THE BACKGROUND
Magners may have turned around the fortunes of the cider sector, but Strongbow is still the market leader. Last month, the S&N-owned brand teamed up with Livingtv's Most Haunted Live Halloween special to run a scratchcard promotion in more than 13,000 pubs and clubs nationwide to generate interest in the drink. The initiative follows branded experiential activity under the Ciderhouse banner at several music festivals this summer. Mintel estimates that between 2004 and 2006, Strongbow's off-trade value sales will have risen by 26% to £159m.
Rarely can a single brand be said to have been responsible for the turnaround of a sector. But when it comes to cider, which looked to be in terminal decline only a few years ago, that is almost the case.
When Irish company C&C introduced Magners, with its 'serve over ice' concept, it altered consumers' perceptions of cider, particularly among the younger, lager-drinking generation. Other brands, such as Scottish & Newcastle's Sirrus, have launched on the back of Magners' popularity and consumers have been tempted back to the sector. Over the past year, cider sales have grown by 16% to reach an estimated £1.5bn in 2006, according to Mintel.
Magners was launched in Northern Ireland in 1999, but it was not until it was introduced in Scotland in 2003 and London in March 2005, followed by a nationwide roll-out this year, that it ignited the market. A spokesman says the idea for serving Magners with ice came from Ireland. 'It was something someone spotted by observing people in pubs,' he says. 'They noticed that people drinking Magners often asked for ice to be added, so we decided to market it like that.'
With the brand's roll-out coinciding with one of the UK's hottest summers, Magners' value share of the cider on-trade market, has soared from 3% in 2004 to 18%, according to Mintel.
Whether it can maintain this over the winter period, when cider sales traditionally dip, remains to be seen.
A crucial aspect in cider's rejuvenation that Magners has tapped into, through its emphasis on tradition and apples, is an increasing interest among drinkers in provenance and naturalness. Cider's credentials in these categories have helped boost its standing, especially at the premium end of the market.
This rise in premium ciders means consumers previously put off by the drink's image as cheap and the beverage of choice for street alcoholics or the underage, have been willing to try the drink. Indeed, economy cider is the only area of the market that is not growing.
Volume sales of premium brands have risen 38% since 2002, while their value has grown 68%, meaning the category now accounts for 37% of the sector. This has caused sweet cider volume sales to fall 39%, as consumers switch to dry brands.
Magners has not been the only success story. Scottish & Newcastle-owned Strongbow, whose sister brands include Scrumpy Jack, Woodpecker and White Lightning, has enjoyed a significant rise in sales and, in value terms, now accounts for 40% of the market. The brand has maximised its opportunities by introducing multiple variants such as chilled draught, bottled and, more recently, its premium Sirrus brand, which it has supported with a £27m marketing budget.
Constellation Europe, which owns Blackthorn and Diamond White, introduced its own premium brand, Gaymers, in 2004, to compete with Magners and Sirrus. The Gaymer's Orchard Reserve variant is packaged like wine and named after the orchard from which the drink's apples are sourced.
Despite the boom in the market, only 4% of consumers consider themselves regular cider drinkers, while 50% never consider drinking it, according to BMRB. The sector was worth £1.3bn in 2005, compared with £11.2bn for lager and £8.3bn for wine, meaning there is a huge untapped audience for manufacturers.
Heavy cider drinkers are most likely to be men aged between 25 and 54 and from the C2, D and E socio-economic groups, while medium to light drinkers are generally affluent males, according to BMRB.
Alcoholic drinks have to tread carefully when making claims about health benefits. But given the increasing popularity of functional foods, cider's anti-oxidant content and relatively low number of calories could prove to be benefits worth promoting.
The growth enjoyed by this market is predicted to continue, albeit more modestly. The UK cider market is forecast to reach a value of £1.7bn at current prices by 2011, according to Mintel. This represents an increase of 18% - or 4% in real terms. But these are only predictions, and it remains to be seen whether the Magners phenomenon is a passing fad, or whether it has made consumers truly rethink their attitude to cider.
CIDER BRANDS BY OFF-TRADE VALUE AND MARKET SHARE
2006 (est) 2002 02-06
pounds m % pounds m % % chng
1 Strongbow 159 28.2 111 23.6 43.3
2 Olde English 39 6.9 35 7.4 11.8
3 Frosty Jack's 33 5.8 14 2.9 139.8
4 White Lightning 32 5.7 29 6.1 12.1
5 Scrumpy Jack 30 5.4 34 7.2 -10.1
6 Blackthorn 29 5.2 30 6.3 -1.0
7 Magners 17 3.1 n/a n/a n/a
8 Merrydown 15 2.6 n/a n/a n/a
9 Woodpecker 14 2.4 31 6.6 n/a
10 Bulmers 13 2.3 4 0.9 206.5
Own-label 86 15.2 69 14.7 24.6
Others 97 17.2 114 24.3 -15.1
Total* 564 100 470 100 19.7
Source: Mintel
* some totals are affected by rounding-off
CIDER OFF-TRADE VOLUME SALES BY TYPE AND MARKET SHARE
2006 2004 2002 02-06
ltrs(m) % ltrs(m) % ltrs(m) % % chng
1 Dry 502 90 391 81 395 79 28
2 Sweet 56 10 92 19 105 21 -39
Total 558 100 483 100 500 100 -11
Source: Mintel
CIDER BRANDS BY ADPSEND (pounds)
Brand Company TV Press
1 Magners C&C 9,675,205 211,182
2 Strongbow HP Bulmer 9,117,660 120,637
3 Strongbow Sirrus HP Bulmer 1,434,527 847,080
4 Gaymers Constellation Europe 509,945 29,936
5 Lambrini Halewood International 156,936 335,231
6 Scrumpy Jack Scottish Courage n/a 142,420
7 Blackthorn Constellation Europe 64,042 3849
8 Frosty Jack's Aston Manor Brewery 25,596 7370
9 Thatchers Thatchers n/a 30,047
10 Heritage Thatchers n/a 7370
11 Savanna Distell n/a 6540
12 Westons H Weston & Sons n/a 2195
13 Kopparbergs Kopparbergs Bryggeri n/a 1975
Total 20,983,911 1,745,832
Source: Xtreme Information
ANALYST COMMENT - RICHARD CORBETT, STRATEGIC ANALYST, CANADEAN
It doesn't seem all that long ago that cider was the drink that 'dare not speak its name', when leading brand Strongbow dropped all reference to the word from its packaging and promotion to position itself in the long alcoholic drink market.
Cider has traditionally been associated with a rural heritage and as a right of passage choice for drinkers entering the market. But this has changed, and cider has been the buzz beverage of 2006.
The catalyst has undoubtedly been Magners, with its concept of pouring over ice. 'Extra-cold' beers have been popular for several years, but C&C deserves credit for identifying such an opportunity in the cider market. The cider boom has not been driven solely by Magners, but the brand has generated a lot of interest.
Scottish & Newcastle deserves recognition for its handling of Strongbow and its courageous decision to stop discounting White Lightning, which contributed to the repositioning of the cider market.
This status upgrade has widened the beverage's appeal to encourage former cider drinkers to return, disillusioned alcopop drinkers to try it and 'repertoire drinkers' to include it once again. The sector is a broad church - cider drinkers cannot be categorised by age, gender or socio-economic group.
Record sums will be pumped into supporting ciders in 2007, which will maintain the momentum. S&N and C&C will continue to invest large sums, while the number-two producer, Gaymers, will be boosting its marketing investment as it looks to sustain the revival in its fortunes.
The prospects look rosy, but cider has been on a growth curve for decades, during which time there have been more booms than busts.
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