Cider Market

Market report 2010 : Premium Ciders

HISTORY

In the alcoholic market the term « premium » has two meanings:

Firstly it may refer to a drink's alcoholic content (measured in percentages as alcohol by volume), however the drink must be marketed at a premium price if the manufacturer decides to market the product's superior quality through highlighting the ingredients or manufacturing methods. Premium drinks may, therefore, be marketed through their high alcoholic content or their high quality.

The cider market has fluctuated in popularity since the 1950s. This is due to changing fashions, trends and also product innovations. These ciders were filtered white to produce a bland flavor, yet they were high in alcohol content at 7% ABV. Sales of designer ciders declined in the 1990s when fashions headed towards the alcopop, which usually contained a small amount of spirit (usually rum or vodka) mixed with fruit juice.

The cider market has seen a very big focus on product innovation since 2000S and it continues to fluctuate in popularity. It enjoy the period of great success in the 2000s, owing to "over-ice" brands that were of standard strength (4,5%) put promoted themselves with premium image. Premium brands were helped by an overall interest in cider and their sales figures have increased since 2006, but their share of the total has decreased considerably.

Overall the premium cider sector has benefited from the cider boom of recent years, but future prospects for this sector also appear limited.

Cidre le Brun is considered as premium product due to their high quality of product, manufacturing process (hand picked and traditional) and the alcoholic content (5%). The alcohol rate of cider brewed required to be classed as premium is 6%. But having a stronger percentage also means a higher rate of taxation. Producing premium cider required higher retail price such as special ingredient, superior quality of taste and unique packaging.

The cider market has developed rapidly for several years. There had been a shift a few years ago to lower-strength, 'over ice' products such as Magners and Bulmers Original. However because the drink are around 4.5% in strength and are sold as mainstream drinks, they are not classed as premium.

Another emerging cider market is fruit cider. Although some of these are served with fresh, exotic fruit, it is important to note that the percentage strength is often at around 4%, so they are classed as standard drinks.

ECONOMIC TRENDS

Population: More men drink beer and cider than women, so the fact that there are slightly more women in the UK works against the market. This is something the market will have to cope with in the long term, because projections anticipate this imbalance in sex to continue.

UK Resident Population Estimates by Sex 2005-2009

2005 2006 2007 2008 2009

Female 30 742 30 895 31 068 31 244 31418

Male 29 492 29 69 29 918 30 154 30 374

TOTAL 60 235 60 584 60 986 61 398 61 792

% change 0.6% 0.7% 0.7% 0.6%

As with most developed countries, population levels in the UK continue to rise fairly slowy. The premium drinks industry cannot, therefore, anticipate rapid growth as a result of population expansion.

Inflation: The rate of inflation has fallen by 4.5 percentage points to -0.5%. The forecast for 2010 predicts a rise back up to 4.2%.

UK Rate of Inflation (%) 2005-2009

2005 2006 2007 2008 2009

Inflation (%) 2.8 3.2 4.3 4.0 -0.5

(%) Change 0.4 1.1 -0.3 - 4.5

Deflation applies to pricing in the off trade for beer and cider, but sales in the on trade have tended to rise above inflation.

Unemployement: has risen sharply by 68% in 2009 to over 1.53 million.

Actual number of unemployment person in the UK 2005-2009

2005 2006 2007 2008 2009

Actual number (million) 0.86 0.95 0.86 0.91 1.53

(%) Change 10.5 -9.5 5.8 68.1

The recession had an big impact on public houses with many closing over the last few years. A rise number of people will no doubt have an effect on the on trade, because those who want to drink can save money by using the off trade and drinking at home.

Household disposable income: Despite the recession, household disposable income continued to rise in 2009. Over 10 years the average household has seen their disposable income double.

UK Household disposables income per Capita (£) 2005-2009

2005 2006 2007 2008 2009

Household disposable income 13 529 14 080 14 453 14 976 15 350

(%) Change 4.1 2.6 3.6 2.5

If Household disposable income rises, people are usually willing to pay more for premium goods and services. This can benefit the premium market.

MARKET POSITION

The UK: Premium ciders enjoy a noticeable percentage share of the total amount of cider purchased in the UK. The main competition the ciders face in the UK market is wine, which continues to prosper and enjoy a sizeable share of the alcohol market. There is also major competition coming from spirits such as vodka and rum.

MARKET SIZE

The total market: producing a total value of each premium market is complex dur to changing trends and attitudes. The total value of the UK premium lagers, beers and ciders market continued to decline between 2006 and 2009 (less concern by the ciders). But there are signs of individual sectors showing improvements, and the total market rose by 1.4% between 2009 and 2010.

The total UK premium Lager, Beers, and Ciders by value (£m) and percentage (%)

2006 2007 2008 2009 2010 % change 2006-2010

Premium lager 11 100 10 600 10 250 10 050 10 150 -8.6

Premium dark beers 3 475 3 275 3 175 3 300 3 400 -2.2

Premium ciders 300 325 350 360 350 16.7