Perhaps as a reflection of the times we live in, the ‘value’ segment of today’s lager market has experienced considerable growth in the last few years. Most on-trade beer suppliers have now adopted a value lager brand to fulfill this demand.
All the major breweries have used some of their secondary brands – Fosters and Tuborg, Carling and Tennents, Bavaria and Becks – as good tactical contenders with which to fight this expanding corner of the on-trade draught lager market.
Value lager’s share
Originally coming in from the off-trade cold into the heat of the on-trade lager market, value or ‘standard’ lagers now constitute 13% to 14% of the overall draught lager market in the on-trade by volume, over 10% by value. With no similar value offering in the draught stout, ale or cider categories, it’s understood that this value segment comprises lager brands only.
The value category has been huge for some time now in the off-trade with many different brands available to the consumer. Turnover values here are estimated at around €110 million through some 15 to 20 different competing brands operating across the entire standard lager segment including own-label arrangements.
In the on-trade, the past six months have put a value of €65 million on standard lager sales, according to one trade source, which can be projected to some €130 million per year by next December. That would give this segment a of the on-trade lager market a 10.3% share by value.
Continuing on-trade growth
According to Nielsen, value lagers have enjoyed significant improvements in their volume share of the on-trade lager market over the past few years. It points out that just four years ago this share was 6% MAT to December 2009. It grew to 8% MAT to December 2011 and to 10% the following year.
“Growth of these ‘defined value lagers’ exceeds that of the total lager market, with lager on-trade volumes increasing by 1.3% MAT to December 2013” states Nielsen, “whereas the combined growth of the value lagers in the on-trade is 31% to 13%”.
It’s understood that the drivers for this growth have been Tuborg, Carling and Foster’s.
But Bavaria from the Gleeson Group that was one of the first to pull through to a significant Above-The-Line presence in this value niche.
So initially the trade had but three value lager choices: Tuborg, Bavaria or Fosters – of which one would be chosen for countermounting. This developed to the point where some pubs had two value offerings for their more price-sensitive customers. Today, a number of pubs are believed to offer even more draught choice in this category.
Molson Coors has been finding its way around on-trade value category over the last few years with Carling.
Tennents too had always been regarded as a value brand until Tennents (Ireland) made the disastrous decision to go premium all those years ago which led to its sinking Bismark-like from sight. However it’s beginning to claw its way back onto the scene in the last year or two via C&C.
And Heineken Ireland has pushed ahead with Fosters in the value category without any fear of it cannibalising its market leading Heineken brand which enjoys a 33% value share of the total lager market.
Value brand for the publican
“Consumers are trading down” agrees VFI Chief Executive Padraig Cribben, “with value lagers cornering a reasonable share of the market in the on-trade.
“Overall beer sales in the on-trade in 2013 were flat at best. Value lagers were in growth. The only place it could come from is the premium market,” he asserts, “There has to be a balance for publicans between having a good value offering and ensuring that their cash margin is good too.
“Value-for-money will continue to be a factor this year.”
For the publican there’s much to be gained by having a value brand among the mainstream pumps because the difference in price for a keg could be anything from €35 and €40.
Choice in the value market
In this growing category then, more publicans are prepared to push their value offering and consumers now have a bit of choice.
It seems that people may be becoming less emotionally attached to brands thanks the activities of the discounters across the board here in Ireland.
Some brands have been sold across the counter outside the capital for as little as €2.50 while others would regard themselves more of an ‘everyday’ brand in this category.
One particularly enthusiastic supplier of a prominent value lager brand summed it up.
“It’s not enough to simply describe this as a ‘value’ market, it’s more than that now.
“There’s an appetite for value in every market and it’s not going to go away any time soon.”
The on-trade has come to recognise the value lager market as an entity in itself. And where 10 years ago it wouldn’t have wanted anything to do with a value lager, it now realises that a value proposition is something that has to be offered in today’s market, a market that’s certainly a lot more competitive than it was.