End of the golden age?
There's a strange shape looming on the horizon in the cider market and it looks a bit like a plateau. Graham Holter investigates
There is an almost comical predictability about cider sales figures
right now - just like the Fast Show's weather forecasts, it's always scorchio. Can it go on? Certainly not at recent levels, otherwise the nation would eventually be buying more Magners than margarine.
The latest Nielsen data points to a slowing-down of growth in the on-trade - most product categories there have actually experienced declines. In the off-trade, the cider market is still achieving healthy growth, with premium brands leading the field.
Premium volumes were up 42% in the year to June, and not surprisingly this is the most congested area of the market. Long-standing craft products from Thatchers, Westons, Merrydown and Aspall have already been leapfrogged by interlopers
such as Magners and Bulmers; now they have been joined by pear ciders (not perry - but more on this later); me-too products which come within a lawyer's whisker of stealing Magners' packaging; fruit ciders, and any number of brand extensions. Nielsen counts 102 in all.
In volume terms, the "value" category (containing brands such as Aston Manor sweet cider and Orchard Mill) is doing better than many give it credit for, with a 16% uplift. The "mainstream" category (Strongbow, Olde English, Blackthorn and Woodpecker) is doing almost as well, with a 15% volume increase.
leaves the maligned white and strong cider segment, which is in serious danger of being disowned by the rest of the category. Brands like White Lightning and Polaris are not having a happy time of it in the off-trade, and their performances have contributed to a 7% volume downturn for
this bottom-shelf end of the cider spectrum.
Optimism remains in good supply among producers and retailers. Simon Russell, spokesman for the National Association of Cider Makers, says: "What has driven and is driving the surge in interest in cider is the innovation and investment of cidermakers.
"Given the results that this has delivered you might imagine that we will continue to invest and innovate. However, we are not immune to the dramatic rises in production costs and the inflation-busting hike in duty. These factors can affect the level of investment cidermakers can make.
"I believe there is more to come, just that the spectacular pace of recent years might slow. Cider has seen a step change in how it is perceived - by both the retailers and consumers."
Russell describes a "virtuous circle" in which innovation and investment from producers leads to greater interest from retailers, which in turn generates higher sales, which then prompts more innovation and investment.
"With most of this investment coming at the more premium end, value is ahead of volume, creating even greater opportunities for retailers in the take-home sector," he says.
Gaymer Cider Company managing director John Mills is, like most of his contemporaries, prepared to concede that the cider category is beginning to settle into a less frenzied stage of its development.
"The market is still the fastest growing alcohol category, with double-digit growth," he says. "It's slowing down a bit in the on-trade, partly because the on-trade is slowing down. The good growth is coming from the off-trade and the multiple grocers are
getting the lion's share.
"It's disappointing for me that the independents, although doing OK, are still losing share and still have an over-reliance on 2-litre and 3-litre plastic bottles.
"Most of the retailers have doubled or tripled their space. We're going to get the inevitable drop-out of a lot of me-toos, but they're not the ones driving the volumes. Everyone's brands are in different stages of their evolution. Magners is now struggling in the on-trade as Bulmers and ourselves are taking share from them."
Booths beer and cider buyer David Smith says: "We're still seeing some good growth, but I think some of the more established suppliers in the business are just starting to level off a little .
"I do think people like to try new ciders now and the newer suppliers are doing very well with us. We're still seeing good growth - we've just finished the beer and cider festival . We've had cider on tasting for seven weeks."
Chris Carr, managing director of Merrydown, sees
an interesting parallel
with the alcopop boom of the early
"We had a fantastic time with Two Dogs for about five months," he
recalls. "Christmas came and there were another 100 products on the market. It's beginning to feel a bit like that at the moment. Anybody who can launch a product with the word 'cider' on it thinks they're onto something, especially in the on-trade, but I'd be amazed if people are looking at putting in any new products that aren't very well supported.
"In the off-trade there's obviously slightly more opportunity, but at the last count there were 102 premium cider brands - that's brands, not SKUs. Some are not sold in any great quantity but it's a huge jump - if you look back three years, a figure of 27 comes to mind.
"I think there will be some sort of rationalisation and hopefully the amount of space that supermarkets give us will remain the same, but there are some products that are not getting the weekly rate of sale that supermarkets need.
"The cider market is still in pretty solid shape. A slight disappointment is that while supermarkets have pulled away from white ciders a lot - some barely stock it now - it's been replaced by very low-priced amber ciders."
Carr is promoting cider as a food match in the hope of avoiding the RTD fate, and has teamed up with wine writer Joe Wadsack to find the best pairings, including curries.
Paul Burton, joint managing director of St Helier producer Intercontinental Brands, has a pragmatic view of the market. "It's impossible for any category to keep expanding at the rate that cider has for the past couple of years," he says. "There's obviously a finite limit to that sort of year-on-year growth. I do see the market plateauing, but because it's been driven by a lot of investment - and it's premium products driving that investment - I think there will continue to be single digit growth."
Martin Thatcher, managing director of Thatchers, adds: "It looks like it's still the drinks category that's growing the most, so as an industry we've got to be very pleased with that.
"The market is changing slightly, moving from the much larger brands to the smaller niche brands like ours and one or two of the same ilk. People have seen adverts for Magners and Bulmers, tried them and quite liked them, and then went on to explore some other brands as well. It's a really exciting time.
"The growth might slow down. The weather will have a big influence on the next couple of months, but there are some quite nice new products coming into the market that will continue to generate interest. That innovation will sustain sales growth.
Wannabes need quality
"Some of the me-toos aren't of the quality that people are expecting and will come and go very rapidly, but the good products will stay in," Thatcher says.
Phil Plowman, head of marketing at Brothers, echoes th ese sentiments.
"The cider category has been riding the crest of a wave, so it is no surprise that it had to slow down at some point," he says. "Ironically, it is the volume brands that are suffering the biggest drop in sales while the premium brands maintain stronger growth.
"The drinks sector as a whole is now more orientated towards premium drinks and cider is no exception."
Glenn Asquith, sales and marketing director of Aston Manor, warns that investment in the category doesn't come cheap.
"For us our investment on new packaging and a new format for Kingstone Press, and the launch of Knights Premium Reserve, have both been great successes.
But he said the duty hike and rising production costs have made things difficult. "These factors can affect the level of investment we can make - though no matter what, we will continue to support our brands."
Is the ice fad melting away?
Cider's sales boom is often attributed to the marketing idea of persuading consumers to drink the product with ice. Is this a passing fad, or a permanent shift in drinking behaviour?
Scott Fairbairn, Magners' marketing manager, believes the over-ice message is sustainable.
He adds: "Our product generally delivers better when it's cold and serving it over ice is a way of doing that - it's also something consumers buy into. The big news for us is our draught product which is not delivered over ice."
Chris Carr, managing director of Merrydown, is one of many producers happy to have Magners as the sector's standard bearer.
"The Magners marketing is still very good," he says. "It's a simple message, nice music, soft focus, good-looking people having a nice time and it's not trying to be too clever. A lot of booze advertising really did become an art form rather than a communication about what was really good about the brand.
"Over-ice is still a really interesting way of giving consumers a bit of theatre as it's poured out. I think it will be interesting now Bulmers and Magners are selling on draught, which will make their products consistently cold. But ice is not something I've been particularly enthralled with - you get to the end of your glass and you're left with a fairly dilute, flat product."
Phil Plowman, head of marketing at Brothers, says: "There is no question that Magners did a great service to all cider brand owners . For some brands in the sector, improved serve will be a constant goal, but in the long term quality of product will win out."
White cider: the black sheep
With independents still shifting substantial volumes of white cider, the "rocket fuel" end of the market is not likely to disappear any time soon - unless there is some sort of government intervention.
Gaymer boss John Mills points out the Conservative manifesto pledge to increase duty on ciders above 5.5% abv, a move that could
kill the segment at a stroke. Merrydown managing director Chris Carr would not be among the mourners if this happened.
"White cider attracts a completely different consumer on a different occasion, but the problem is it still says 'cider' on there so it makes it that much more difficult to move away from that park bench image," he says. "It would be great if it continued to decline."
NACM spokesman Simon Russell urges a balanced debate. "There has been a great deal of misinformation about both the scale of white cider and the impact that it might have," he says.
"White cider represents less than 1% of total alcohol in the UK. While the market leader, Frosty Jacks, is growing sales through a mix of consumer activity and sponsorship, the balance of the white cider segment is in long-term decline - putting paid to the argument that white cider might be fuelling a growth in irresponsible consumption.
"The industry and producers of cider of all types are not complacent about alcohol misuse, but if we are to have a meaningful approach to tackle an important issue, it must be based on evidence and
be focused on why people misuse various forms of alcohol, not what forms of alcohol might be misused."