By Philip Blenkinsop
BRUSSELS Dec 20 Almost a thousand years since
the Norman conquest made cider popular in Britain, brewers are
launching cider invasions of their own, with the United States
the main battlefield.
Cider, or hard cider as Americans call it, promises growth
in developed markets at a time when consumers are drinking less
beer but are willing to pay more for premium products, such as
independent "craft beer", flavoured lagers or indeed cider.
It tends to draw drinkers away from wine rather than eating
into beer sales, attracts more women than does beer and commands
a higher profit margin.
In volume terms, cider is only about 1 percent of the beer
market, but prices are much higher. The United States accounts
for about a fifth of global beer sales of $500 billion a year,
so each percentage point increase there for cider could add well
over $1 billion to the total revenue of cider makers such as
world number one Heineken and number two C&C.
While increasing wealth makes emerging markets a bright spot
for brewers, beer consumption in Europe and North America has
been in decline for years and is expected to keep falling.
"Mass-produced beers have suffered due to the surge of craft
beers in the United States ... Big brewers feel the threat.
Cider could be the escape hatch," said Spiros Malandrakis,
senior drinks analyst at market research group Euromonitor.
While they may be drinking less, consumers are willing to
pay more for premium long drinks such as cider, which has
spurred a flurry of acquisitions and product launches.
This year MillerCoors has acquired the third
largest U.S. cider producer Crispin, and Ireland's C&C Group
, maker of Magners, has bought Vermont Hard Cider
Company, which makes the leading U.S. brand Woodchuck.
Anheuser-Busch InBev, the world's number one beer
maker, launched Michelob Ultra Light Cider in the United States
in spring, a year after its Stella Artois Cidre hit the market
in Britain. Angry Orchard, a unit of craft brewer Boston Beer
Co., went nationwide at the same time.
Heineken, with 24 percent of the market, this year bought a
Belgian cider innovation centre and said it would take back U.S.
distribution rights for top-selling brand Strongbow from Vermont
Hard Cider from 2013.
UK RENAISSANCE, U.S. BOOM
Cider has already had a renaissance in Britain, spurred by
the 2005 arrival of C&C's Magners, advertised as a drink poured
over ice at a time when extra-cold beers were in vogue.
New flavours have also helped expand cider's appeal beyond
middle-aged men to younger men and women and have made it an
all-season beverage, not just a summer drink.
Social media have helped the spread, with women posting far
more messages related to cider than beer. References to final
exams, partying and dance festivals demonstrate its appeal to
In Britain, the sector grew 24 percent in volume terms from
2006 to 2011, according to market research group Mintel, though
it stalled somewhat in 2010 and 2011. Over the same period, beer
sales have fallen 23 percent.
Cider makes up 15 percent of the long drinks market in
Sales are expected to rise 12 percent from 2011 to 2016,
says Mintel, and by 29 percent, or 5.2 percent a year, according
to Euromonitor. It sees UK beer sales down 9 percent in that
While Britain represents almost half of the 1.8 billion
litres drunk globally last year, the United States is almost
virgin territory. Americans drank just 59 million litres last
year, 15 times less than Britons in a country with five times
more people. Cider made up 0.3 percent of beer market volume.
However, that small base is growing fast, with ciders
branding themselves as a healthier alternative - made from
apples and free from gluten - and appealing to the sweeter
palates of young people there.
Research firm Nielsen says 38 percent of U.S. cider drinkers
are under 35 years old, against 17.5 percent for beer, and half
earn $70,000 or more, against 38 percent for beer.
In the year to the end of November, off-premise sales have
jumped 75 percent, according to Nielsen.
That compares with 23 percent for flavoured malt drinks,
such as AB InBev's Bud Light Lime-a-Rita, 14 percent for craft
beer and just 0.7 percent for mainstream premium light beer.
A 24-bottle case of premium light beer retails for about
$20. Craft beer and cider normally cost at least $30. If cider
can also match craft beer's 7 percent of the U.S. market, that
would spell a lot of high-margin growth.
"Ten years ago, no one would have expected craft beer to
have risen so much. We think in cider similar things can
happen," said Joris Brams, director of C&C's international
operations, cider could rise to between 2 or 3 percent of the
market in five years.
Cider was a mainstream drink in the United States before
German immigrants established large-scale lager production in
the mid-19th century, but it fell away after the prohibition
"We see cider getting rediscovered there," Heineken global
brand manager Willem Jan van der Hoeven told Reuters in an
interview at the company's Amsterdam headquarters.
Euromonitor expects U.S. cider sales to grow 10.6 percent on
average, or 65 percent overall, from 2011 to 2016, with beer as
a whole down 1 percent.
It also sees strong growth in South Africa, the world's
second largest market, with 48 percent expansion over the five
years to 2016.
Innovation is a key factor in cider's present and expected
In Britain, where cider need contain no more than 25 percent
apple juice, shop sales of fruit-flavoured ciders have grown by
80 percent in the past year, with additions of ginger, honey,
rhubarb, cloudberries, red berries or lime.
France, where only drinks made exclusively from apples can
be called cider, is the only major market in which cider sales
are forecast to fall in the 2011-2016 period, according to
Euromonitor, which sees an overall 8 percent decline there.
The entrance of larger producers has also meant large
marketing budgets. Magners alone spent an estimated 45 million
pounds ($73 million) following its 2005 UK launch, boosting both
its own brand and the sector as a whole.
AB InBev has also put advertising muscle behind its cider
brands in the United States. Something similar might be expected
from Heineken when it regains control of Strongbow there.
A second factor supporting growth is distribution and
packaging. In 2009, cider was present in fewer than 10 percent
of U.S. convenience and grocery stores, according to Nielsen.
Now it is in at least 70 percent of them.
Until Strongbow's U.S. entry in 2003, U.S. cider was almost
exclusively high strength and sold in large bottles. Now smaller
bottles, cans and boxes have made it an easier drink in bars and
RED APPLE CIDER?
For a flavour of the future, the Stassen cider plant in
eastern Belgium offers clues. The Stassen family has been making
cider in the pretty market town of Aubel near the Dutch and
German borders since 1895, building a factory in 1937.
Gradually, they have expanded from cider production to
R&D chief Jean-Pierre Stassen says the company was the first
to make flavoured ciders, adding peach in 1987, later cherry,
lychee and raspberry.
"At the time, other companies said it was crazy, it was
sacrilege ... but people bought it," he said over the din in the
company's bottling house.
Jean-Pierre, whose brother Philippe is managing director,
has an enthusiasm undimmed by three decades in the industry and
struggles to think of any fruit that would not work.
Stassen has worked with the biggest players in the industry,
including world number two C&C Group, and helped develop AB
InBev's Stella Artois Cidre. Heineken bought Stassen this year.
Strongbow Gold, a sweeter variant of Strongbow developed by
Stassen, is sold in Italy and Hungary and is set for other
markets in 2013.
Longer term, Stassen's orchards are seeking to develop an
apple with red flesh that will produce a red cider, richer in
tannins and more akin to red wine. First results are due in
2015. It is unlikely to be commercially available until 2022.
This highlights one of the limits to cider's expansion; it
typically takes seven years to produce a fruit-bearing orchard.
Grapes can be ready for wine-making after three, while barley
for beer can grow in a single season.
But geographically, expansion prospects are sizzling. C&C
has already started bringing Magners to China, Indonesia, Japan,
Thailand and South Korea and is in talks with Taiwan.
"It's hot, but really small," says Heineken's Van der
Hoeven. "Still, a niche across the globe can be very valuable."