In cider's case, money really does grow on trees

You know you're doing something right when the taxman decides he wants a piece of the action, and the last Chancellor's attempt to raise the duty on cider by 10% demonstrated that the significant growth witnessed by the category had been noticed at the very highest level.

With both the Conservatives and the Liberal Democrats opposing that rise, the expectation is that it will not be enforced at the end of this month further good news for the suppliers who are busily persuading c-store owners that there's room for more than one amber sparkling long alcoholic drink on shelves and in their chillers.

Market analyst Nielsen puts total cider sales up by 13% in 2009 and 24% in the past two years, with six times the number of people buying into the category than five years ago. Over the same period, it says, lager sales fell by 2% and ales by 1.5% a clear indication of where the growth is. In fact, cider has been the fastest growing of all alcohol categories in each of the past three years, and is worth about £2bn, but is expected, according to research carried out by the Gaymer Cider Company, to add a further £312m over the next 18 months from this summer.

Within independents, where the category is worth £304m, cider is outperforming the rest of the market at +16%, making indies the fastest-growing portion of the fastest-growing product category in the off-licence section a very encouraging place to be.

Steve Collins, commercial director at SalesOut, a retail analyst which takes its data from 11,000 independent stores, says cider has benefited from a year of new product variants, new brands, media advertising and promotions that have targeted a wider audience. "With cider now accounting for 25.1% of total sales within alcohol (up from 22.3%) it is vital that retailers devote sufficient space to it," he says.

"With just a few exceptions, most of the main sub-sectors within the cider category are performing well, from niche brands (up 56%) and contemporary ciders (33%) through to the heritage brands (18%), and there's no sign of this growth slowing," adds Merrydown managing director Chris Carr.

Peter Matthews of H Weston & Sons, maker of Stowford Press, believes the pre-election row which put cider onto the front pages of the newspapers will act as a further boost. "As happened when Magners Irish Cider first started investing in heavyweight marketing campaigns several years ago, the publicity behind the duty hike has once again re-awakened interest in the category," he says.

"Premium quality ciders are still good value and this presents an ideal opportunity for independents to take advantage by increasing cider facings, offering a range of premium ciders and capturing the attention of those who have been tempted into the category by the imagery of the mainstream brands."

As a category with a story to tell the provenance of the liquid, the emergence of a network of small local producers cider is perfect for smaller stores looking to differentiate themselves from the mainstream retailers. "There's been a huge influx of new brands and brand extensions coming into the category," Merrydown's Carr adds. "Given the space limitations in many convenience stores, the number of new products and the fragmentation of the category into so many different sub-sectors actually presents retailers with a real dilemma in terms of which brands and pack formats to stock."

The choice tree

The key to understanding the sprawling category is to recognise what customers are looking for and how they arrive at their final choice. Selecting the pack format tends to be the first decision, then either sweet or dry, then big brand or 'heritage' ciders. Merrydown recommends that glass bottles, cans and PETs should each be grouped vertically, so on a five-shelf fixture, for example, the top two shelves should be devoted to cider glass bottles, with the third shelf being allocated to cans, the fourth to half cans and half 'amber' cider PET, with the bottom shelf given over to both 'amber' and white cider PET bottles.

Carr advises allocating space for new, contemporary and niche brands which currently account for a small slice of category sales. "They are showing phenomenal growth rates and I think this is where independent retailers could do more in terms of updating and enhancing their range."

Debs Carter, marketing director at Beverage Brands, which launched WKD Core last year, agrees. "If you drill down within the category to see what's actually driving the current performance, it's the new contemporary cider brands such as WKD Core, Jacques and Kopparberg, along with fruit and pear ciders, which are offering consumers greater choice and, as a result, are having the biggest impact on sales."

The explosion of pear and fruit variants in the past two years has certainly been a factor in the resurgence of cider. Together pear and flavours drove 68% of the category growth last year, and while they still only added up to 8% of total cider sales, it's thought that their appeal brought plenty of consumers to cider for the first time. And as Heineken's Shaun Heyes points out, it's women who are succumbing to the popularity of fruit flavoured cider, with the girls now accounting for 24% of drinkers in the long alcoholic drinks category.

All of this is going to leave your allocated space bulging and raises the question of how much of your alcohol fixture you should dedicate to cider. Heyes suggests 18%, but warns against too much reliance on the lower end of the market. "Mainstream and premium brands are fuelling the success of the cider category at the expense of white and PET cider," he says, and indeed Heineken delisted its own 'functional' cider, White Lightning, in April. "While white and value cider have a small role in the category retailers should ensure they are not the main focus of any fixture," he adds.

So you won't want to stray too far from the best sellers, as SalesOut's Collins points out: "Strongbow is by far the largest brand in the category, accounting for more than a third of sales and growing just above the category as a whole," he says. "Own label is popular, but Frosty Jacks and Magners are gaining apace with strong growth over the period, and Bulmers also saw above-category growth."

New and improved

Beverage Brands introduced its WKD Core cider brand in 2009 and is pouring further investment into its 'Like Cider?' promotional campaign this summer. It is supporting retailers with 50,000 cases of 15 for the price of 12 WKD Core stock, including POS material, available to independents through wholesalers. The company's Carter says it will "work hard to support retailers with relevant activities and encourage them to offer real choice to customers" and suggests keeping sufficient chilled stock in the summer peak and the latter stages of the World Cup.

Merrydown underwent an image makeover earlier this year with a new look to emphasise its quality and heritage. A new-look website takes its cue from the label design of the Merrydown Medium and Dry bottles. During the summer, Merrydown is offering special deals and branded merchandise such as T-shirts and glassware at cash and carry trade days.

A growing alternative this year is Swedish cider, now making its mark in the UK as a premium choice. Kieron Barton of Chilli Marketing has discovered Rekorderlig and brought the apple, pear and strawberry and lime variants to the UK. "It has a sweeter taste profile and lower abv and appeals to both men and women aged 18-35," he says. "It's premium, but it's for everyone. Our strawberry and lime cider, served over ice with mint, is already becoming a favourite in the on-trade."  Rekorderlig makes its debut in the convenience channel this summer.

Meanwhile, fellow Swedish premium brand Kopparberg is marking itself out as different with a marketing campaign urging cider drinkers to 'Find Kopparberg'. "The cider market has become very competitive and cluttered with similar brands and ad campaigns, but we believe each of the Kopparberg cider variants is very different to more traditional brands, and as such should have a completely different style of advertising and marketing campaign,'" says the company's managing director Davin Nugent.

Covering press, cinema, online and outdoor advertising, the campaign is expected to bring the brand to 18 million people.