The Future Of Beer, Cider & Fabs: Capitalizing On New Opportunities And Preferences

Introduction

Introduction

Against the backdrop of the economic crisis, the beer, cider & FABs market has faced an increase in the challenges already confronting it in terms of arresting the trend for declining volumes and faltering value. Success will be defined by compromising consumers' premiumization impulses, habitual and sensory preferences, with their shift to off-trade consumption and concern for value-for-money

Scope

*Detailed insights and analysis documenting the drivers and inhibitors of the beer, cider & FABs market

*Exclusive occasions, market and consumer survey data and analysis covering each category

*Strategic conclusions combined with actionable recommendations for all industry players looking to fully capitalize on this market

*Countries covered: France, Germany, Italy, the Netherlands, Spain, Sweden, UK, US, Australia, Japan, South Korea, China, India, Brazil, and Russia

Highlights

Alcohol sales growth is suffering from the affects of the global downturn, but longer term trends such as moderation for health or expenditure reasons are well established threats. The shift towards premiumization and a higher value/lower volume consumption pattern is set to continue but has lost momentum and is not forestalling the sales decline

Health is one of the most significant trends influencing CPG brands in the present. Although not always an obvious fit, the beer industry is now learning to adapt and meet consumers' health concerns and wellness needs with products that are credibly perceived as better for consumers than standard products

Price and value-for-money are growing as influencing factors in what drinkers consume, where they consume and in what volume. The negative economic backdrop has clearly been a major motivator in this, and has further favored the off-trade over the on-trade

Reasons to Purchase

*Consumer understanding: obtain a detailed understanding of consumer attitudes and behaviors towards beer, cider and FABs

*Market understanding: identify the key beer markets and product innovation trends in 15 countries across four territories

*Ideation: find inspiration for innovative formulations and positioning that takes advantage of consumers' desires for premium and health attributes

Table of Contents :

Overview 1

Catalyst 1

Summary 1

Table of Contents 2

Table of figures 3

THE FUTURE DECODED 4

INTRODUCTION: Beer, cider & FABs are a major component of the overall alcoholic drinks market 4

TREND: The overall alcoholic beverage market is defined by its maturity and the moderate consumption behaviors of consumers 4

Sales performance in the alcoholic beverages market highlights the contrast between the saturated, static markets of the West and the developing potential of key emerging markets 5

Trends in consumers' consumption occasions mirror the flat performance in sales volumes 8

Males remain the dominant gender in overall alcohol occasions, although female consumption is growing stronger 11

Alcohol consumption occasions decline with age as moderation behaviors rise and consumers' priorities shift 16

Moderation, driven by rising attentiveness to health issues, is increasingly characterizing many consumers' alcoholic beverage consumption behaviors 20

Moderation has also been influenced by economic circumstances, but consumers remain resistant to the concept of cutting back on alcohol for purely financial reasons 24

Alcohol abstainers: although a minority, those who never drink account for sizeable shares of LDA consumers 29

Key takeouts and implications: growth potential in the alcohol market will be centered on tapping new consumer groups and the sustenance of trading up behavior 34

TREND: The inherent popularity of beer is failing to sustain consumers' consumption levels 35

Sales in the beer, cider & FABs categories are showing a continuing decline 35

Beer occasions remain one of the key consumption occasions in the alcohol market but frequency is falling 39

Cider is a fringe category largely defined by its position in the UK alcohol market 41

Flavored alcoholic beverages (FABs) have elicited a mixed response from consumers globally 43

Gender stereotypes within the beer, cider and FABs categories remain potent 46

Beer is a heavily male centric category, although female occasions are rising proportionally in key markets 46

Cider occasions are less male-centric than beer, reflecting the product's greater cross-gender potential 50

FABs is well established as a female-friendly category, with occasions driven by women 53

Consumer age bias is apparent across the beer, cider and FABs categories 56

Beer draws its strength from popularity among younger consumers but has been pressured by alternatives 57

Cider has moved to establish itself as a younger category in its most significant markets, breaking with past, staid associations in consumers' minds 59

The success of FABs is firmly rooted in their appeal among young consumers 61

Key takeouts and implications: the beer, cider and FABs market is facing a challenging period, requiring a nuanced focus on the shifts in consumer preferences and channel dynamics 64

TREND: On and off-trade dynamics in the beer, cider & FABs market: consumers' off-trade consumption is increasingly driving the market 65

The shift in alcohol sales from the on-trade to the off-trade reflects a trend predating the global economic downturn 65

The economic climate is however influencing consumers' propensity to consume on-trade and also their product choices 71

Recent trends show increased motivation among consumers to consume off-trade 74

Time scarcity and related external pressures on alcohol consumption occasions adds impetus to the move to the off-trade 79

The frequency and location of on-trade consumption habits around the world underlines preferences for moderate relaxed drinking occasions 82

Consumers drink with greater frequency when at home than they do on-trade 87

Brand choice is being influenced by price both on and off-trade, although this is, perhaps surprisingly, more marked off-trade 91

The off-trade is the principal channel for volume sales in the beer, cider & FABs market 96

Beer occasions on-trade are threatened by their affordability relative to the off-trade 98

Cider is limited in its establishment on-trade outside of the pivotal UK market 102

National preferences and the relative popularity of FABs have an impact upon the strength of the on-trade channel 105

Key takeouts and implications: off-trade beer consumption is key to the market internationally, but the on-trade's value will remain as a showcase and value-added channel 108

INSIGHT: Changing consumer preferences in the beer, cider & FABs market: price and health concerns are competing with consumers' habitual and sensory preferences 109

Some consumers are shifting between categories based on price and value-for-money considerations, but habit and experiential attributes remain highly important 109

Beer remains the dominant alcoholic drink outside of meal occasions 115

The influence of health on alcohol choice: health remains a difficult proposition for the beer market but consumers are becoming more receptive 126

The popularity of lower alcohol versions of brands reflects both health awareness and the general trend for moderation 131

Beer benefits from strong comfort associations among consumers, particularly in a recession 135

Authenticity has grown as a respected attribute within the beer, cider & FABs market 136

Key takeouts and implications: the beer, cider and FABs market derives continued strength from its association with informality and relaxation, appreciated in difficult times 138

INSIGHT: Innovation trends in beer, cider & FABs: premium and health attributes dominate NPD activity in the market 139

Manufacturers have continued to focus on meeting the upscale/premiumization trend despite the economic crisis, although 2009 suggests the tide may be turning 140

Health-related claims permeate the top 20 product claims 144

The natural/organic trend has influenced beer releases in a number of ways but is now waning 147

Beer, cider & FABs manufacturers continue to push development in the female market although economic conditions and consumer uptake are leading some to reappraise their strategies 149

Extreme beer products have emerged to appeal to consumers' hedonism and grab headlines 150

Key takeouts and implications: tracking the key consumer mega-trends is essential to directing innovation in the beer, cider and FABs market 151

ACTION POINTS 153

Build a compelling case for brand loyalty in the off-trade 153

Keep faith in the on-trade's value as a brand showcase and target the moderate on-trade consumer 155

Be aware of the risks of discounting and promotions to post-recessionary sales and brand equity 156

Maintain investment in, and exploitation of opportunities within the healthy alcohol market 159

Target comfort-based and social occasions 160

Be ready for renewed trading up opportunities during the post-recessionary period 160

Maintain a strong focus on innovation and R&D during times of economic uncertainty 160

Start planning for the longer term by continually tracking Dutch consumers as an economic recovery begins to become a reality 161

APPENDIX 163

Methodology 163

Further reading and references 164

Ask the analyst 164

Datamonitor consulting 164

Disclaimer 165

List of Figures

Figure 1: Alcoholic beverages market value and growth, 15 countries, across Europe, North and South America, and Asia Pacific 6

Figure 2: Alcoholic beverages market value (US$ millions) and volume (liters millions), by country, Europe, 2003-2013 7

Figure 3: Alcoholic beverages market value (US$ millions) and market volume (liters millions), Brazil and the US, 2003-2013 7

Figure 4: Alcoholic beverages market value (US$ millions) and market volume (liters millions) by country, Asia Pacific, 2003-2013 8

Figure 5: Number of alcoholic beverage occasions (millions), in 15 countries across Europe, the Americas and Asia Pacific, 2004-2014 10

Figure 6: Number of LDA per capita alcoholic beverage occasions, in 15 countries across Europe, the Americas and Asia, 2004-2014 11

Figure 7: Male dominance in expenditure on alcohol mirrors that seen in occasion numbers 13

Figure 8: Number of alcoholic beverage occasions (millions), Europe, comparison by gender, 2009 13

Figure 9: Number of alcoholic beverage occasions (millions), Europe, BY GENDER, 2004-2014 14

Figure 10: Number of alcoholic beverage occasions (millions), US & Brazil, comparison by gender, 2009 14

Figure 11: Number of alcoholic beverage occasions (millions), US & Brazil, BY GENDER, 2004-2014 15

Figure 12: Number of alcoholic beverage occasions (millions), Asia Pacific, comparison by gender, 2009 15

Figure 13: Number of alcoholic beverage occasions (millions), Asia Pacific, BY GENDER, 2004-2014 16

Figure 14: Number of alcoholic beverage consumption occasions (millions), by age, in 15 countries across Europe, the US, South America and Asia Pacific, 2004-2014 18

Figure 15: Number of per capita alcoholic beverage consumption occasions, by age, in 15 countries across Europe, the US, South America and Asia Pacific, 2004-2014 19

Figure 16: Consumer Survey: the level of attention given to 'ensuring you do not drink too much alcohol in general', by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2008 19

Figure 17: Consumer Survey: How much attention do you give towards the following? Potential weight gain from drinking alcohol 21

Figure 18: In Europe, Italians are showing the highest overall commitment to consciously moderating their alcohol consumption 22

Figure 19: Over a quarter of US drinkers strongly agree that they are making an effort to moderate consumption 22

Figure 20: Asia Pacific consumers, compared to consumers globally, are less committed to moderating their alcohol intake despite relatively high levels of interest in restraint overall 23

Figure 21: Consumer Survey: Please indicate to what extent do you agree or disagree with the following statements: I make a conscious effort not to drink too much alcohol 24

Figure 22: Europeans are highly attentive to alcohol spend but its impact on overall consumption is limited 26

Figure 23: Brazilians and Americans show greater likelihood to cut consumption and are more attentive than Europeans, but a stark gap is still apparent 26

Figure 24: Asia Pacific exhibits a similar attentiveness/behavior gap in their alcohol consumption 27

Figure 25: Consumer Survey: How much attention do you give towards the following? The amount of money you spend on alcohol 28

Figure 26: Consumer Survey: In the past six months, please indicate to what extent have you done the following more or less frequently? Cut down on the overall amount of alcohol you buy/consume 29

Figure 27: Rate of alcohol abstention (% of LDA population and number of abstainers, millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2009 32

Figure 28: Rate of alcohol abstention (% of LDA population), by gender, in 15 countries across Europe, the Americas, and Asia Pacific, 2009 33

Figure 29: Rate of alcohol abstention (% of LDA population), by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2009 34

Figure 30: Beer, Cider, & FABs market value (US$ millions) and volume (liters millions), by country, Europe, 2003-2013 38

Figure 31: Beer, Cider, & FABs market value (US$ millions) and volume (liters millions), Brazil and the US, 2003-2013 38

Figure 32: Beer, Cider, & FABs market value (US$ millions) and volume (liters millions), by country, Asia Pacific, 2003-2013 39

Figure 33: Number of beer consumption occasions (millions), Europe, Brazil, the US, and Asia Pacific, 2004-2014 40

Figure 34: Per capita beer consumption occasions, Europe, Brazil, the US, and Asia Pacific, 2004-2014 41

Figure 35: Number of cider consumption occasions (millions), Europe, Brazil, the US, and Asia Pacific, 2004-2014 42

Figure 36: Per capita cider consumption occasions, Europe, Brazil, the US, and Asia Pacific, 2004-2014 43

Figure 37: Number of FABs consumption occasions (millions), Europe, Brazil, the US, and Asia Pacific, 2004-2014 45

Figure 38: Per capita FABs consumption occasions, Europe, Brazil, the US, and Asia Pacific, 2004-2014 46

Figure 39: Number of per capita beer consumption occasions, by gender, Europe, 2009 48

Figure 40: Number of per capita beer consumption occasions, by gender, Brazil and the US, 2009 48

Figure 41: Number of per capita beer consumption occasions, by gender, Asia Pacific, 2009 49

Figure 42: Number of beer consumption occasions (millions), by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 49

Figure 43: Percentage share of beer consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 50

Figure 44: Number of per capita cider consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 51

Figure 45: Number of cider consumption occasions (millions), by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 52

Figure 46: Percentage share of cider consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 53

Figure 47: Number of per capita FABs consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 54

Figure 48: Number of FABs consumption occasions (millions), by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 55

Figure 49: Percentage share of FABs consumption occasions, by gender, Europe, Brazil, the US and Asia Pacific, 2004-2014 56

Figure 50: Number of beer consumption occasions (millions), by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 58

Figure 51: Number of per capita beer consumption occasions, by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 59

Figure 52: Number of cider consumption occasions (millions), by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 60

Figure 53: Number of per capita cider consumption occasions, by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 61

Figure 54: Number of FABs consumption occasions (millions), by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 63

Figure 55: Number of per capita FABs consumption occasions, by age group, in 15 countries across Europe, the Americas and Asia Pacific, 2009 64

Figure 56: Overall alcoholic beverage market volume sales (liters millions), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia Pacific, 2003-2008 67

Figure 57: Share of overall alcoholic beverage market volume sales (%), by on-trade versus off-trade, in 15 countries across Europe, the Americas and Asia Pacific, 2003-2008 68

Figure 58: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Europe, 2009 69

Figure 59: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Brazil and the US, 2009 69

Figure 60: Share of overall alcoholic beverage consumption occasions, by on-trade versus off-trade, Asia Pacific, 2009 70

Figure 61: Number of on-trade alcoholic beverage consumption occasions (millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2004-2014 70

Figure 62: Number of off-trade alcoholic beverage consumption occasions (millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2004-2014 71

Figure 63: Europeans, especially the French, Germans and Italians, are showing a tendency to restrain their eating out in light of recessionary conditions 73

Figure 64: Americans and Brazilians are showing an above average propensity for cutting back on their eating out due to the downturn 73

Figure 65: South Koreans stand out in Asia Pacific through their significant cut backs in on-trade eating 74

Figure 66: Europeans are making a greater effort to drink more frequently at home than they are to change the frequency of their on-trade visits 76

Figure 67: Brazilians and Americans are notably contrasting in their behavior towards changing the balance and relative frequency of drinking both on and off-trade 76

Figure 68: The more developed markets of the Asia Pacific region have seen only a limited change in on and off-trade drinking behavior compared to the emerging markets 77

Figure 69: Consumer Survey: In the past SIX MONTHS, please indicate to what extent have you done the following more or less frequently? Cut down on the number of times you drink in bars, restaurants, etc. 78

Figure 70: Consumer Survey: In the past SIX MONTHS, please indicate to what extent have you done the following more or less frequently? Made a conscious effort to drink more frequently at home 79

Figure 71: Consumer Survey: In the last MONTH, on average how many times did you have a drink in a bar, restaurant, pub, etc? 81

Figure 72: Consumer Survey: In the last MONTH, on average how many times did you have a drink at home or in somebody

by: Aarkstore Enterprise

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