£2.4 Billion UK Cider Market is Ripe For Further Development
Cider is the undisputed success story of the UK alcohol category over the past six years, according to new research from Mintel. It has grown its volume sales by just under a quarter (24%) between 2006 and 2011 and over this period its value sales increased from £1.7 billion to £2.4 billion. With pubs seeing record closures since 2008, cider has performed well above the market by recording a quarter (25%) growth in revenue within this channel – albeit a lesser 5% growth in real value sales between 2006 and 2011.
Cider has seen particularly steep growth in the off-trade over the past five years, experiencing a 67% increase in volume sales and doubling its revenues between 2006 and 2011. Cider’s share of supermarket shelf space has grown exponentially over this time and in 2010 accounted for 40.7% of UK cider volume sales.
Mintel’s research shows that in terms of penetration, cider has now become the equal of lager, while its steep sales growth in the past five years is the direct opposite of lager’s equally dramatic sales decline. Indeed, consumer demand has skyrocketed and Mintel’s research reveals that, while 10 years ago, 42% of British consumers were cider drinkers – this has now grown to 47% – despite a decline in the UK adult drinking population from 88% to 82% in the past five years alone. This is compared to 46% of consumers who are lager drinkers today.
Indeed, cider’s success is in stark contrast to wine and beer – the most adversely affected in losing actual drinkers, mainly because they are the biggest categories with more to lose. In terms of actual sales, beer has seen the most dramatic decline, losing £2.2 billion in revenue between 2006 and 2011 mainly due to the dramatic decline of the UK pub sector. Meanwhile, wine has seen a decline in the proportion of UK drinkers from 66% in 2007 to 58% in 2011.
“Cider has been particularly successful at attracting younger drinkers from the ailing lager category, as well as from alcopops and wine,” points out Mintel senior drinks analyst Jonny Forsyth, “due to a combination of impressive innovation and marketing nous.”
Furthermore, the sector has potential for much more growth with Mintel forecasting volume sales to increase by 12% between 2011 and 2016 and value sales by a third (33%) as annual above-inflation duty continues to push up retail sales prices (RSP). “This is in a highly challenging context for alcohol but cider has had the advantage of a lower tax than borne by many competitors which it has invested wisely – especially in constant innovation,” says Jonny Forsyth.
However, there is clearly further opportunity for the sector as cider falls massively behind lager in volume consumed; meaning its revenue of £2.4 billion (in 2011) is a fraction of the UK lager market’s total revenues of £11.4 billion. Today, a third (34%) of alcohol drinkers who do not drink cider claim that it ‘never occurs to them to do so’ rather than them actively disliking it.
He continues: “This is a result of cider not being able to compete with lager when it comes to being a ‘session drink’ rather than something you have one or maybe two glasses of, due to the sweetness of its flavour.” It is also less of a mainstream ‘top of mind option’ than lager.
If cider can develop its taste profile – and perception – to account for those with less sweet as well as sweeter palates, it has the potential for a broader appeal. “For example, as an alternative to wine during meal occasions as well as providing the ‘all night’ volume appeal of lager – with the result that it can seriously close the gap on lager’s superior revenue,” reasons Jonny Forsyth.
