Shifting patterns in drinks consumption have been blamed for another bad year for the UK's big beer companies.
The OC&C Grocer Index 2007 shows a 1.6% fall in turnover for Stella Artois producer InBev UK, number six in the UK's top 25 drinks companies. Carlsberg UK, number eight, is down 2.1%.
Most dramatic, though, is the 13% fall in sales for Carling and Grolsch producer Coors, number five in the Top 25; its operating profit was down 39.8% to £68.4m.
"The beer off-trade in the UK has been under a lot of price pressure," said Luke Jensen, head of retail and consumer with OC&C. "The level of promotional activity is cut-throat and that's reflected if you look at the results for the beer distribution companies. The promotional battles have become more intense, and because they're being used by retailers as footfall drivers, even the retailers are prepared to lose money on them."
This creates a vicious circle because while supermarkets were aggressive on price, pubs were pushing prices up, which created a widening gap between drinking at home and in the bar, said Jensen. "This is pushing people to change their drinking habits, drinking more in the home," he said.
However, the international drinks giants continued to enjoy above-average profitability. Operating profits at the number two, SABMiller, which has benefitted from its acquisition of Colombian brewer Bavaria, rose 15.4% to £1,487.7m on sales up 19%.
Spirit companies, too, did well. Whyte & Mackay's
profit grew 25.1% and Glenmorangie's was up 50.6%.
Wine sales also grew, albeit from a much lower base.
Drinks companies had to recognise that the future lay in the off-trade and working hand-in-hand with the retailers — "promotional junkies" — for selective rather than systematic promotions, said Jensen. "People are competing on price rather than putting effort back into building brands," he said.
OC&C Grocer Index p30