Big questions for cider insiders

Cider may be the industry success story of recent years, but it still faces challenges. Graham Holter quizzed some key players about the prospects and problems for the year ahead

Is there evidence that the cider boom of recent years can be sustained in 2008?

Simon Russell, spokesman, National Association of Cider Makers

"In 2007 the cider category was once again the fastest growing of any drinks category. For a mature sector - the UK's oldest drinks industry - this was another remarkable performance in light of two or three years of very considerable growth.

"There is considerable headroom available for the industry to continue to flourish. This is not to say that the fortunes of individual brands and businesses will not vary given the highly competitive nature of the market.

"It is testament to the confidence of cidermakers that, almost without exception, they have announced plans for a considerable acreage of new orchards - notably Bulmers/S&N and Westons.

"Given the investment this requires and the 30-year contracts offered to growers and farmers, this is a very tangible ­illustration of the resources being invested to sustain the growth in cider and support the rural economy."

Martin Thatcher, managing director, Thatchers Cider

"Some commentators are predicting a decline for the cider category, but recent figures show the market 25% up on last year.

"Certainly the poor summer didn't help sales, but our belief is that this growth is here to stay with the smaller, premium producers beginning to further increase their market share.

"Retailers will look to broaden the range of ciders they stock, thus meeting the demand from consumers who are graduating from their existing brand and looking to try something new and develop their understanding of cider."

John Mills, managing director, Gaymer Cider Company

"The reason I think it's going to keep growing is because it's not just the 18 to 24-year-olds' latest fad.

"Alcopops peaked and fell again because they only appealed to one segment of the population. This is more sustainable.

"I think cider is going to keep going for some time - people have discovered or rediscovered it and it's part of their repertoire.

"If you go back three or four years the consumer penetration of cider was 20% in the UK. Now more than 30% of the population are regular cider drinkers."

Rod Marsh, owner, National Collection of Cider & Perry

"January and February have seen a very marked increase in sales of cider and perry for us - far better than the past two years.

"I think it is fair to say that, historically, we have seen this kind of growth whenever recession is talked about. Punters cut back on luxury goods and tend to spoil themselves with food and drink.

"They want something with more provenance than Strongbow, something which can be shown to be made with care and attention to detail, in the way that a more expensive product like wine is."

Scott Fairbairn, marketing manager, Magners

"While it is expected that the rapid growth of the cider category cannot be sustained at the same levels as previous years, we still expect a strong year.

"We are committed to driving value for the trade with continued investment in the category and new and exciting plans for 2008."

Glenn Asquith, sales & marketing director, Aston Manor

"Our 2008 sales are showing a 20% increase on 2007. I have no doubt that there will be continued significant growth this year."

Barry Chevallier Guild, partner, Aspall

"All indications for Aspall are that our growth will continue over the next few months. We had an exceptionally good Christmas despite the fact that none of our products were promoted during the festive season. Our volumes in grocery trade are up 70% year on year and we also have a number of new product developments under way to add to the super-premium end of the market."

How big a headache for the industry is the rise in production costs – and do you think these will translate into higher retail prices?

Paul Burton, joint managing director, InterContinental Brands

" The drinks industry has not seen anything like it for 25 years. Manufacturers are reluctant to absorb the costs and retailers to accept the costs and push retail prices up in turn. Given the magnitude of the raw material increases I think they will turn into moderately higher retail prices.

"If increases are only moderate and provided manufacturers continue to invest, I do not see there will be an adverse impact for brands such as ICB's."

Chris Carr, managing director, Merrydown

"More a migraine than a headache. There is no doubt prices will rise and these do have to be passed on to the consumer but I believe cider still represents good value and people will still buy and enjoy it."

John Mills, Gaymers

"We have long-term commitments with about 75 apple growers so we have long contracts - up to 30 years - and we invested in those many years ago. We're in better shape on supply than many of our competitors but we do have a gap until 2009-10 which means we have to import some concentrate. Juice prices have tripled, sugar has nearly doubled in the past year, and oil-based products like PET and shrink wrap and fuel costs have increased a lot as well. Our costs have gone up by about 8%.

"We've been pushing price increases of between 5 and 8% through on our brands since January. We're trying to offset cost increases by being more efficient and looking at cost saving measures, like lightweight glass. "

Glenn Asquith, Aston Manor

"We have seen huge increases, especially on raw materials over the last 18 months. Taking into account that it already costs three times more to produce cider than beer, this is a serious issue. I believe that imminent further increases are unlikely and costs seem to be less volatile at the moment. These increases will definitely translate into higher retails, but I do not see this as a big issue, as certain retailers are simply selling some of their ciders too cheaply."

Simon Russell, NACM

"It is a big headache. Cider already has markedly higher costs of production than for the equivalent volume of beer - one of the many reasons for a different duty structure. In addition, the relatively small scale of the industry and the distinct lack of control cidermakers can exert over the retail price of their products make it an issue of great concern to cidermakers."

Rod Marsh, National Collection of Cider & Perry

"We are seeing price increases, some substantial, in the craft sector, but cider has always been a comparatively cheap product, and as long as quality is perceived to be good and improving, any increase in retail price does not deter consumers. Indeed at the top end of the market customers seem positively reassured to be spending anything between £7 and £12 on a bottle of cider or perry - the Stella syndrome, I suppose."

Scott Fairbairn, Magners

"While consumers will always seek good value, we believe price promotions have no place in the premium sector and that consumers make their purchasing based on many factors, of which price is just one. Product quality and brand perception are just as important.

"Cider spent many years as an ailing category precisely because the product image had been devalued by heavy discounting. The revival of the cider category can be attributed to the creation of the premium category, which Magners has invested in heavily. We always advise retailers to maintain and further drive value into the sector and not to erode its potential through price promotions."

Can smaller craft ciders survive and thrive in a market dominated by big brands?

Martin Thatcher, Thatchers

"This is a great time for smaller brands. The image of cider is being continually enhanced as growers progress planting schemes throughout the country and the provenance and traditions of the craft producers are brought to the fore.

"As a company we are always looking to move forward, and with the renewed interest in the cider category this innovation remains vitally important. The continued introduction of new products within our single variety range, for example, allows people to experiment with tastes. As consumers who were first introduced to the category a few years ago look to try something new and develop their understanding of cider, so the concept of a single variety cider, and the characteristics borne out of the type of apple, are recognised.

"The crop of the Dabinett apple, for example, has been excellent this year, and we have decided to bring this variety back into our range after a break of five years. "

Barry Chevallier Guild, Aspall

"The prospects for smaller craft products are high as they offer consumers choice, heritage and authenticity.

"High quality, niche ciders are essential for a vibrant and developing category - without them the cider market could be in danger of becoming commoditised.

"They are also important for retailers , offering a point of difference for consumers. Consumer appreciation for the more niche products is definitely growing as people increasingly seek out locally-sourced products from the regions.

"The chances of the smaller brands are undoubtedly enhanced by the success of their bigger mainstream rivals."

Chris Carr, Merrydown

"I believe there are excellent prospects for craft ciders because consumers are now shopping the shelves for cider and small niche brands, plus the established premium ciders such as Merrydown, with its 60-year heritage, are there to be discovered. Every time someone new discovers cider it is a good thing for the industry ."

Paul Burton, InterContinental Brands

"Prospects for craft products are excellent because consumers have never been more receptive to sampling such a wide range of cider products, especially premium cider products."

Rod Marsh, National Collection of Cider & Perry

"The bigger brands have certainly increased their dominance of the market with their seemingly inexhaustible advertising budgets, but they might just have shot themselves in the foot a bit by taking the product back to the bucolic idyll of the orchard.

"It's an image which has brought people back to where cider really comes from beautifully. Huge factories with state-of-the-art science fit uncomfortably into this perception of the drink.

"If the weather is halfway reasonable 2008 will see cider sales continue to grow apace, and all the indications so far are that craft cider is going to be a far more major beneficiary than hitherto.

"As well as taking market from the industrial product, it has market to steal from ale, lager and wine with a freshness and a perceived honesty of outlook - a rustic artlessness, if you will - that appeals to the widest possible audience, neither age, nor gender, nor income-bracket specific."

Simon Russell, NACM

"With the exception of white cider most sectors and producers are in growth to some degree. It is clear that it is more ­premium products that are stimulating growth here, though the smaller producers are flourishing as well.

"For many it is a logical progression that if they enjoy one of the new mainstream brands they will try other, more premium ciders from a range of producers."

Glenn Asquith, Aston Manor

"The ever increasing marketing budgets for big brands, including ours, have an extremely positive effect on the whole sector. I believe all cidermakers are benefiting from this effect."

John Mills, Gaymers

"People such as Westons, Thatchers and Aspall have always produced good products and they're really benefiting from this growth.

"That's why we've taken a category approach with our range. We have NPD on the 'top shelf' with Addlestones and more to come this year, right the way down to rationalising the bottom shelf.

"There is an analogy with premium bottled ales. People want those kinds of choices. We pride ourselves on being a bit of a category adviser because we've got a range of own-label at the bottom right up to the top shelf.

"Independents really need to start looking at premium products that offer choice, diversity and taste - and there's a huge demand. Premium glass is the fastest-growing part of the market."

Scott Fairbairn, Magners

"It can be quite confusing for consumers when fixtures contain a diverse range of products, so retailers should focus on a manageable number of brands, which drive their category value and represent the highest proportion of sales.

"While it is important to offer choice and there is always space for some niche products with USPs, the trade should concentrate on bigger brands that will consistently generate more revenue."

What are social and commercial prospects for white cider?

Glenn Asquith, Aston Manor

"The white cider market has seen a small decline in the past few years and currently only accounts for 0.6% of total alcohol consumption.

"Frosty Jack's has seen massive growth over the past three years and is now by far the largest brand in the UK, even though the total sector is in slight decline.

"I do not believe the sector will see growth, but I do believe that the number of white ciders will decline as retailers rationalise their ranges to include the largest brand and maybe one own-label or commodity brand.

"We actively encourage responsible retailing but obviously have no control in retail pricing.

"We live in a society where it seems to be acceptable to misuse any form of alcohol. This can only be combated through education and government-led initiatives."

Chris Carr, Merrydown

"In the independent sector there is still too much space allocated to white cider in large plastic bottles."

John Mills, Gaymers

"White cider is a small and rapidly declining part of the cider market. We have put up the pricing of Diamond White and K over the past three years so they're not at the cheap end of the market.

"Diamond White's typical drinker is someone who drank it when they were 18, 19 or 20 but are now 35 and still love it. Are we promoting it or investing in it? No and no. If we do promotions they're really shallow. Are we trying to get new drinkers into Diamond White? No.

"We are where we are. White cider will find its own natural level."

Simon Russell, NACM

"The NACM has no specific view about white cider. Any product legally produced, responsibly marketed, responsibly sold and responsibly consumed does not present a problem. The vast majority of consumers enjoy a range of different drinks responsibly and they should not be punished for the actions of a minority - whatever the category of alcohol.

"White cider is in long-term decline - sales for 2007 were down 6.5% while amber cider sales were up by 27.1%.

"Average prices for take-home cider are up 5.4%, which is ahead of any measure of inflation, so cider is becoming more expensive relative to other drinks and consumer goods.

"The average price for white cider has grown 1.3% in the past 12 months and 2.5% in the past 12 weeks.

"Hence the suggestion, in some quarters, that white cider is responsible for a growing problem of alcohol misuse, simply does not reflect the evidence.

"That said, as a responsible industry we are not complacent and we will work with any body, agency or organisation that has a sincere wish to manage and reduce the misuse of alcohol by a minority of individuals."

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