If you enter the words “beer sales UK” into Google News right now you might feel in need of a strong ale or six, with headlines saying: “Beer sales slump to Great Depression levels” and “Decline in sales of beer in the UK accelerating”.
(Actually, that last headline really reads: “Decline in sales of bee in the UK …“, another powerful blow for those of us who insist web news needs copy editors just as much as dead tree news does, but that’s a debate for another forum.)
So: all gloom and doom from the tomb in Britain’s breweries? Well, no.
Read the British Beer and Pub Association’s UK Quarterly Beer Barometer, and it doesn’t look good: total beer sales are down 4.5 per cent compared with the same quarter last year, with sales in pubs down 10.6 per cent, equal to 5,500 barrels a day.
Now, you can probably work out that if pub sales have fallen, percentagewise, more than twice as much as total beer sales are down, then sales elsewhere must be up: and indeed, supermarkets and off-licences have seen a 3.8 per cent increase in beer sales on the same quarter last year. This is not in the slightest surprising: in the past 10 years the price of a pint in British pubs has more than doubled, while in supermarkets the cost of premium lager has actually fallen by eight per cent.
But that’s the total beer market. If you look at the cask beer market, and the premium ales market in the off-sales trade, the picture is very different.
I’m indebted to Graham Page of Nielsen for all the following figures, which come from the July 2008 update to his UK Drinks Market On Trade and Cask Ale Trends Report. Because of the problems of double-counting on one side, and under-recording on the other, trying to get accurate figures on cask ale sales in the UK is a nightmare – I know, I was involved in a very controversial attempt to try to show the market was much larger than everybody said back in the early years of this century. But out of the multiplicity of differing counts, including the British Beer and Pub Association (BBPA), HM Revenue and Customs and SIBA, the independent brewers’ association, I suspect Nielsen’s current figures are about as good as you’ll find.
Total cask sales, as measured by the BBPA, declined by 4.3 per cent in 2007, a slower fall compared to previous years. But Graham Page suggests that something like 400,000 barrels of cask ale sales, as measured by corrected figures for Progressive Beer Duty payments, are missing from the BBPA’s figures. This, he says, means the fall in cask ale sales is actually more like 1.3 per cent, vastly better than the beer sector in pubs as a whole: “Crucially, in our view, cask has clearly outperformed the beer sector in on-sales in 2007. Cask ale is doing better than ale overall and a lot better than total beer.”
In 2007 cask ale was 30 per cent of ale in total and, on revised volumes, 7.1 per cent of total beer. But this is a misleading figure, As Page says: “We [Nielsen] agree with SIBA that cask ale accounts for a much higher proportion of ale sales in pubs, possibly nearer 30-40 per cent in outlets stocking it (maybe 50 per cent plus in regional brewers pubs), though many city and town circuit bars and clubs don’t stock cask at all. But … where stocked, cask is often a large part of the beer mix.”
Cask ale sales “recovered very well in the market, given the non-summer of 2007 and the effect of the smoking bans in England, Wales and Scotland”, Page says. “It was close to growth again, but this may have been hit in recent months, as the GB on-sales beer market was down 8-9 per cent at May 2008.” All the same, Page says: “Given June and July 2007 beer market figures were poor, cask ale may even do relatively better still in summer 2008.”
Significantly, as take-home beer sales continue to rise, sales of 500ml bottles of ale brands are doing almost twice as well as the take-home beer market overall, according to Nielsen’s figures: up seven per cent in 2007, “supported by retailers keen to give choice, variety and source local products.” It seems logical to assume that drinkers of bottled premium ales at home are those who are, or would be, drinking cask ales in the pub.
We might wish people preferred cask ales in pubs, but as the next best thing, tasty bottled beers drunk at home further the idea of decent individualistic brews against bland mass-market monopolists, increase awareness of beer brands people might encounter as cask ales in pubs, advertise the wide variety of beer available in Britain now, and provide incremental sales for many small local brewers.
It’s a fact little appreciated in the UK that, compared to most markets, we are still much more biased towards on-sales for beer. Beer drunk at home in Britain may have risen to around 43 per cent off-sales against 57 per cent through pubs and bars, but compare that to the United States, where on-sales, pub and bar sales, account for only 20 per cent of the total market. While tiny brewers in the UK can largely get away with never having to bottle their beers, the microbrewery sector in the US has to be vastly more geared to brewing for the take-home market.
British supermarkets are certainly aware that the real growth, and the real margins, in the drinks sector are in the proper premium beer brands, which is why Sainsbury’s, for example, plans to increase the amount of shelf space it gives to premium bottled beers by 50 per cent in October.
Graham Page, who waves no flags for anything except independent, accurate analysis, comments in his July update: “Looking at beer trends in general in 2008, I’d have to caution that cask ale’s move to growth may well be scuppered by current economic woes and smoking ban effects, let alone duty hikes. That said, I suspect cask to continue to outperform beer in general in 2008.”
Another interesting wrinkle in the statistics are the figures showing that the big growth in cask sales on the “small independent” side seems to be coming from the real tinies among the now 600 currently open new breweries in the UK (a staggering figure in its own right, considering that the US, with five times our population, has only 1,200 new small brewers). The smallest brewers (up to 5,000 hectolitres a year, 3,000 barrels) increased total volumes between 2003 and 2007 from 300,000hl to 450,000 hl – up 50 per cent. The medium-small brewers (5,000-30,000 hl pa) rose in total from 300,000 to 400,000, up 33 per cent. The “large small” brewers (30,000 hl to 60,000 hl pa, 18,000 to 36,000 barrels) were static at 250,000 barrels pa in total.
That may be an artefact of the statistics: it’s more than possible that either the biggest of the “small” brewers rose past the upper limit on progressive beer duty of 60,000 hl and thus their growth disappeared from the statistics, or they all deliberately chose not to grow so as to continue to benefit from PBD. In either case, it certainly shows a massive boom among the real ale real minnows. Is there any other sector of British industry shown a 50 per cent rise in production in the past four years?
But as the huge number of independents thrive, and regional and “neo-national” brewers (that is, Greene King, Marston’s and Wells and Young’s) “are clearly growing or doing better than a declining beer market, so growing their share”, what’s happening with those global brewers with operations in Britain, who surely have the marketing resources to outperform any piddling little player a fraction of their size? Let’s quote Graham Page again:
There are now hosts of green shoots and opportunities and growth potential, but virtually all with regional and micro brewers brands … Have our global brewers given up on the cask sector? It appears they have – what a damn pity for them, After all, at present, they all actually need on-trade volume more than most, let alone the brewing reputation that goes with brewing great cask ales.