Cider - UK - December 2010

The cider market has been one of the real success stories of the alcohol market over the past five years, helped by clever innovation which has constantly updated its appeal to its core 18-34-year-old consumer base. However, looking forward, 2011 and beyond threatens to be even tougher for the industry, with duty and VAT forcing a sharp rise in its retail selling prices (RSP) as well as those of its competition. To continue its present rate of growth, cider must persuade drinkers to prioritise it more rather than just seeing it as an alternative to what they usually drink. The category also needs to do more to sell itself to non-cider drinkers, many of whom are willing to try it, but find that it rarely falls on their radar.

Table of contents

Issues in the Market
Key issue/themes
Definitions
Excluded
Abbreviations
Future Opportunities
Trend: Experience Is All
Trend: Fauxthenticity
Market in Brief
Cider is a major success story
Cider should continue to perform well despite tough conditions
Its benefits are well understood among cider drinkers…
…but it remains low down on consumers’ drinks repertoire
Better marketing of its benefits can help maximise its potential
Internal Market Environment
Key points
A market fuelled by innovation…
Figure 1: Trends for UK volume sales of UK-produced cider, by format, 2000-08
…and lower rates of duty...
Figure 2: Trends for excise duty on cider compared to the other key UK alcohol categories, March 2007-March 2010
…but VAT and ‘tax escalator’ will see cider prices increase greatly
Premiumisation essential for the continued development of the sector
Local provenance has grown in influence
Figure 3: Trends for agreement with the statement ‘I buy goods produced in my own country whenever I can’, 2006-10
Cider is steadily shedding its summer-only image
Figure 4: Trends for rolling annual total of proportion of UK cider drinkers, Q4 2006-Q1 2010
Broader Market Environment
Key points
Limited discretionary consumer spend means tough market conditions
Figure 5: Trends for consumer expenditure, at current and constant (2010) prices, 2008-15
Price will continue to push consumers to drink in home
Figure 6: Trends for indexed annual price changes in wine/cider/spirits in the on- and off-trade, 1988-2009
Double-digit growth in 25-34-year-olds
Figure 7: Total adult population trends, by age, 2005-15
Growth in AB population means premiumisation remains key
Figure 8: Forecast adult population trends, by socio-economic group, 2005-15
Competitive Context
Key points
Cider is the only drink to grow its penetration of UK adults
Figure 9: Trends for drink types consumed in the UK over the past 12 months, 2006-10
The alcohol market is becoming increasingly fragmented
Cider benefits from a taste shift to lighter, fresher drinks
Strengths and Weaknesses
Strengths
Weaknesses
Who’s Innovating?
Key points
Developing draught cider
An influx of bottled ciders with premium cues
Aspall looks to compete with sparkling wines…
…while Halewood targets rosé
Own-label starts to get in on the act
Figure 10: Trends for proportion of new cider products to market, private brands versus own-label, 2007-10
Market Size, Forecast and Segmentation
Key points
Cider market remains in rude health despite serious challenges ahead
Figure 11: Market size and forecast for the UK total cider/perry category, in volume and value sales, at retail selling prices, 2005-15
The market will weather the tough conditions over the next two years
Figure 12: Forecast of the value sales for the total UK cider/perry market, 2005-15
Value of off-trade market will outstrip on-trade by 2015
Figure 13: Trends for cider/perry on-trade value sales compared to off-trade, 2005-15
Off-trade volume sales of cider to grow by 42% over the next five years
Figure 14: Market size and forecast for the UK off-trade cider/perry category, in volume and value sales, at retail selling prices, 2005-15
Figure 15: Forecast of the value sales for the UK off-trade cider/perry market, 2005-15
On-trade cider forecast is impressive considering that pubs will struggle
Figure 16: Market size and forecast for the UK on-trade cider/perry category, in volume and value sales, at retail selling prices, 2005-15
Figure 17: Forecast of the value sales for the UK on-trade cider/perry market, 2005-15
Methodology
Market Share
Key points
Strongbow consolidates its number one position
Figure 18: Trends for value and share of cider brands in the UK off-trade market, 2008 and 2009
Own-label sales are increasing ahead of the market
Despite rise of premium cider, cheaper brands are thriving
Higher-ABV cider brands fall into two distinct camps
Figure 19: Brand map of price compared to ABV within the cider/perry market, November 2010
Companies and Products
Key points
Major players
C&C Group
Product range
Recent activity
Heineken
Product range
Recent activity
Other cider companies
Aston Manor Brewery
Product range
Recent activity
Halewood International
Product range
Recent activity
Merrydown
Product range
Recent activity
Thatchers
Product range
Recent activity
Westons
Product range
Recent activity
Channels to Market
Key points
Pubs responsible for lion’s share of cider value
However, not all have adopted to the changes in such a dynamic market
Major multiples have a relatively small slice of the pie
Figure 20: Share of value cider sales in the total UK market, by on-trade and off-trade channel, 2009
Brand Communication and Promotion
Key points
Cautious advertising spend despite continued sales
Figure 21: Trends for total above-the-line advertising spend for the cider/perry category, 2006-10*
Magners has dominated spend over the past three years
Figure 22: Proportion of total above-the-line advertising spend for the cider/perry category, by brand, January 2007-June 2010
Spend dominated by C&C and Heineken
Figure 23: Proportion of total above-the-line advertising spend for the cider and perry category, by companies, January 2007-June 2010
Consumer Usage of Cider
Key points
Cider goes from niche product to major category…
Figure 24: Trends for cider consumed in the past 12 months, 2006-10
Figure 25: Proportion of UK cider drinkers and how this ranks against other drink types, August 2010
…but can it sustain its appeal as its core young drinkers get older?
Cider’s status as a repertoire drink remains a weakness
Figure 26: Proportion of drinkers who consume cider depending on how many drink types they consume, August 2010
Cider is attracting more wine than beer drinkers
Targeting the missing quarter of drinkers
Figure 27: Crossover of cider, wine and beer drinkers, August 2010
Men and women have different barriers to drinking cider
Figure 28: Those who drink wine and beer but not cider, and their reasons for not drinking cider, August 2010
Pear/fruit cider is catching on
Figure 29: Proportion of UK apple and pear/other fruit cider drinkers and how this ranks against other drink types, August 2010
Around half of cider drinkers embrace both kinds
Figure 30: Cider drinkers, by cider type, August 2010
Pear and fruit ciders are helping to attract a younger, more female crowd
Figure 31: Solus drinkers of apple and pear/fruit cider, indexed (100 = average), by gender, age and socio-economic group, August 2010
Consumer Attitudes towards Cider
Key points
Cider drinkers are very enthusiastic about its sweet and refreshing taste
Figure 32: Statements about cider which cider drinkers agree with, August 2010
Cider has the benefits to attract chilled wine drinkers
Too many cider drinkers view it as an alternative to their usual tipple
Figure 33: Drink types consumed in the past year by those cider drinkers who consume cider when they feel like a change from their usual drink, August 2010
Appealing to discerning drinkers attracted by local provenance
Consumers are now less likely to pigeon-hole cider as just for summer
Cider is simply not on the radar for most non-drinkers…
Figure 34: Reasons why people have not drunk cider in the past year, August 2010
…and can sell its benefits better to the wider drinking public
Cider needs to raise its food matching profile
The category cannot forever rely on innovation for its growth
Women put off by the volume of cider serve
Figure 35: Reasons why people have not drunk cider in the past year, indexed (100 = average), by gender, August 2010
When men want a pint, they are more likely to opt for lager
Targeting Cider Potentials
Key points
Cider has potential to convert many more drinkers...
Figure 36: The proportion of Cider Potentials and Cider Rejecters among non-cider drinkers, August 2010
...but taste is the main turn-off for rejecters
Figure 37: Barriers to entry for Cider Rejecters compared to Cider Potentials, August, 2010
A chance to attract more older, discerning males
Figure 38: Cider Potentials, by socio-economic group, age and gender, August 2010
Cider has the potential to attract more drinkers from wine than from lager
Figure 39: Drink types which Cider Potentials and Cider Rejecters consume, August 2010
Appendix – Internal Market Environment
Figure 40: Agreement with the statement ‘I buy goods produced in my own country whenever I can’, by demographics, 2010
Figure 41: Monthly % change in GfK NOP Consumer Confidence Index, January 2009-October 2010
Appendix – Brand Communication
Figure 42: Advertising spend (top ten) on cider and perry, by company, 2007-10
Figure 43: Advertising spend (top ten) on cider and perry, by brand, 2007-10
Appendix – Consumer Usage of Cider
Figure 44: Most popular types of alcohol drunk in the past 12 months, by demographics, August 2010
Figure 45: Next most popular types of alcohol drunk in the past 12 months, by demographics, August 2010
Figure 46: Other types of alcohol drunk in the past 12 months, by demographics, August 2010
Figure 47: Least popular types of alcohol drunk in the past 12 months, by demographics, August 2010
Figure 48: Types of alcohol drunk in the past 12 months, August 2010
Figure 49: Types of alcohol drunk in the past 12 months, by demographics, August 2010
Appendix – Consumer Attitudes towards Cider
Figure 50: Agreement with the statement ‘Cider is too sweet to drink too much of it in one sitting’, by demographics, August 2010
Figure 51: Agreement with the statement ‘Cider is refreshing’, by demographics, August 2010
Figure 52: Agreement with the statement ‘I like the sweet taste of cider’, by demographics, August 2010
Figure 53: Agreement with the statement ‘I like the variety of different flavoured ciders now available’, by demographics, August 2010
Figure 54: Agreement with the statement ‘I prefer traditional cider (ie apple) rather than the variety of different flavoured ciders now available’, by demographics, August 2010
Figure 55: Agreement with the statement ‘Cider is made from fresh/natural ingredients’, by demographics, August 2010
Figure 56: Agreement with the statement ‘I drink cider when I feel like a change from my usual drink(s)’, by demographics, August 2010
Figure 57: Agreement with the statement ‘I only drink cider in warm weather’, by demographics, August 2010
Figure 58: Agreement with the statement ‘I like to drink cider all year round’, by demographics, August 2010
Figure 59: Agreement with the statement ‘I like drinking local ciders’, by demographics, August 2010
Figure 60: Agreement with the statement ‘I prefer to pay more for premium cider’, by demographics, August 2010
Figure 61: Agreement with the statement ‘It never occurs to me to drink cider’, by demographics, August 2010
Figure 62: Agreement with the statement ‘Cider is too sweet’, by demographics, August 2010
Figure 63: Agreement with the statement ‘Cider has too many calories’, by demographics, August 2010
Figure 64: Agreement with the statement ‘I am put off by the taste’, by demographics, August 2010
Figure 65: Agreement with the statement ‘If I am going to drink a pint, I would rather it be beer’, by demographics, August 2010
Figure 66: Agreement with the statement ‘There are more refreshing alternatives (eg lager, wine etc)’, by demographics, August 2010
Figure 67: Agreement with the statement ‘There are better-quality alcohol alternatives (eg lager, wine etc)’, by demographics, August 2010
Figure 68: Agreement with the statement ‘It has too many artificial ingredients’, by demographics, August 2010
Figure 69: Agreement with the statement ‘I prefer not to drink pints or bottles’, by demographics, August 2010
Figure 70: Agreement with the statement ‘I associate cider with something people only drink when they are young’, by demographics, August 2010
Figure 71: Types of alcohol drunk in the past 12 months, by agreement with the reason ‘There are more refreshing alternatives’, August 2010
Figure 72: Types of alcohol drunk in the past 12 months, by agreement with the reason ‘There are better-quality alcohol alternatives’, August 2010
Figure 73: Agreement with the statement ‘I am prepared to pay more for foods that don’t contain artificial additives’, by demographics, 2010
Appendix – Targeting Cider Potentials
Figure 74: Reasons why people have not drunk cider in the past year, by demographics, August 2010
Figure 75: Reasons why people have not drunk cider in the past year, by attitudes towards future cider consumption, August 2010

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By sector: Cider (in Beer & Cider)

By market: United Kingdom (in Europe)