Christmas, the trade agrees, was the worst yet with price cutting starting earlier than expected, and the prices went lower than anyone anticipated. The much publicised winner among the multiples in the race to go lower sooner was Sainsbury. Its £9.99 24 pack of Carling rocked the trade and gave it invaluable publicity and consumer awareness. Prices went down on other brands in other retailers but with much less impact. The result was that Sainsbury was delighted with its pre-Christmas performance and the volume of the beer market grew by 4% in the last eight weeks of the year. Value growth was less than 3%, reflecting the reduced prices. Scottish Courage calculates the average price of a litre of lager dropped by 2p on the same period a year ago and ale was down by 1p. Marketing director Brian Sharp says: "We are where we expected to be for the period. We are trying very hard to keep value in the category and it is not helpful for suppliers or retailers for value to be taken out of the category so significantly at a time when consumers will buy in any case. This is the only country in the world where prices go through the floor when demand goes through the roof. If that did not happen then the industry would be in a much healthier state." He adds: "As an industry we can try to hold the pricing to the customers at sensible levels, but what the retailers do is up to them. "At one point our value for money lager Kestrel, was more expensive across the trade than Carling." The problem for the brewers is that if the multiple grocers decide to fund price cuts there is nothing the brewers can do about it and they still have to manage their relationships with the cash and carries and independents who are disadvantaged by the grocers' strategies. They are aware that the brewers still get the volume and value of the extra sales through the multiples and they are the ones that suffer. Coors Brewers is basking in the glow of a very successful trading period. Sales of Carling were up 22% in value, Grolsch was ahead 94% and became a top 10 brand and both Worthington and Caffreys grew in a declining ale category. The brewer benefited from the multiples' focus on the price of big packs of cans. Sales director John Holberry says: "Every year the game is played in a new arena. A few years ago it was all about stubbies, last year it was premium bottled lager, this year it was cans. "The £9.99 price for a case of 24 440ml cans of Carling was crazy. We did not fund it. I wish we could afford to, but we can't. Sainsbury worked out it would attract more shoppers who would spend money on other things, but I don't know if they can prove that happened, and Carling sales went up everywhere anyway. But it certainly pays to get the best deal in first, as no one remembers who goes into the market second with a great offer." Holberry is concerned that in the long term the value is being stripped out of the market but he can provide no obvious solution and offered the pessimistic view: "The only thing worse than having your product's prices cut is having somebody else's products cut first. If you stand on the moral high ground you get destroyed at Christmas, which is what happened to us in 2000." Interbrew's sales director Steve Kitching is just as downbeat. He says some products were as much as 25% cheaper this Christmas and that produced value destruction in the category on a scale rarely seen before. But he is looking for answers and plans to work with the retailers to find them. "The challenge is to find ways of using the big brands to deliver what our customers want. We have to look at mechanics which can do the same sort of thing as pricing does in terms of bringing people into the stores, and do it in a category building manner. We have to find some constructive solutions which do not undermine the sector," he says. Stella Artois is still the biggest brand in the business at this time, and by a wide margin, but Kitching was disappointed with Interbrew's growth over the pre-Christmas period. Stella was up just 2% (value), Boddingtons up 1% and Heineken down 9%, but he maintains this was against a strong performance the previous year and, overall in 2001, Interbrew was ahead 11%. He says there's an opportunity for increasing the sales of the brands earlier, pointing to strong performances in September and October. "There is a blurring as to when Christmas gets started. I think you can build awareness of beer and come into the market earlier, and this process has been taking place over the last three years. In the past people used to sit back and get ready in September and October, now that is no longer the case. "We sold as much Heineken in value terms in those two months as we did in November and December." He believes the trade will have to review its pricing strategies. "The individual retailers will have to look at these strategies and see if they really delivered what they were supposed to. "The advantage of taking the price down does not necessarily last that long. "Any review must take into account how disappointed shoppers are who come into a store to take advantage of an advertised deal and find it is already sold out. This is the negative side to the promotional strategy. "Point of sale material over an empty shelf is bad news for both the brand and the retailer." He says in some outlets the deals on Stella only lasted two or three days because the logistics could not cope with the demand these prices create. "We invest a lot of money in Stella Artois and we don't like to be in the position too long where consumers are seeing two diametrically opposed messages about the brand. "Stella still commands a premium over other brands, but in some of the pack formats this was not the case." Carlsberg-Tetley's customer marketing director Chris Phillips backs up Kitching's view that getting in early pays dividends. He says: "We lined up the right offers at the right price and it was clear consumers were starting to pick up their Christmas beer at the beginning of November. "We also benefited from being able to keep our products on the shelves all the way through and got consumers into the habit of buying our brands. Not all our competitors managed that and suffered as a consequence." He believes that after a period of upheaval Carlsberg-Tetley is getting its act together. "We are concentrating on providing what the customer and the trade wants. In the past we were not focused on that." He adds: "With the multiples taking a bigger share of the market it becomes increasingly difficult for the other trade channels but there are opportunities in the convenience sector. "We have developed specific packs, price marked cans and point of sale for the sector and we are one of the few brewers committed to calling on independents with a field sales force." {{FEATURES }}