Lion vs CUB – the state of the beer market
By James Wells in Hobart
At the Australian Hospitality Conference in Hobart, two leading executives from the two major beer companies Lion and CUB faced off in an industry panel discussing the future of the beer market – this is an edited extract of their speeches to the conference:
James Brindley – Lion, managing director
"There is growth in smooth, easy drinking beers like Carlton Dry and Tooheys Extra Dry and even Corona is still growing heavily, but the big growth is in the sweet products and you have seen that with cider that has usurped the RTD trend, so most people when they turn 18 have got quite a sweet tooth these days.
"On the other hand you have got the growth in craft beer with Little Creatures, James Squire and Matilda Bay brands. So I guess at the other end of the spectrum of beer you’ve got people looking for more flavoursome products, so you have got to try and balance these two products as a supplier and as a retailer selling it.
In the current economic situation a lot of people are looking for value for money and you see that in the prices offered by retailers and in the on premise with happy hours and things like that.
On the other hand, people are willing to fork out a lot more money and drink less, so again you see the growth in craft beer with generally a higher price and the same in wines and spirits, so you have to balance that value offering and a more expensive offering.
Life is very busy these days, 24/7 with technology, yet there is also a trend towards authenticity. [Consumers] want real life 'traditional' types of experiences and products.
[The] bottom line is there is different types of liquids to cater for different types of segments. You have to balance your focus on the value versus the higher end products and of course know your customers, and get with the program in terms of the digitisation of technology, but still offer authentic experiences." [continues below]
Doug May – Trade Relations Manager – Lion, Peter Filipovic – Sales Director – CUB, James Brindley – MD – Lion
Peter Filipovic – CUB, sales director
"We understand beer has been declining for a couple of years now, as is alcohol with its per capita consumption. I think the first thing is we need to find ways to work harder to make people drink more and drink at higher value as James has mentioned.
"People are saving a lot more than what they did three years ago – we've seen savings rates up to 12 per cent, three years ago they were saving 3 per cent more than what they were earning, so we have to find ways to increase the number of occasions and target brands and pack formats to increase consumption at those occasions.
I think the second thing is 'premiumisation'. In a flat consumption environment, we need to find ways both on and off premise to increase the number of dollars people are spending in there whether it is keeping them in there longer or trading them up to higher dollar purchases when they are either in a liquor store or in an on-premise environment.
The third thing for me is regulation – there is an increasing amount of regulation and if I look at current issues out there such as Newcastle and Kings Cross that have huge restrictions… I think that trend is going to continue.
"I think we need to do more to show why for example alcohol is different to tobacco. Tobacco kills you when you use tobacco as it is intended and beer doesn’t. The majority of Australians drink responsibly.
When it comes to product quality, I think from a beer perspective, I know wine has done it well for many years, making product quality for beer will be at the forefront of what we are doing going forward. We have probably been a marketing based organisation for a period of time and brew quality will not be compromised."