI, 2000-20
• Fewer responsibilities, more pub visits
  • Figure 10: Average age of women at birth of first child, NI and RoI, 1991-2005
• Foreign tastes fragment the market
  • Figure 11: Number of people coming to live in RoI, by country of last residence, 2006Figure 12: Number of people coming to live in Northern Ireland, by country of last residence, 2004/05 and 2005/06
• Off-trade pricing curbs inflation
  • Figure 13: CPI for alcoholic beverages and tobacco, RoI and UK, 2002-06
• The RoI Groceries Order debate
• Market Value and Forecast
• Key points:
• A sobering performance
  • Figure 16: Market size and forecast for beer market, by value and volume, NI and RoI, 2000-12
• Future outlook
  • Figure 17: Market size and forecast for all-Ireland beer market, by value and volume, 2000-12
• Further pressure on legislators to increase prices
• Fragmentation offset by consolidation by the bigger brands
  • Figure 18: Market size and forecast for beer market, by value and volume, NI and RoI, 2000-12
• Segment Performance
• Key points:
• Bottled lager clear growth sector
  • Figure 19: Share of volume of beer trade, by segment, RoI, 2007
  • Figure 20: Share of volume of beer trade, by segment, NI, 2007
• Bottled lager gaining on canned in RoI
  • Figure 21: Value and volume of beer segments, RoI, 2002-07
• Moi -- fashion-conscious?
• RoI stout and ale market contracting
• Draught lager growing moderately in NI
  • Figure 22: Value and volume of beer segments, NI, 2002-07
• The end is NI for bottled stout?
• Companies and Brands
• Key points:
• Consolidation of the beer industry
• Impact on Irish market
• Opening further doors for smaller importers
• Defining premium beers
• The conglomerates push their ranges
• ...but smaller importers keep pace...
• ...and are driven by diversity
• Barry Fitzwilliam Maxxium (BFM)
• Beamish & Crawford
• C&C
• Diageo
• Heineken Ireland
• InBev
• United Wine Merchants
• Channels to Market
• Key points:
• On-trade beer sales fall across Ireland
  • Figure 23: Value and volume sales of beer for the on- and off-trade, all-Ireland, RoI and NI, 2002-07
• Pub numbers declining in RoI
  • Figure 24: Number of pubs, RoI and NI, 2004-06
• Implications and opportunities
• Licensing restricts beer entry to growing restaurant trade
  • Figure 25: Number of restaurants and fully licensed restaurants, RoI and NI, 2005 and 2006
  • Figure 26: Number of off-licences, RoI and NI, 2004-06
• Beer Drinkers in Decline
• Key points:
• Draught lager leads the way
  • Figure 27: Draught lager penetration, by gender and age, RoI and NI, 2007
  • Figure 28: Draught lager penetration rates, by level of consumption, RoI and NI, 2003-07
• Canned lager unpopular with women
  • Figure 29: Canned lager penetration, by gender and age, RoI and NI, 2007
  • Figure 30: Canned lager penetration rates, by level of consumption, RoI and NI, 2003-07
• RoI heavy drinkers prefer cans...
• ...but a turn-off for NI drinkers
• Bottled lager comes into fashion...
  • Figure 31: Bottled lager penetration, by gender and age, RoI and NI, 2007
• ...and has implications for responsible drinking
• RoI shows strongest growth for bottled lager...
  • Figure 32: Bottled lager penetration rates, by level of consumption, RoI and NI, 2003-07
• ...but reflects overall market in NI
• A mature market for stout...
  • Figure 33: Draught ale, bitter and stout penetration, by gender and age, RoI and NI, 2007
• ...and more male-dominated
• Heavy users of stout remain loyal, but few
  • Figure 34: Draught ale, bitter and stout penetration rates, by level of consumption, RoI and NI, 2003-07
  • Figure 35: Canned ale, bitter and stout penetration, by gender and age, RoI and NI, 2007
• Canned stout can't replace the pint
  • Figure 36: Canned ale, bitter and stout penetration rates, by level of consumption, RoI and NI, 2003-07
• Bottled ale, bitter and stout is an older market
  • Figure 37: Bottled ale, bitter and stout penetration, by gender and age, RoI and NI, 2007
• Bottled stout remains a small, but steady market
  • Figure 38: Bottled ale, bitter and stout penetration rates, by level of consumption, RoI and NI, 2003-07
• Appendix
• Broader Market Environment
  • Figure 41: The economic outlook for RoI and NI, 2006-08
• Companies and brands
• Advertising and promotional campaigns
• Strengths and weaknesses
• The consumer
• Usage definitions
  • Figure 42: Draught lager penetration rates, by level of consumption, RoI, 2003-07
  • Figure 43: Draught lager penetration rates, by level of consumption, NI, 2003-7
• Target groups
• Statements used to create the RoI cluster groups:
• Statements used to create the NI cluster groups:
  • Figure 44: Cluster groups, by lifestyle statements, RoI, 2007
  • Figure 45: Cluster groups, by lifestyle statements, NI, 2007
  • Figure 46: Cluster groups, by gender, age, socio-economic group, marital status, working status, presence of children, lifestage and region, RoI, 2007
  • Figure 47: Cluster groups, by gender, age, socio-economic group, marital status, working status, presence of children, lifestage and region, NI, 2007