British Beer Market and Export Insights 2021

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  • Post last modified:February 24, 2021
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Premiumization is the most significant trend influencing the UK beer market nowadays. It has led to an explosion in the number of craft producers and brands. Britons are interested to pay a premium for an alcohol product that offers an authentic experience. This connects ale and cider trend, with the rise of craft breweries and growing consumer interest to microbreweries.

In this article, various quantitative and qualitative data sources across overseas markets, on trade and off trade to understand the sales and consumer trends and ‘what’ is happening in the beer trade. This helps us to understand the ‘why’ behind the current and future beer trends. The main idea of this article is to publish something useful for readers, with recommendations to help you to navigate your beer sales and business.

Conclusion

The British beer industry faces its greatest challenge in 50 years. All at once, there is falling consumer demand, increasingly competitive products, heightened requirements by retailers and consumers, and tougher market access. This confluence of challenging developments is not merely creating temporary roadblocks for large beer manufacturers – it marks the beginning of a difficult era for the entire industry.

Consumers, especially younger drinkers are increasingly looking for non-alcoholic, premium lager, and ales with a developed taste than standard pilsner and lager beers. Craft beer consumption has still on trend worldwide among millennials, wealthy seniors, and premium drinkers. The mainstream drinkers may be unable to define craft, but they can certainly describe the difference.

For the British beer industry, great opportunities lie ahead overseas. Brewers set their sights on growing markets such as China, Japan, Turkey, and the middle east. In 2020, British brewers’ total overseas trade of beers were £400 million. This was a decrease of £90 million (-18%) compared with the previous year. Due to the pandemic, beer exports in 2020 experienced significant decrease, while the most affected country was China in trade. Furthermore, British ales and craft beer exports overall was around £50 million in 2020.

Understanding the consumer

Understanding the drinker will help breweries to sell more beer by ensuring the right brands are in the right route to the market. The drinker should be at the centre of every ranging decision. Understanding who they are and how they differ will make these decisions easier. Here we look at who the beer drinker is and how you can use this information.

There are two type of drinker: the ale drinker and the lager drinker. Also, we have experimenters and stick with favourites.

Ale drinker usually likes to experiment, on contrary, lager drinker prefers to go with the usual one. Lager drinkers are more loyal to the category and stick to lager whist ale consumers will visit other categories such as ciders. Furthermore, ale drinker is getting younger; Gen-Z has increased attention to ales, IPA, and craft options in accordance with the rise of craft microbrewers which uses social media as the ultimate weapon.

Consumers are health concerned because of the very well-known issues, so that they explore different solutions for the self-conscious related problems, such as low alcohol beers.

Twenty three percent of 18-24-year-olds are getting sober, an increase of six percent in the last 12 months. Which ties in with no and low alcohol beers now being the top drink trend for 2020.

The findings in this year’s report show a drastically changing marketplace – with consumers opting for no or low alcohol options, particularly young people, and brewers who are quickly adapting to this challenge and bringing out some really interesting, flavoursome low abv beers. It shows the dexterity of small independent breweries and I think we are going to see even more growth in this area over the next twelve months as people become more health conscious.

Editor of the SIBA British Craft Beer Report Caroline Nodder

Genuine craft beer must be produced by a small independent brewery

SIBA British Craft Beer Report 2020 shows a growing number of consumers, 50% in 2020 up from 43% in 2019, recognise that genuine craft beer must be produced by a small independent brewery. In contrast only 3% of our consumers believe craft beer can be made by a multinational global brewer. This is something small brewers need to communicate better to consumers. People are worried by the authenticity of ale and the British image; 27% of consumers can’t tell if a beer is made by an independent brewer or not.

The unpleasant truth behind those concerns is acquisitions of independent brewers by industry leaders, for instance; AB InBev – Camden Town Brewery, Asahi Breweries – Meantime Brewery, Heineken – Beavertown Brewery relationship. It is getting difficult to find independent successful small brewery every other day. Almost half of consumers in the UK believe that Camden Town is an independent brewery. Highlighting that awareness is limited and the majority of consumers are unaware of macro brewer acquisitions.

Macro trends: premiumisation, health, authenticity, convenience, experience

Across the globe, consumers are increasingly drawn to beer that skews either to the high end or the low. Market trends over the last five years reveal volumes shifting away from core lager products and toward premium beers and/or value-based brands. In mature markets, such as Western Europe, the U.S. and Australia, tastes are trending toward premium beer.

Price remains a crucial factor to consumers. That however does not mean an offering must be “cheap”, and it still should be of added value to the consumer. Consumers wants to feel posh with their drink choice, thus the image of the drink, shall offer value and should be “shareable” on their social network. Consumers are looking for reasons to pay for the product, this signals to the added value problem.

To get full value out of your different beers, the price to the consumer must be correct. The entry price in an outlet, which is based on classic lager in most outlets, is set by environmental factors such as the type of outlet, e.g., pub vs. restaurant, quality of outlet, location (high vs. low property value area) and other factors. But the percentage jump between various categories should always be the same to drive satisfaction for all drinkers.

On retail side, beer is a convenience purchase, with bottles picked up on the way out to dinner, or with the weekly shop. Presumably, this is why the supermarkets in the UK are now responsible for some 80% of off-trade sales. Statistics have shown that beer is one of the most price elastic commodities carried by supermarkets. Reduce the price by a pound and the bottles fly off the shelves, with sales rocketing up.

We live in an experience economy where making memories through shared moments is key

Consumers are willing to pay more for products and experiences that go the extra mile. Service, knowledge, and quality are crucial to a high quality in pub experience. Consumers highlight their top three motivators for purchasing a product are quality based, being served chilled, being easy to drink. However, consistency of quality all come out at the first place. Rest of factors that effects sales are social media, experience with the brand, abv, organic and/or vegan – sustainable ingredients and origin of the beer.

World Lager accounts for 44% of all Packaged Beer sold in the British retail markets

1 in 3 consumers will buy packaged, multi packs when they do weekly shopping. World lager brands lead on retail just because of their dominance in fridges of retail shelves such as Heineken, Carlsberg, Stella Artois, Peroni, Corona.

Retail stores such as supermarkets and large chains of discounters or convenience stores are becoming an increasingly important distribution channel for beer manufacturers, at the expense of pubs and specialty stores. This presents several challenges. One is further pressure on manufacturers’ prices and margins since retail stores deliver lower profit margins even when they are not discounting. At the same time, retailers are putting greater demands on manufacturers, insisting upon ever smaller and more frequent product deliveries in order to reduce their warehousing costs. They are also expecting manufacturers to come up with new and innovative merchandising units, such as movable shelves that can be rolled into the store fully stocked, thus minimizing the store’s cost of replenishment. On the other hand premiumization is the most significant trend influencing the UK beer market.

What does premiumisation mean in a nutshell?

The action or process of attempting to make a brand or product appeal to consumers by emphasizing its superior quality and exclusivity. Premiumisation is impacting the Beer industry through drinkers drinking less but better. This is most evident at a top line level with drinkers in the on-trade consuming 66.5 million fewer pints of beer than they did last year but spending an extra £177.8m on the beer they drank according to the 2019 Kantar market report.

Thirty seven percent of global drinkers are willing to pay extra for an alcoholic drink that would deliver extra level of joy and indulgence.

The image of the brewer on social media, as shareable moment or content is also one of the traits of a premium beer. People do expect creating stories with their pint of good ale.

Nearly half of ale drinkers go for depth of taste, would like to support local brewers, and look for something different. Ale drinkers it is the style that dictates if they consider it to be premium, so they are looking for cues such as IPA, English pale, wheat etc. Abv and price are also important as well.

One-third of lager consumers prefer high quality and premium brands. Lager drinkers judge their beers differently, it is less about the drink and more about the positioning with price being the strongest indicator, followed by brand and abv.

It goes without saying, consumers are willing to trade up and spend more money on what matters to them.

Health concerns

Consumers are increasingly concerned about health and wellbeing which extends to their leisure time and drinking out behaviours. Alcohol consumption has reduced overall in the past 15 years with fewer adults drinking weekly and many choosing to cut it out completely or opt for drink free days.

One third of consumers stated their alcohol consumption has decreased during pandemic in the last six months.

Low alcohol beer drinkers saying that they prefer lower abv beers in the afternoon, and finding them easy to drink, by including the reason of hard-working week and/or of busy day. As a trade of but they promptly low abv beers are tasteless and defined non-alcoholic beers as not a proper drink which is funny. In addition to that, of course, Gen Z drinkers believe that is healthier and better for them which is heavily arguable.

Authenticity is another issue

Sustainability and environmental issues have further gained in importance to consumers who will choose brands based on their responsibility credentials. Several craft beers have built their brands around a sustainability, by celebrating the British ingredients and tell drinkers which region they’re from such as St. Austell Brewery, the producer of Proper Job from Cornwall in England.

The traditional, British nature of Cask Ale sits hand in hand with this trend, holding a number of authentic credentials: Brewed the same way for centuries using only traditional ingredients (malted barley, water, hops and yeast). A live product unlike Keg Beer, its character and favour continue to develop in the Cask. Cask Ale is naturally conditioned and undergoes a secondary fermentation inside the cask allowing the beer to naturally develop carbonation.

Photo by Jon Parry on Unsplash

British beer export report

Leading five export destinations for beer from United Kingdom in 2020, ranked by value: United States, Republic of Ireland, Canada, France, and China. Besides only 10% of the total volume exported by independent brewers, and are craft beers, ales, stouts.

Across the country, breweries and exporters are seeing the decrease in numbers overseas, and the support of department of international trade offers dedicated excellent export support for emerging markets with free trade agreements such as Japan, Turkey, Canada, etc. British breweries can use DIT’s overseas network which operates in 125 countries or look for live exporting opportunities on the digital hub great.gov.uk, to build their brands abroad as part of Great Britain. as we, as foodnomy, help brewers to land beers to Israel, Turkey, middle east, GCC countries, and many more.

In 2020, British brewers’ total overseas trade of beers were £400 million

This was a decrease of £90 million (-18%) compared with the previous year. Due to the pandemic, beer exports in 2020 experienced significant decrease, while the most affected country was China in trade.

Countries20192020
United States £     106,873,944 £     101,693,469
Irish Republic £       67,625,090 £       84,276,935
China £       79,541,717 £       21,007,481
Canada £       29,347,365 £       31,965,061
France £       31,900,317 £       24,255,930
Netherlands £       23,424,879 £       17,557,685
Spain £       18,779,595 £       10,723,452
Russia £       14,446,024 £       13,529,373
South Korea £       12,082,605 £       13,465,688
Australia £         9,638,400 £         9,502,254
All Countries £    490,923,288 £    400,682,578
uktradeinfo

The USA remained the UK’s largest beer importer in 2020, with slight value decrease in 2019 while exports to China hugely decreased £55 million (-74%). At the same time exports to Ireland increased £17 million. My apologies for the basic, nonaesthetic charts and pivot tables, will work on this to make them more visually appeal. However, they demonstrate the considerably basic information we are looking for very well.

When we look at the last five years trend, the beer exports are having great downturn on contrary the increase of total food and drink exports. Should exporters investigate the reasons behind this in order to change the trend. As a deeper insight, total amount of beer kegs exported in 2020 was £18 million, it was £38 million in 2019, due lockdown all over the world and closure of pubs and restaurants has hugely impacted keg sales.

On the bright side, export of canned beers in retail markets stayed just fine, total amount of canned beers was £199 million this year.

Retail stores such as supermarkets and large chains of discounters or convenience stores are vitally important distribution channel for beer manufacturers, at the closure of pubs and specialty stores. So, as we remove the keg sales out of the equation in order to extract effects of pandemic out of the results, nonetheless, there is an 16% decrease between 2019 and 2020. DIT, producers and exporters should spend on time evaluate results, in order to change the course of trend and to compete internationally.

Regions20192020
European Union £ 186,250,935 £ 168,816,650
North America £ 137,767,245 £ 134,831,610
Asia and Oceania £ 123,197,747 £    64,640,746
Eastern Europe exc EU £    15,793,973 £    14,606,879
Middle East and N Africa £    13,055,067 £      4,095,663
Western Europe exc EU £      7,410,573 £      7,327,890
Latin America and Caribbean £      5,995,130 £      4,995,481
Sub-Saharan Africa £         727,757 £      1,240,160
Stores and Provisions £         724,861 £         127,499
Grand Total £ 490,923,288 £ 400,682,578
uktradeinfo

The top five export partner countries accounted for 66% of total exports of beers in 2020, which is not a healthy distribution. Also, as we look at the regions of export allocation; for beer exporters there is a huge opportunity in Eastern Europe, Middle East, North Africa, Latin America and of course in Asia especially in China and Japan.

The leverage force of the signed free trade agreements

Recently, United Kingdom has signed a free trade agreement with Japan, the British exporters have only £5.3 millions beer trade to Japan, The Japanese mainstream beer market is the fourth largest beer market in the world with retail value sales of £26.5 billion in 2018. The mainstream beer market is dominated by Asahi Breweries Ltd, Kirin Breweries Co Ltd, Suntory Beer Ltd and Sapporo Breweries Ltd who together account for 93.4% of the beer market. I reckon there is a huge opportunity for British companies.

At the same, Turkey and the UK has also signed a free trade agreement, so that British brands can use this as a leverage to enter the Turkish market and grow their present in Turkey. For British brands, especially alcoholic beverage producers, the demand always present and is highly valuable. Brewers can use the British appeal. The beer trade to Turkey in 2020 was roughly £850.000.

Conclusion

The British beer industry faces its greatest challenge in 50 years. All at once, there is falling consumer demand, increasingly competitive products, heightened requirements by retailers and consumers, and tougher market access. This confluence of challenging developments is not merely creating temporary roadblocks for large beer manufacturers – it marks the beginning of a difficult era for the entire industry.

Consumers, especially younger drinkers are increasingly looking for non-alcoholic, premium lager, and ales with a developed taste than standard pilsner and lager beers. Craft beer consumption has still on trend worldwide among millennials, wealthy seniors, and premium drinkers. The mainstream drinkers may be unable to define craft, but they can certainly describe the difference.

For the British beer industry, great opportunities lie ahead overseas. Brewers set their sights on growing markets such as China, Japan, Turkey, and the middle east. In 2020, British brewers’ total overseas trade of beers were £400 million. This was a decrease of £90 million (-18%) compared with the previous year. Due to the pandemic, beer exports in 2020 experienced significant decrease, while the most affected country was China in trade. Furthermore, British ales and craft beer exports overall was around £50 million in 2020.

Foodnomy is here for help

British Beer is having hard days both at home and abroad. We, as foodnomy, support some of the largest regional breweries in the UK providing sales and operational expertise to help smooth out the complexities of importing excise goods.

If you read the entire report from first until the last the sentence, here is our most read olive oil market report and How to do export market research – a useful guide at your disposal.

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