Budweiser Brewing Group UK&I supplies some of the most iconic beers known to British drinkers, including Budweiser which was ranked by Brand Finance as the most valuable beer brand in the world in 2019. Stella Artois gets its distinctive taste from 600 years of brewing tradition in the Belgian town of Leuven using expertly balanced malted barley and the finest European Saaz hops.
Mexican brand Corona is the UK’s number one world beer.
Tibor Sebastiaan Raátz, Commercial Controller Off-Trade, Budweiser Brewing Group UK&I, told Grocery Trader what trends are driving the beer market and what the industry can learn from its experiences during Covid-19.
What are the key products in your range that supermarkets should be stocking?
At Budweiser Brewing Group, we’re proud to brew some of the UK’s best-loved beers – including Stella Artois, Budweiser and Corona, all of which have grown by double digits in the last 13 weeks.1 Premium options, like Stella Artois, are a must-stock at this time of year. Shoppers are more willing to indulge over the festive season, spending more on branded and premium own-label products at Christmas.2 This is reflected in a higher spend per trip – December 2019 saw a 14.6% increase on the monthly average across the rest of the year.3
Stella Artois is the UK’s favourite alcohol brand4 and continues to see strong performance across the premium category, with consumers spending an extra £19.7m on the brand last year (up 3.4%).5 The brand has strong ties to Christmas – the Artois Brewery crafted a festive beer in 1926 as a Christmas gift to the people of Leuven. That special batch was the first to officially include the name “Stella” – meaning star in Latin – and the brand now continues to pay homage to its Christmas heritage with the iconic star design on each bottle. Stella Artois is consistently the number one alcohol brand at Christmas,6 making it a stand-out choice for stores over the festive season.
World beers are another clear festive winner – the value of the category was up 14.2% YOY in the two weeks leading up to Christmas last year.7 Corona is a great choice for retailers wanting to leverage this demand, as the number one world lager in the off-trade by value, growing 46.1% YOY in 2019.8 Having brought in an additional 430,000 shoppers during the 2019 festive period compared to the previous year,9 Corona is a must-stock for retailers looking to drive sales this Christmas.
This year, we also launched two new alcohol-free products – Budweiser Zero and Stella Artois Alcohol Free. Both premium options allow retailers to provide alcohol-free variants of shoppers’ favourite beers that don’t compromise on taste or quality.
Budweiser Zero offers the same iconic taste of Budweiser – the second most valuable beer brand in the off-trade last year.10 At zero alcohol, zero sugar and 46 calories, it responds directly to consumers who are looking to moderate their alcohol consumption to suit their active lifestyle. Additionally, the launch of Stella Artois Alcohol Free allows retailers to tap into the success of a growing brand whilst drawing upon this increased demand for alcohol-free options.
Similarly, Bud Light is a great option to tap into shoppers looking to moderate their alcohol consumption without eliminating it. It has been a star performer since its launch in 2017, worth £11.4m over the last quarter.11
What is the value of the UK beer market?
The beer, wine and spirit sector has consistently been one of the fastest growing categories over lockdown.12 Within this, beer has been the key driver, worth over £1,468.9m in the last quarter alone.13
What trends are driving the market?
Covid-19 has seen a move towards premiumisation – almost two thirds of shoppers claimed that they had been treating themselves at home during the initial lockdown.14 Alcohol is one area where consumers are choosing to splash out, with 52% of shoppers agreeing they would pay extra for quality when it comes to buying alcoholic drinks to have at home.15 We expect this at-home occasion to continue for the foreseeable future, so retailers should ensure they have a range of premium options available.
The closure of the on-trade has also impacted the formats consumers are opting for. The pint can has seen strong performance, with sales up 29.2% over the last year,16 and 60% of consumers claiming to only buy this format.17 With many shoppers looking to replicate the on-trade experience at home in light of restrictions, we can expect this popularity to grow. To help our customers tap into this, we’ve optimised our pack line-up to hero the 568ml pint can – removing the 500ml SKU from our core beer portfolio.
We saw a shift in the way people consumed alcohol during the initial lockdown period – a quarter of British drinkers claimed to cut down their alcohol intake.18 Even before lockdown, moderation was on the rise, with 42% of drinkers having made efforts to reduce their alcohol consumption at some point in their lives – equating to nearly 20 million people in the UK.19 This has driven the success of the no and low category, now worth £96m, up a huge 29.6% YOY.20
Beyond the products themselves, reducing plastic waste is high on the agenda for shoppers. 82% feel it is important to reduce the UK’s plastic consumption and 27% said they feel guilty when buying single-use plastic products.21 Packaging remains at the forefront for consumers wanting to reduce their environmental impact.22 In response to this, we’ve removed plastic rings across our canned beer portfolio, eliminating 250 tonnes of plastic every year. We invested £6.3 million into the packaging infrastructure at our UK breweries to produce alternatives to plastic rings, including fully recyclable wraps and Keel Clip™, a new technology which uses recyclable paperboard to create a lighter weight pack. Combined with decreasing our usage of plastic shrink wrap, we have removed 850 tonnes of plastic waste – the equivalent weight of 67 double decker buses – from our supply chains.
What is Budweiser Brewing Group’s market share and how has the company been performing?
This year, we have introduced new initiatives to support our customers and launched campaigns from our much-loved brands, while continuing to prioritise the health and safety of our teams. In Q3, our value sales grew by 18.2%, showcasing the strength of our brand portfolio.
We have also seen success with our iconic brands. In Q3, Stella Artois and Budweiser became the most and second most valuable beer brands respectively in the UK off-trade with 129.9m pints of Stella Artois and 93.6m pints of Budweiser sold. Additionally, volume of Corona grew at nearly three times the rate of the total category making it the most valuable world beer brand in the off-trade over Q3.23
What effect has Covid-19 had on the beer market?
Beer was the standout drink of lockdown in the off-trade, with value sales up £737m on the same period last year,24 with a 42.7% year on year volume growth25 during the lockdown period.
We expect at-home consumption to continue throughout the remainder of the year and even with the on-trade open, anticipate a strong double digit growth in Q4.26 As such, retailers should expect to continue catering for this heightened demand.
During lockdown, we have also overwhelmingly seen shoppers opt for trusted brands. This has been demonstrated by the success of our core beer portfolio with value sales of Stella Artois, Budweiser and Corona growing by double digits during the lockdown period.27
What will be the long-term impact of changes made during Covid-19?
Covid-19 has led to a significant change in shopping habits – a quarter (25%) of Brits are shopping more at their closest local store,28 and we’ve seen an uptake in online shopping. E-commerce sales have unsurprisingly grown as a result of the nationwide lockdown and continue to grow ahead of the total market, with online sales up 79.3% in the last month.29 So it’s important for retailers to consider how their in-store and e-commerce offerings can work in tandem in 2021 to ease the shopper journey, such as in-store promotions that can be redeemed online.
During the first national lockdown we saw an increase in people opting for larger basket sizes as they visited shops less often. Although shoppers are slowly returning to pre-Covid shopping habits – shopping more often and with trip spend dropping slightly30 – meaning retailers must be agile in adapting to changing shopping patterns. For example, stocking up on bigger pack sizes to cater for those who may wish to buy more, less frequently.
It’s clear that the pandemic will leave a lasting mark on the sector but for now, the situation is constantly evolving for retailers as restrictions change. Our teams on the ground are connecting regularly with customers to understand their ongoing challenges and how we can best help. We also have been working with GroceryAid and ACS to support the communities in which our brands are sold. Grocery Aid has a range of support – including a 24/7 helpline, counselling, and a health and wellbeing portal – so we’ve been working hard to ensure our customers know what is available to them.
What can the industry learn from its experiences during Covid-19?
For us, the biggest priority has been keeping our staff safe. The second has been maintaining supply. Retail supply chains have been under huge pressure, so we have implemented new models to ensure we can still put beer on shelves, while helping stores free up capacity for essentials such as pasta, dairy and toilet roll.
The pandemic has also demonstrated the need for agility among both retailers and suppliers, and the ability to adapt to fast-moving changes in behaviour and restrictions. We’ve been working closely with our customers to map out stock levels, production capacity and transport capabilities based on new rhythms of shopping.
The importance of regular, informative, and clear communication across the value chain has also proven vital. Thinking ahead to Christmas, continuing this level of communication will ensure retailers can meet consumer demand and that shoppers can have a convenient and stress-free experience in store.
Given the rise of e-commerce during Covid-19, what will the future look like – will it be possible for e-commerce and in-store sales to work hand in hand?
We know the online channel is seeing immense demand with value growth up 79.3%.31 Online shopping has long been on the rise, but the lockdown has accelerated this trend – as consumers move to a more digitised lifestyle. Even as restrictions lift, physical and online stores will need to work together in future to create a holistic customer experience that allows shoppers to connect with brands.
We’ve been working with customers during lockdown to help bridge the physical-digital gap. To celebrate the return of football Budweiser partnered with Uber Eats to help independents tap into the growing trend for online shopping. Shoppers could head to the “Budweiser Store”, only available via Uber Eats, and when adding any Budweiser Brewing Group beer to the order and spending over £10, receive free delivery, helping to increase basket spend.
Budweiser Brewing Group recently announced that it is sourcing 100% of its barley from British farms. Why was it important for the company to reach this milestone?
By eliminating the need to import barley, we’ve been able to create more efficient supply chains and reduce carbon emissions. Sourcing local resources is a critical part of our business model globally and we now work with 300+ local farmers across the country, who grow barley for Budweiser – producing 40,000 tonnes each year. Local communities are the lifeblood of this country, so it’s important to us to support British agriculture and empower local farmers to have greater flexibility and opportunities in the range of crops they grow.
What advice do you have for supermarkets on merchandising beer?
Food pairing is a savvy way retailers can boost basket spend. A beer like Bud Light complements sharing platters of chips, burgers and dips, while Stella Artois pairs well with cold meats and cheeses. Additionally the lime in a Corona will add a citrus freshness to the palate when eating nachos. Placing cross-category items together in store and highlighting these pairings is an effective way to boost spend.
With the moderation trend booming, no and low options need to be given their own prominent shelf space – especially with half of consumers saying they find it difficult to see which products are low and no-alcohol.32 Here, clear sign-posting is important. Retailers should look to stock Beck’s Blue, Budweiser Zero and Stella Artois Alcohol Free alongside alcoholic counterparts and use clear signposting to highlight whether the product is alcohol-free or not. Doing so will allow shoppers to identify the options available quickly and easily.
How do you work with supermarkets to improve sales?
We have a number of teams on the ground, communicating regularly with our grocery customers to understand their ongoing needs, challenges and opportunities – and importantly, how we can best help. During Covid-19, we have seen unprecedented demand for our products, so it was vital we were able to maintain supply. To do so, we adopted Direct To Store deliveries with some of our partners to ensure we could keep up with demand and understand the needs of our customers. Communication and collaboration has been key in capturing the opportunities throughout Covid-19.
With new innovations like the Corona 330ml can that launched in grocery retail this summer, we have been able to drive incremental sales by appealing to more consumers. We have also ensured we are on top of industry trends, like seltzers, with the introduction of Mike’s Hard Seltzer.
Understanding these latest industry trends, shopper behaviours and changing consumer values means we can give our customers robust advice that’s rooted in insights and a deep understanding of the evolving world around us.
What brand activity do you have planned?
Budweiser, as the official beer of the Premier League, launched its Premier League campaign last month to coincide with the start of the new season. The campaign includes a docuseries, Side Hustles, which follows footballers Wilfried Zaha, Eniola Aluko and Tyrone Mings as they build a legacy away from the pitch through their passion project business ventures. And on Sky Sports, Kings of the Premier League has returned, a football review show that selects the 11 best players to form the ultimate fantasy team of the month. These activations will be supported by limited-edition Premier League packs which will help stores to drive sales throughout the season.
Additionally, Bud Light has launched the first ever beer and esports on-pack promotion in Europe.33 Esports is huge and has seen significant growth during lockdown – with daily average viewers up 65%. It is particularly popular among a younger audience, making it a great partnership for Bud Light – a brand which continues to attract younger and more affluent shoppers than other standard lager brands.34 We’re confident that this on-pack promotion, coupled with a comprehensive social media campaign, will drive both footfall and customer loyalty.