Brewers are finally coming to recognise the off-trade’s potential thanks to the craft beer phenomenon, expanding premium bottled ales ranges and an appetite for experimentation among buyers.
It is not just that staying in has firmly established itself as the new going out, or that pubs and bars continue to face challenges.
With the proliferation of microbreweries and a tidal wave of new and exciting packaged beers coming into the market, brewers are finding retailers quick to react and more able to stock a broader range of brews than pubs can.
“Historically ale has been led by the on-trade, with off-trade retailers selling packaged versions of the beers that you find down the pub,” says Sharp’s Brewery senior brand manager James Nicholls.
“But off-trade retailers are able to scale up NPD in bottled ale more quickly than their on-trade counterparts. A great example of this is the launch of Sharp’s Atlantic Pale Ale and Wolf Rock which have established themselves as firm favourites in the off-trade in under a year.”
But he notes: “Although there are some great ales out there, the breadth of choice can sometimes be overwhelming and act as an obstacle to new shoppers trying out new brews. Some retailers have started to merchandise by beer style, such as golden, amber or dark, and this helps shoppers navigate through the amazing variety of brands and identify the styles of beers and brands they prefer.
“With taste and style becoming increasingly important, retailers will need to communicate that in-store too. Much of this has been led by wine in the past – the explanation of wine styles and taste in-store has moved on enormously over the past few years, so the future for ales is to establish in-store communication as strong as the wine market.”
Adnams master brewer Fergus Fitzgerald says: “The trend of people drinking at home in favour of going out will continue and when they are drinking at home they will search out more flavoursome beers and often try a larger selection.
“While some pubs are now offering a more exciting range of beer, it’s not true for most pubs, so very often the widest selection of beer is in the off-trade. Marks & Spencer, Booths and Waitrose have all taken note of the growing interest in beer and introduced a fantastic range, and they are continuing to expand and try new things.”
Oakham Ales national and export manager Nick Jones points to the ongoing challenges facing pubs.
He says: “The off-trade remains pretty buoyant with changing lifestyles and the value for money that it gives, so there is scope to explore new avenues in a growing market – and a need to, as the overall on-trade struggles with high costs and difficult retail business models. This will drive people to develop and contemporise styles and presentation.”
TIP OF THE ICEBERG
Consumer education also plays a role. Saltaire managing director Ewen Gordon says: “Ale sales are booming in the off-trade and we are only at the tip of the iceberg.
“As people learn about styles and beer in general, they also learn about what good beer is and they want to drink it at any social occasion, and not just in a pub. Our bottling is now 25% of our business, and with the revival in the canned beer market, I think there is a long way to go in all sectors.”
Gower Brewery director Matt Joslin agrees: “Off-trade markets are a huge part of the business these days, driven by consumers entertaining and socialising more at home.
“The choice and quality of bottled and canned ales have increased, which has and will further fuel demand in the off-trade. I also think we will start to see more brewers offering their products in cans.”
But innovation and the proliferation of new breweries and beers inevitably intensify competition between them.
Bath Ales sales director Mark Harding warns: “As more new breweries join the market, competition for space on the shelf in the off-trade will become increasingly fierce. It will be more important for brewers to be clear on their proposition and place in the market.
“There is an increasing consumer thirst for seasonal ales that represent the flavour combination and profile of the time of year and we expect this to continue to develop. Each year we release our seasonal ales and each year we increase the production volumes to satisfy the interest from the off-trade.”
The off-trade was once seen as a poor relation to the on-trade in terms of beer, but those days are gone and now pubs struggle to keep up with its scale.