Breweries and the Beer Market Market

Breweries and the Beer Market Market

Executive Summary In 2008, the acquisition of Scottish & Newcastle PLC (now Scottish & Newcastle Ltd [S&N]), the largest UK brewer, has taken the share of the beer market held by foreign companies to more than 85%. The buyers were two multinationals, Heineken of the Netherlands and Carlsberg of Denmark, typifying the cross-border deals that now characterise global brewing.

After dividing up S&N, Carlsberg took the company's overseas interests and Heineken took on the domestic business, which incorporates a 30% share of the UK beer market, with brands including Foster's, John Smith's and Newcastle Brown, as well as the Bulmers ciders. The Heineken brand, already well established in the crucial premium lager segment of the market, will be pushed forward against other foreign competitors and their lager brands, such as InBev (with the Stella Artois and Beck's brands), Carlsberg (with Carlsberg Export and Kronenbourg) and Coors (with Carling and Grolsch).

The multinationals entered the UK market to fill a gap left by the once powerful `big six' domestic brewers (Whitbread, S&N, Bass Charrington, Allied Breweries, Courage Imperial and Watneys), which combined brewing with running enormous public house (`pub') estates. This traditional model of pubs being `tied' to a brewer is still evident at a regional level, where smaller brewers have merged to produce larger pub estates and have put muscle behind marketing domestic beers. The three `pan-regional' forces are Greene King, Marston's and Wells & Young's (W&Y).

The beer market as a whole is now in decline, and faces higher taxation, competition from other drinks (e.g. cider and wine) and an uncertain future for many pubs (which are still the main outlet for beer, even in the wake of smoking bans across the UK and price increases).

There are also attitudes towards health to consider. In response to the growing concern over alcohol and its connection to poor health, there have been several high-profile launches of lower-alcohol beers since 2005. However, beer still held a 44% share of all UK spending on alcohol as at 2007, and it will always remain a substantial market. Although international lager brands now dominate the mainstream market, micro-brewing continues to thrive, maintaining the UK tradition for `real ales'.  
 

Executive Summary

1. Market Definition

REPORT COVERAGE

MARKET SECTORS

MARKET TRENDS

Long-Term Trends

Trends in the 2000s

ECONOMIC TRENDS

Population

Table 1: UK Resident Population Estimates by Sex (000), Mid-Years 2003-2007

Gross Domestic Product

Table 2: UK Gross Domestic Product at Current and Annual Chain-Linked Prices (£m), 2003-2007

Inflation

Table 3: UK Rate of Inflation (%), 2003-2007

Unemployment

Table 4: Actual Number of Unemployed Persons in the UK (million), 2003-2007

Household Disposable Income

Table 5: UK Household Disposable Income Per Capita (£), 2003-2007

MARKET POSITION

The UK

Table 6: Beer in the Total UK Alcoholic Drinks Market by Value at Current Prices (£bn at rsp and %), 2007

Overseas

2. Market Size

THE TOTAL MARKET

Table 7: The UK Beer Market by Value at Current Prices and Volume (£m at rsp, million litres and £ per litre), 2003-2007

Figure 1: The UK Beer Market by Value at Current Prices (£m at rsp), 2003-2007

Growth Factors

Variations by Trade Channel

Table 8: Retail Price Indices for Beer (index 2003=100), 2003 and 2006-2008

BY MARKET SECTOR

Lager Versus Dark Beers

Table 9: The UK Beer Market by Sector and Channel by Value at Current Prices (£bn at rsp and %), 2008

Standard and Premium Lagers

Types of Dark Beer

Leading Brands by Sector

Table 10: Examples of Beer Brands by Market Subsector, 2008

PRODUCTION AND OVERSEAS TRADE

Table 11: Production of Beer in the UK by Volume (million litres), 1998-2007

3. Industry Background

Recent History

Number of Companies

Table 12: Number of UK VAT-Based Enterprises Engaged in Brewing by Turnover Sizeband (£000, number and %), 2002-2007

Employment

Table 13: Number of UK VAT-Based Local Units Engaged in Brewing by Employment Sizeband (number and %), 2007

REGIONAL VARIATIONS IN THE MARKETPLACE

Table 14: Brewers by Regional Location, 2008

DISTRIBUTION

Table 15: UK Retail Distribution Channels for Beer by Value at Current Prices (£m at rsp and %), 2001, 2003, 2005 and 2007

HOW ROBUST IS THE MARKET?

LEGISLATION

Distribution Legislation

European Legislation and Taxation

KEY TRADE ASSOCIATIONS

British Beer & Pub Association

Other Organisations

4. Competitor Analysis

THE MARKETPLACE

Table 16: Market Shares in UK Brewing by Value (%), 2008

MARKET LEADERS

Table 17: Leading Beer Brands by Subsector, 2008

Scottish & Newcastle Ltd

Company Structure

Current and Future Developments

Financial Results

Coors Brewers Ltd

Company Structure

Current and Future Developments

Financial Results

InBev UK Ltd

Company Structure

Current and Future Developments

Financial Results

Carlsberg UK Ltd

Company Structure

Current and Future Developments

Financial Results

OTHER INTERNATIONAL COMPANIES

Heineken

Diageo

Miller Brands UK (SABMiller)

DOMESTIC/REGIONAL BREWERS

Greene King PLC

Marston's PLC

Wells & Young's Brewing Company Ltd

OUTSIDE SUPPLIERS

Importers and Agents

Packaging and Presentation

Production Supplies

MARKETING ACTIVITY

Main Media Advertising Expenditure

Table 18: Main Media Advertising Expenditure on Beer (£000), Years Ending March 2005-2008

Lager

Table 19: Main Media Advertising Expenditure on Leading Lager Brands (£000), Years Ending March 2006-2008

Lager `Personalities'

Dark Beers

Table 20: Main Media Advertising Expenditure on Leading Dark-Beer Brands (£000), Years Ending March 2006-2008

Dark Beer `Personalities'

Other Marketing Activity

Exhibitions

5. Strengths, Weaknesses, Opportunities and Threats

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

6. Buying Behaviour

CONSUMER PENETRATION

Table 21: Penetration of Beer by Type and Packaging (% of adults), 1994 and 2004-2007

BEER DEMOGRAPHICS

Lager

Table 22: Penetration of Lager by Sex, Age, Social Grade and Region (% of adults), 2007

Dark-Beer

Table 23: Penetration of Dark Beer by Sex, Age, Social Grade and Region (% of adults), 2007

BEER AND OTHER ALCOHOLIC DRINKS

Table 24: Favourite Alcoholic Drinks (% of adults), 2008

LEADING BEER BRANDS

Table 25: Selected Drinks Brands Consumed at Least Once a Month (% of adults), 2004 and 2007

7. Current Issues

Introduction

MERGERS and ACQUISITIONS

BEER DISTRIBUTION DEVELOPMENTS

8. The Global Market

PRODUCTION AND CONSUMPTION

GLOBALISED BREWING

9. Forecasts

The Economy

Population

Table 26: Forecast UK Resident Population by Sex (000), Mid-Years 2008-2012

Gross Domestic Product

Table 27: Forecast UK Growth in Gross Domestic Product in Real Terms (%), 2008-2012

Inflation

Table 28: Forecast UK Rate of Inflation (%), 2008-2012

Unemployment

Table 29: Forecast Actual Number of Unemployed Persons in the UK (million), 2008-2012

FORECASTS 2008 to 2012

Table 30: The Forecast UK Beer Market by Value at Current Prices and Volume (£m at rsp, million litres and £ per litre), 2008-2012

Figure 2: The Forecast UK Beer Market by Value at Current Prices (£m at rsp), 2008-2012

market growth

Figure 3: The UK Beer Market by Value at Current Prices (£m at rsp), 2003-2012

FUTURE TRENDS

Market Trends

Future of Scottish & Newcastle

Other Possible Brewery Mergers

Consolidation in Regional Brewing

10. Company Profiles

Anheuser-busch Europe Ltd

Carlsberg Uk Ltd

Coors Brewers Ltd

Diageo Plc

Greene King Plc

Heineken (uk) Ltd

inbev Uk Ltd

Marston's Plc

Scottish & Newcastle Ltd

wells & young's brewing company ltd

11. Further Sources

Associations

General Sources

Government Publications

Bisnode Sources