Establish it as naturally refreshing by showing it poured over ice in an apple orchard and then further distinguish it by selling it in a pint bottle. That, in a nutshell, is the strategy behind the highly successful Magners cider that is storming the UK drinks market this summer. C&C, which owns Magners', expects sales growth figures to triple by the end of the year to 390%.
This summer marks the official roll out of Magners across the UK. The cider was previously only available in Scotland and London, where it was deemed "the drink of the summer" for 2005. Its recent popularity has been driven by a €30 million national marketing campaign, combined with the World Cup and a long spell of hot weather. But Maurice Pratt, CEO of C&C, says the real strength of the brand goes back to its Irish roots.
Like many winning ideas, the concept for Magners over ice came from consumers. "You observe human behavior, recognize an opportunity and use your instinct - that is what we did," says Pratt. In this case, C&C was monitoring the behavior of Irish consumers drinking its Bulmers cider back in the early 1990s. That's when the company decided to reposition Bulmers closer to beer by adding long-neck bottles and cans to its on tap offering. C&C owns the right to the Bulmers name in Ireland and wanted to elevate cider out of the "embarrassed-to-be-seen-drinking" category.
"What's intriguing about what we did in Ireland is that we brought former cider drinkers back to the idea of cider as refreshment," says Pratt. Coming in from a round of golf, or simply sitting outside on a hot day, 40- and 50-somethings across Ireland were suddenly ordering Bulmers to quench their thirst, and then moving on to beer or wine.
Then around 1997, C&C noticed consumers were adding ice to Bulmers draft to cool it down. "We did some research, and what we came out with was the development of the pint bottle over ice," says Pratt. "This now represents 40 percent of what we sell in Ireland."
When it came to launching in the UK a couple of years' ago under the Magners' name, C&C spoke to local cider industry specialists and they all said, "don't do it". "They told us that the category is in decline and that the product is a commodity and the trade is much more interested in premium packaging," recalls Pratt. C&C wasn't deterred but knew it needed to clearly differentiate Magners from other drinks on the UK market.
It stuck with its pint bottle and ice look and decided to promote mainly in the in the on-trade [pubs and bars] market rather than off-trade [supermarket and off-licenses], where most ciders are pushed. "In terms of differentiation, Magners also has a high natural apple juice content and a lower alcohol content than other ciders," says Pratt. These elements were critical in positioning Magners as a quality, refreshing drink rather than a cheap intoxicant, which was how cider was largely viewed in the UK.
This was clearly the right strategy as the brand took off, firstly in Scotland in 2004 and then in London the following year, and now across the rest of the UK. The popularity of the brand has had a serious knock-on effect for the cider market. "It's been a real shot in the arm to the industry," says Simon Russell, a spokesman for the National Association of Cider Makers (NACM).
Russell attributes much of Magners' success to timing. He claims the UK cider market was already starting to innovate and Magners was able to capitalize on that momentum with its strong marketing campaign. "Up until 18 months ago the marketing of cider was pretty one-dimensional and focused on the off-trade and price promotion," he says. "This got out of balance as the sole marketing focus became the level and depth of discount." In turn the value of leading cider brands among consumers was lowered. Then the leading brands began to diversify with by developing single-apple, single-orchard and even organic varieties to cater to a more sophisticated consumer.
"Timing worked for [C&C] and they have the money to communicate," he points. "Magners is an aspirational advert; it's a beauty shot of the product which looks fantastic." The current TV advert shows shots of the cider process from orchard to pint glass and has the slogan "Time Dedicated to You". The brand's "theatre of ice", as Pratt terms it, also turned a few heads in the industry. "The fact that it's served over ice clearly has appeal and creates a point of reference and point of difference," says Russell. "It's the first cider brand to do this and the rest of the cider industry is responding by reformulating products so they can be served over ice." Scottish & Newcastle, for instance, has introduced Sirrus, a cider specially formulating to be poured over ice.
Value sales are now ahead of volume sales for UK cider. A report by Euromonitor International shows that volume sales grew by 12% and value sales by 19% in the UK between 2004 and 2005. That is up from 2003 when volume increased by a mere 3% and value by 5%. The report predicts growth in the market to continue as competition between Magners, Sirrus and specialist brands like Thatchers' Somerset accelerates.
"The brand has had a very positive effect on the UK cider industry and orchards," agrees Bob Price, chair of NACM and company secretary for Food and Drink Federation. By positioning itself as a high-quality, lifestyle brand, Magners has reenergized the industry and encouraged other producers to mimic its strategy. "Gaymers cider, for instance, are now starting to advertise in the same way as Magners," Price observes. "Magners' advertisements have targeted the outdoors and young to middle-aged drinkers. It's a lifestyle advert and the music creates a certain ambience." In fact, Donavan Leitch, who does the song "Sunshine Superman" for the current Magners' TV ad is about to release a greatest hits album - the ultimate sign of a successful ad campaign today.
UK pub landlords are certainly noticing the Magners effect. "The other ciders didn't sell before Magners; it's certainly increased awareness," says John Dyson, pub landlord at the Grosvenor in South London. "We sell three or four cases a night of Magners, which is even more than last year."
While it's still early to pinpoint Magners' main consumer market in the UK, so far it's mainly young affluent workers sipping the cider. "It's typical mid-twenties professionals; around 60% male and 40% female," says Pratt. "It's the maturing alcopop generation of mid-twenties that are looking for something not so green or sweet and want quality and style," adds Russell. But C&C doesn't want Magners to be typified as a young and trendy summer drink. It's looking to build longevity for the brand as it has with Bulmers in Ireland.
Following the success of Magners' launch in London in last year, there was skepticism in the market that it was a flash in the pan. "People were saying that Magners' was 2005's thing and it be something else in 2006," says Pratt. "But we have spent 15 years carefully positioning Bulmers in Ireland as a mainstream brand with no fashion cues. Consumers say they like it because it's traditional, natural and has heritage. We have worked very hard to keep the fashion element out of Magners."
Still, there is no denying the cider has become very fashionable this summer with prosperous 20-somethings in London. Sitting outside a Brixton pub in mid-July, three quarters of the 18- to 24-year old trendy punters are sipping Magners over ice. Pratt prefers to attribute this to the drink's refreshment factor. "As consumers move to drink outdoors in the warmer summer months, a lot of people haven't made up their mind what to drink and they see the Magners' bottle and there is an immediate association with refreshment," he says. "The visibility of product is unique."
It's easy to understand Pratt's reticence to pigeonhole Magners. It's still early days in the brand's national roll-out and it is already ratcheting up C&C's share price. "Sixty-eight percent of our earnings in February 2006 came from cider and that is a 10 percent increase from the previous year," says Pratt. "Our cider revenues last year were €280 million and Magners was 38% of our volume. With that tripling in volume, it will be well above 50% next year."
With so much buzz, what value does C&C place on Magners? "It's difficult to quantify in a company like ours; it's the market that decides through the valuation of the company," says Pratt. But the CEO strongly believes in the return-on-investment in marketing and advertising Magners, having moved the UK budget from an initial €2.5 million for the Scottish launch in 2004 to today's €30 million spend. "This should buy us somewhere between 8 to 10% of the advertising voice with 9 to 10% being the target you want to achieve," adds Pratt.
As the recent hotter-than-expected weather cools off, the logical question is: how will Magners sustain its momentum through the winter? Pratt says the company has already de-seasonalized the product. "We have created branding campaigns that are built around the four seasons," he says. "So far this year we have rolled out spring and summer campaigns. Our autumn campaign is showing the product consumed indoors in warm, convivial pub environments." He admits that C&C won't see the same volume during autumn and winter but believes "we will still do very well".
Naturally, Magners will still be shown in a pint bottle poured over ice even in the colder season advertising campaigns. This is, after all, the strategy behind its tremendous success. As Pratt points, pubs tend to have heating and warm fires in the winter months "so, refreshment is still an element". This might be good news for the young hipsters who have come to associate Magners' this way but pub landlords might be less enthused. As the Grosvenor's Tyson says," The ice is actually a huge pain in the ass."
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