Research: Alcoholic Beverage and Premium Lagers Essay

Submitted By B00571368
Words: 1100
Pages: 5

“When a firm finds itself exposed to a change to the environment in which it operates, it must determine how the processes of change in the marketplace impact on that firm’s choice of strategies, its related resource deployment and the nature of its competitive advantage within that environment”.
Volume sales of beer have been declining for some time now, especially via on-trade sales outlets such as bars, pubs and restaurants. A variety of socio-economic trends including the squeeze on consumers’ wallets from the recession in the uncertain economic times, high taxes on alcohol and growing concerns about the health impacts of alcohol consumption have all contributed to the general decline in the amount of alcohol adults are drinking. On-trade sales have declined at a steeper rate than off-trade sales, as the latter are generally significantly lower in cost, while the rising taxes have made alcohol unaffordable for many.
Despite this, the beer industry is so much a part of UK culture that there is little need for concern. The sector received a welcome boost when it was announced that the tax escalator policy, which had been pushing prices up annually by 2% above the rate of inflation, was to be scrapped. However, this policy still remains imposed on cider.
Although Gross domestic product at annual chain-linked prices contracted in 2009 has been positive, it has been weaker year-on-year since 2010. GDP at current prices also contracted in 2009 (by 2.7%) and has subsequently grown year-on-year — by 4.6% in 2010; by 3.4% the following year; and by 1.7% in 2012. Positive GDP growth is usually considered indicative of a healthy economy and should both reflect and encourage greater consumer confidence. This should provide positive support for sales of alcoholic drinks through both on- and off-trade channels. Greater consumer confidence should also support sales of premium drinks, as people are less likely to be discouraged by the higher price tag of premium brands.
Unemployment rose by 68.1% in 2009, leaving 1.5 million people claiming Jobseeker’s Allowance (JSA). This number fell in 2010, but increased again in 2011 and 2012, by 2% and 3.9%, respectively; just under 1.6 million people were claiming JSA at the end of 2012. Rises in unemployment are likely to have encouraged off-trade sales at the expense of sales through on-trade channels, while many people are likely to have reduced their expenditure on alcohol through both channels, regarding it as an unaffordable luxury. This is particularly likely to have affected sales of premium beers, lagers and ciders, as they tend to be more expensive.
Living costs which for the most part cannot be avoided such as transport and energy bills have been rising, while wages have tended to stay fairly flat. This has left shoppers with less disposable income in real terms and, therefore, less income for non-essential products such as beers and lagers.
Rates of excise duty: Brewers in the UK continue to complain about the levels of excise duty in the UK compared with the rest of Europe. Excise duty is as much as seven times higher than in France, resulting in major smuggling operations into the UK.
Premium lager started to gain popularity in the UK in the 1970s, displacing ales and stouts as the nation’s favourite beer. The craze for craft beers (few of which are lagers), coupled with the rise of microbreweries, has seen the ales category start to challenge lagers in recent years. Cider has also seen strong growth, with consistent performance expected over the next few years as the long running over-ice trend gives way to fruit-flavoured ciders.
The term cider refers to a fermented alcoholic beverage made from fruit. It is usually made from apples, but perries (cider made from pears) and other fruit ciders are also well-established products, and are gaining in popularity. Cider is particularly popular in the south west of England and East Anglia, which are the