Molson Coors has had a bumpy track record of late when it comes to new product development.
While lower-abv citrus-flavoured beer Carling Zest, launched last March, has performed well enough to warrant a recent winter-themed limited-edition brand extension, two high-profile beer launches - ‘female-friendly’ Animée and premium lager Carling Chrome - came and went all too rapidly.
Now the brewer - which saw value sales of Carling lager fall 2.5% year-on-year [Nielsen off-trade 52 w/e 13 October 2012] - is moving into unfamiliar territory with 4.5% abv premium Carling British Cider (CBC). Rolling out in March, Molson Coors will be hoping it can ape the success of AB InBev’s £60m [Nielsen] Stella Artois Cidre.
“Cidre has brought new users into the category and I am surprised it has taken so long for another beer brand to follow its lead,” says Mintel senior drinks analyst Chris Wisson.
But there are a number of differences. Stella is a bigger brand, and also came to the market with a distinctive proposition: a mass-market cider with a foreign edge. It also gained first-mover advantage. “When Stella entered with a ‘French’ Cidre and the intriguing prospect of a beer brand doing a cider, they created a new space for themselves,” says Tom Ellis, director of Brand Genetics.
“Carling cider seems to lack such interest, and while the brand is positioned around refreshment and being British, this feels a thin promise for a consumer beset by established offerings.”
Stella also entered the cider market while it was in growth, but category volume sales are currently down 2.1% year-on-year [Nielsen]. Indeed, C&C reported UK sales down 11.9% this week.
And where there is growth, it is coming from pear (up 4.3% by value) and fruit-flavoured ciders (up 57.2%) - not the plain apple category (-3.2%) that makes up the vast majority of the market. Not that there is anything to stop CBC expanding into pear - as Cidre and Strongbow did last year - or fruit flavours, a fact Molson Coors has acknowledged.
One attraction with cider is lower taxation. Beer is taxed on a sliding scale. By reducing abv, brands including Stella, Budweiser, Carlsberg Export and - announced this week - John Smith’s have been able to avoid duty-based price increases/increase margins/gain brownie points with the government and its Responsibility Deal.
But even a mid-strength beer such as 4% abv Carling is currently taxed at 44p a pint, against the 21p duty on cider between 1.2% to 7.5% abv.
“For the likes of Stella and Carling, the structure of excise duty rates makes a move into cider a relatively low-risk strategy,” says Wisson.
Doug James, founding partner at Thrive, suggests a 4% abv would have given the brand a much needed point of difference compared with 4.5% Cidre.
At least Molson Coors has set aside plenty of money to support the launch, with a £4.5m budget, and argues that CBC’s point of difference will be as the market’s most refreshing cider. But one supermarket buyer believes it faces an uphill battle.
“It will be extremely tough for them as you have some fantastic brands in the market, all of whom invest heavily above the line for sustained periods.”