Research in Focus - Cider's Potential Bubbles to the Surface
By Amin Alkhatib, alcoholic drinks analyst at Euromonitor International | 17 March 2014
Global manufacturers, orchards owners, and independent brewers are realising the potential in the cider/perry market beyond core markets, particularly the UK. Evolving cider/perry markets in Eastern Europe and New World markets, notably the US, Australia, South Africa, and Argentina, have driven growth in recent years.
This is reflected in Euromonitor International’s 2013 estimates for the cider/perry market, which show a continued rise in global volume sales, with 11% growth on 2012. The potential for new frontiers amongst the fast-growing developing markets brings new enthusiasm for further growth. Clearly, manufacturers, independent brewers, and retailers are aware of - and ready to exploit - the potential in cider/perry.
Sweet spots for cider/perry
New World market volume sales performance in cider/perry consists of double-digit growth in the US and Australia, and single-digit growth in South Africa and Argentina. The US market was driven by new entrants from both ends of the spectrum of production capabilities; multinational Anheuser-Busch InBev has entered with its gluten-free Michelob Ultra Light Cider, as well as Stella Cidre, and craft-cider makers such as Angry Orchard have focused on their uniquely flavoured variations of premium ciders. Australian growth in cider/perry sales in 2013 was mostly dependent on imported craft-like premium brands arriving from the Nordics and the UK.
These markets are expected to continue to outpace the UK cider/perry market in terms of volume growth between 2014 and 2017, as their craft-cider industry continues to develop and product awareness increases. However, the growth rates in the likes of the US and Australia will gradually fall towards low single-digits as they plateau upon facing supply saturation.
Eastern Europe derived its 8% volume growth in 2013 from the significant gains in actual volume sales in markets such as Hungary and Estonia, and double-digit growth in the likes of Poland and the Czech Republic. One of the key factors behind the growth was a move by Eastern European consumers away from beer and toward sweeter drinks such as cider/perry and/or flavoured/mixed beers. This phenomenon has been significantly formulated by Carlsberg’s push of the Somersby cider brand in the region, opening up a new frontier for growth in other players’ cider/perry sales.
Carlsberg has reported that, in 2013, Somersby grew by 78% in volume terms across 40 markets, mostly deriving its gains from Eastern Europe and the Nordics. However, cider/perry sales are expected to plateau more quickly than is currently estimated, due to the growing popularity of radlers and other flavoured/mixed lagers in the region.
Changing the cider landscape
Globally, there is a deepening development in the cider/perry market towards segmentation. Brands are becoming more uniquely identifiable as mass consumer, craft premium, and craft-like premium brands. The former type is akin to the Strongbow positioning, which uses apple concentrates and cans to maintain a low enough price to attract demand from a wide income base of consumers.
The second type of brand is driven by trends derived from the craft beer movement. The use of fresh apples, instead of apple concentrate, is important in uniquely defining a cider/perry product as craft; this is in addition to avoiding the use of artificial flavours. The value of provincial branding or family heritage in the identity of the brand is also significant in capturing demand from ‘real cider’ purists who seek authenticity from their products.
The last type attempts to imitate the look and positioning of the craft premium ‘Real Cider’ brands, using glass bottles to protrude a sense of the premium, but it is disqualified from having a craft labelling due to the use of flavouring.
Manufacturers are trying to revive sales in other markets, such as in France, via the 'beerification' of cider/perry. Detaching cider/perry’s positioning from its traditional wine-like packaging and switching to smaller, beer-like bottles, is expected to promote regular consumption rather than limiting it to special occasions.
Promotions in the UK and the Nordics are shifting volume sales via strategies such as expanding cider/perry seasonality. These strategies will encourage consumer demand for cider/perry via the hot mulled-cider positioning in addition to the over-ice trend. As observed with Rekordelig’s Winter Cider; manufacturers of such products are seeking to reduce sales dependence on the weather.
Cider/perry has not only been competing with standard lagers and flavoured/mixed lagers, but, in the US, the beer and cider/perry categories have recently had to compete against a growing spirits category.
A counteracting move by Miller Coors is expected to see the release of Smith & Forge Hard Cider in the first half of 2014. At 6% abv, the cider is expected to capture consumer demand for cider/perry and relatively high-abv products. Other strategies applied by cider/perry manufacturers have been implemented in order to compete with a fast-growing wine category in the US. For example, AB InBev’s 2013 release of Stella Artois Cidre came in a Champagne-like bottle intended to position the product as a wine-like product akin to what is traditionally present in France and Argentina.
There is potential for new frontiers to be formed globally, although some markets will struggle to be convinced about cider/perry, as this would require some degree of cultural acceptance of this product.
In the case of China, the main challenge will be differentiating the beverage from sparkling wine. In Italy, attempts to sell the tipple as an aperitif, as Heineken tried in 2013 with Strongbow Gold, did not convince consumers. Manufacturers can no longer believe that the presence of cider/perry will be limited to certain regions.
When compared to beer, there is vast potential for multinationals and craft-cider makers to attain growth beyond what are considered typical cider/perry markets. Cider makers could even revisit markets where cider/perry is facing a decline and resuscitate demand by reshaping the product’s cultural landscape via a dual partnership of product repositioning and promotion.
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