There is a vast difference between ‘beer’ and the ‘business of beer’.
Almost all mainstream media coverage of beer actually relates to the business or marketing of it rather than what’s in the bottle. That’s because mainstream beer is a multi-billion dollar industry and the craft industry – the part of the industry that actually has something interesting to say about the product itself – is a minute fraction of the market.
As a result a term like ‘innovation’ generally refers to something like a new slim-line can, a cold activated label, a newer way to make alcohol taste more like cordial, or a new meaningless label or brand designed to convince beer drinkers that there is a meaningful point of difference between identical products.
Of course such are the costs of living in a free market economy. If you don’t like it, move to North Korea you Commie.
Still, as a someone who loves beer first but who appreciates that it is still a business (even if I secretly wish it wasn’t), it is always interesting to see what the other half are saying about the beer. Last week Fosters held a two day briefing for market analysts and others who have great influence over how their business is viewed by the stock markets. UBS Investment Research was in attendance and has published some commentary on what went on and how they viewed it. It provides an interesting insight into the cold calculations that goes on in the market – and in a big brewery’s head office – and how a term such as ‘premium’ comes to be defined solely on price rather than any qualities inherent in the beer itself.
Among the highlights were
- CUB flagged that it has stabilised its market share at 50% for the first time in 5 years.
- The company unveiled 3 new beers for launch from 1 November, designed to shore up market share:
- Pure Blonde White: a premium low carb wheat beer (which UBS points out is Australia’s first);
- Great Northern Brewing Co: a QLD and NT beer only that should resonate with locals who “go north” to relax. UBS noted that this will be an important product for Fosters if it is to improve its QLD market share which they understand is less than 40 per cent
- Carlton Dry Fusion Black: a sweet beer infused with spices to attract new category consumers who dislike the bitterness of traditional beer.
- VB has a five year ‘perception evolution’ plan – which I assume means to change the way VB is viewed. The current ‘real men’ campaign is part of this and the early indications for this campaign have been positive.
- Carlton Draught’s market share has grown from 4.1 per cent in 2002 to 8.2 per cent this year. The UBS analyst notes that their “greatest concern is that Carlton Draught’s success correlates with VB’s decline and FGL will struggle to grow both. However CUB holds a clear definition of each brand (Carlton Draught more unisex; VB more off-premise) which should help target different consumers and drinking occasions.
- CUB is aiming to double its Cider business in 5 years. UBS see market growth rates alone will help CUB to achieve its target. UBS understand that Tooheys Five Seeds’ share has fallen back to around 12 per cent from 21 per cent after initial launch. Foster’s share is in the 70 per cent range but has fallen from 80 per cent).
- CUB is confident that Australia’s population growth will offset ongoing declines in Beer consumption per capita such that long term beer volumes remain static at worst.
It’s all interesting…but notice how even though the markets have a taste for beer, it’s not beer’s flavour that the’re interested in.
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