Sizzling UK summer fails to ignite Heineken’s Strongbow sales
The UK sales fall for Strongbow – the brand posted a 2% slump globally – is eye-catching given that 2013 was an especially warm and dry summer in the UK, and the sales figures relate to 2012, when the summer was a washout.
Strongbow is the UK’s largest cider brand and held a 32% volume share of the total cider market, according to IRI/CGA data on total trade volume sales for the year ending July 22/May 18 2013.
It suggests that Heineken may be struggling against increased competition in the hard cider category against hipper brands such as Kopparberg and Rekorderlig, which have been successful in appealing to millennial drinkers.
However, a Heineken UK spokesman told this website that the Strongbow family was back in growth in H2 2013 “driven by very strong [Strongbow] Dark Fruit sales”.
Heineken spent £28m on new packaging, brand positioning and through-the-line marketing for Strongbow in summer 2012; line extension Strongbow Dark Fruit was launched in May 2013.
Strongbow jumps on flavored cider bandwagon
Speaking to BeverageDaily.com last month on UK alcoholic beverage trends for 2014, Mintel analyst Chris Wisson said that Kopparberg and Rekorderlig were "absolutely flying".
“It’s interesting that Strongbow has now gone into that market with Dark Fruits (with blackcurrant and blackberry juices) – that’s been successful for them, and their presence in flavored ciders will only benefit the segment,” Wisson said.
“They only moved into the flavour segment in summer 2012 with pear, and considering how dominant they are in sales terms [as the UK’s bestselling cider] it seems they were waiting to see if the flavoured boom would last," he added.
Reporting its FY 2013 results this morning for the year ending December 31 Heineken said group revenue rose 0.1% on an organic basis to €21.255bn ($29bn).
But net profit fell a massive 53% to 1.364bn, although this was due to a €1.486bn ‘revaluation gain’ for Heineken in 2012 due to the acquisition of Asia Pacific Breweries (APB).
CEO reflects on 'challenging year'
As a result of the $6.4bn takeover in 2012, Heineken revalued its previously held equity interest in APB, resulting in the massive pre-tax exceptional gain, which was booked in 2012 results.
Thus, on a more easily comparable basis – net profit before exceptional items (one-off expenses) – and amortization (reduction in asset values) fell 2% on an organic basis to 1.585bn versus 2012.
Heineken’s international premium beer sales fell 1.8% in 2013 reflecting lacklustre sales in key markets the US (Americas -2.1%) Vietnam (Asia Pacific, +3.2%) and France (Western Europe (-4.1%).
Destocking in the US and France contributed to the fall, following a significant excise duty increase in the latter market in January 2013.
Jean-François van Boxmeer, Heineken CEO, said: "2013 was a challenging year as slower economic growth in a number of key markets and adverse regulatory developments impacted performance.
“While the performance of developing markets was not as strong as expected, they now account for nearly half of group revenues and remain strong platforms for long-term growth,” he added.
*Article corrected 14/2/14. We reported on Wednesday that UK sales of Strongbow fell 2%, which was incorrect.
