Have brewers lost their fizz?

Bulmers Strongbow Spice, aimed at bringing cider into the fashionable FAB (flavoured alcoholic beverages) sector dominated by Bacardi Breezer and Smirnoff Ice, might look to the untutored eye like a brand extension too far. Not by the sterile standards of today’s UK brewing industry, however. On the contrary, it is a major piece of innovation.

What happened to that surge of mid-Nineties product innovation, particularly at Bass, which brought us the likes of Caffrey’s – the ‘Irish’ hybrid lager – and the now notorious alcopop – distant vulgarian cousin of the FAB? Change and consolidation within the brewing sector is the short answer.

The wedge driven between major brewers and their pub estates by the Beer Orders of over a decade ago forced the beerage into an unpalatable choice: change or die. One of the more innovative brewers, Whitbread, shuffled off its brewing interests and essentially plumped for the retail catering business. Those that were left in brewing found they were little more than a cottage industry faced with the chill winds of international competition. They could buy their way to critical mass, like Scottish & Newcastle with its Courage and Kronenbourg acquisitions, or they could be bought, like Bass after its dalliance with Carlsberg.

The fallout from consolidation is far from complete, as Interbrew’s uncomfortable takeover of Bass demonstrates. But it has left a lasting, chilling effect on the way the business conducts itself. In the interests of mollifying shareholders – present and potential – the industry has become utterly absorbed in its own reconstruction. Which translates as cost cutting and, most pertinently perhaps, brand rationalisation – a polite term for hacking back the brand portfolio and curbing the new product development programme.

That doesn’t mean to say no innovation is taking place, as wheat beer shows – but it is certainly much thinner on the ground. Which is all the more critical as the sector, overall, is not exactly pregnant with growth. Sales of beer and cider continue the slow decline that has been their hallmark over the past 30 years. Between 1995 and 2000, cider rose just 1.5 per cent in volume – but only after heavy discounting; lager sales dropped by 1.5 per cent. True, value in both cases was up, slightly – but this amounts to a decrease once inflation is stripped out.

Perhaps, once the present round of consolidation is completed, marketers will once again take pride of place over accountants. Certainly, Interbrew – one of the world’s biggest brewers – is promising ‘revolutionary’ products in the pipeline. The sneaking suspicion remains, however, that the golden era of innovation is over. One reason is the prohibitive cost of producing something genuinely new – that is a drink product, rather than a delivery or texturing mechanism. Another, neatly summarised by a new product specialist, is even more basic: ‘Beer is beer. There is a limit to the amount of mucking around you can do with it.’

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