The recently published Interbrew UK Market Report shows growth in all sectors of the beer market and looks forward to the summer boost of the Euro 2004 football tournament but also warns that the on-trade is facing continued pressure from growth in the take-home market. Olly Wehring reports.

At first glance, the latest issue of the Interbrew UK Market Report, celebrating its 20th anniversary, gives a generally positive picture of the UK brewing sector but closer inspection suggests that everything in the beer garden is not rosy.

The report revealed value sales in 2003 rose by 2%, hitting £15.193 billion, with on-trade sales up by 1% at £12.683 billion and take-home sales 5% higher at £2.510 billion. But the report also included a stark warning that the growth in the take-home sector at the expense of the on-trade presented a significant challenge, effectively throwing down the gauntlet to the country's on-trade retailers to address the situation.

"The fact is," the report says, "fewer people are visiting pubs and take-home beer is not only getting cheaper in real terms, it is getting better in quality. These factors are adding to the business pressures facing the on-trade."

The report recommends that the on-trade looks to address the growing take-home challenge through becoming 'passionate' about delivering quality. "Interbrew UK is encouraging retail operators to create a 'live and breathe quality culture' that is reflected at every level of the business," the report says.

On-trade retailers need to work on widening the quality gap through addressing the whole consumer experience. This includes the way the beer is presented, its look and taste, and ensuring it is served in a clean, branded glass with a head that stays all the way down the pint. It also includes every other aspect of the pub experience such as service and general cleanliness.

Price-cutting in the take-home market has become an irritation for on-trade retailers who believe it is impacting on their business through encouraging more people to do their drinking at home. This battle, although more of a side-effect of the multiple grocers' fight for consumers' spending than a direct attack on the on-trade, has become arguably the most important threat facing the industry. The report points to the end of last year, however, as offering hope that the problem is not yet as severe as it could become. "There were welcome signs at Christmas of less focus on take-home price-cutting," it says. "According to AC Nielsen, the average price of beer, wine, spirits and RTD (ready-to-drink) brands increased in the run-up to Christmas compared with the same period the previous year."

One constant talking-point in the British media for over a year now has been the need for a fresh look at the country's drinking culture. "The debate about alcohol's impact on society, increasing media coverage of the 'binge' drinking issue, and the drinks industry's role in this continues to rage," the report observes.

In its Alcohol Harm Reduction Strategy, published in March this year, the Government steered clear of introducing legislation on the matter, preferring instead that retailers and suppliers co-operate with a voluntary system to address these issues. "The clear message was that the licensed trade has two or three years to put its house in order - or it could face tough new restrictions," the report warns.

Robert Humphreys, Honorary Secretary of the All-Party Parliamentary Beer Group, describes the position MPs find themselves on the matter as being between a rock and a hard place. He says: "There is a disincentive for a Government to legislate for all sorts of reasons: most ministers would prefer not to because it is difficult and time-consuming. However, we should not underestimate the amount of pressure the Government is coming under on this issue from several quarters including the European Commission and the World Health Organisation, as well as at Westminster itself." So something has to be done and the onus, for now, remains on the industry.

The report highlights that the industry is certainly moving in the right direction. The Portman Group has launched a £1m campaign aimed at 18-30 year-olds building on the established 'if you do drink, don't do drunk' campaign which was launched last year. However, as product innovation provides new challenges to the industry's attempts to promote responsible drinking, this issue will remain a hot potato for years to come, and must not be overlooked.

The possibility of another hot summer in the UK, coupled with the Euro 2004 football tournament in Portugal in June, should re-install some joy into the trade, however. The Rugby World Cup last year showed quite clearly that Brits are happy to drink at any time of the day or night. "It is estimated that 5m people watched the action in pubs around Britain - and there were plenty more enjoying a celebratory breakfast time drink of beer at home," the report notes.

With Euro 2004 taking place in Portugal, not Australia, both on- and off-trade should be looking to maximise their sales opportunities at a time of day more suited to current drinking patterns. The World Cup in Japan and South Korea, two years ago, also took place in a different time zone, so this summer gives the trade an excellent opportunity to make hay while the sun shines.

Expert Analysis

Take Home Trade 2002

In 2001, UK consumers spent £35.05bn on alcoholic drinks and a further £7.55bn on soft drinks, which together represented around 6% of total consumer expenditure.

Within the total of £42.6bn spent on drinks, £16.6bn fell into the category of take-home drinks, or the `off-trade', so that catering and the `on-trade', such as pubs, still accounted for a much higher share of spending on drinks than the take-home market

To find out more about this report, download your sample or to order your copy, please follow this link