REFILE-INSIGHT-Cider, the golden apple of brewers' eyes

Thu Dec 20, 2012 9:24am EST
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By Philip Blenkinsop

BRUSSELS Dec 20 (Reuters) - 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.   Continued...