Whilst beer remains our national alcoholic drink, the marketplace is probably the most challenging we have ever faced. There are a huge number of moving parts. These range from the economic outlook, through the changing demographics of the consumer, to new consumption patterns, regulatory pressures to tackle alcohol misuse, to the sustainability of the industry as a whole. Beer, along with other drinks categories, must compete for a leisure spend which is increasingly dominated by digital entertainment, takeaway food, energy drinks and, of course coffee houses.
There’s also sense that traditional rites of passage to adulthood have all but disappeared. Young men used to be taken for a beer with dad as a first ritual to entering manhood. Now it is much more likely that a first foray into alcohol consumption will be amongst peers, and far less likely to be beer. Just look at the range of spirits available in clubs and bars - shots of black sambucca and tequila have become bonding rituals among the young.
Overall, we know the consumer continues to change their desires and wants. So, as brewers, we need to understand the consumer, what is driving choice, consumption and value and how does that fit into their needs and lifestyles? The economic situation is still dominating the consumer experience. Whilst the position is improving slightly in that we may now have passed the bottoming out of a lack of confidence, it is still very difficult for consumers to see the up side and we are unlikely to bounce-back to pre-2009 growth any time soon.
At the same time the marketplace in the UK remains very competitive and is continuing to evolve. Traditionally we have thought of beer sales being driven through pubs and bars, however, that trend has long been in decline. Meanwhile, British supermarkets are very focused and constantly looking for products that drive value for consumers. Put simply, for the first time in history, we drink more beer at home than we do at the pub.
This rise of home consumption has it challenges. Where does beer fit into the mix with other alcoholic drinks available and how do we understand consumer attitudes at home? Moreover, is the decline of the pub inevitable or can we do something about it? This is where we really need to understand our products and the occasions that engage the consumer. At Heineken, with the breadth of our portfolio, this is about ensuring that each of our brands is as aligned and relevant to the consumer as they can be. In the current economic environment, a beer or cider must remain inspirational and achievable – the everyday reward that our customers deserve.
To achieve this, we have committed significant investment in innovation. Traditionally consumer electronics have seen innovation rates of more than 80%. In the beer category this has languished below 5% but the tide is turning. Foster’s Gold and Desperados are just the latest in our series of new products to come to market, to lead the way in the future of beer. Whilst it’s early days, they have already been successful in helping to drive our marketplace and are being supported by innovations in point of sale, advertising and online to create a truly holistic consumer experience. And it is this approach to the consumer experience that brings us back to the British pub.
And of course beer is not just beer. The rise of microbrewers and craft beers have fuelled a new interest in the drink through diversity, localism and improved routes to market.
Beer has been around since before records existed to document its invention. It has evolved; moved from functional refreshment to enjoyment, from local to global and back to local again – and adjusted to make room for new categories such as spirit mixers and modern ciders. Will we be drinking beer in 100 years? Of course we will, but its successful future depends not just on the brewers’ craft, but on our ability to keep it relevant, appealing and credible to increasingly discerning, but hard-pressed, drinkers.
Jeremy Beadles is corporate relations director for Heineken.