Coors Brewers’ shock announcement last week that it is ending its sponsorship of the Carling Weekender music festival comes as UK brewers are still reeling from England’s failure to qualify for the Euro 2008 football championships.
The pub and brewing industry is gearing up for another dismal summer following 2007’s wash-out when volumes slumped 5%. The absence of a home team from the Euro tournament next summer could cost well over £100m in lost beer sales and the drive is on to find inventive ways of stimulating interest in the “old foamy”. One source warns: “Without Euro 2008, next summer will be tough for beer. If it’s another wet summer, it will be a disaster.”
Sponsorship is under the spotlight as brewers seek to boost a market facing long-term decline as well as a short-range crisis. Sales of beer through pubs are at a 70-year low and the Government is cracking down on beer advertising in its drive to promote responsible drinking. The days of beer brands spending £25m a year on ads are long gone as TV’s effectiveness is called into question. This is heaping the pressure on sponsorship to create the cut-through and loyalty that were once the domain of ad campaigns.
Carling in particular is looking to maximise the effectiveness of its sponsorship budget after a period of plunging sales. The summer rains contributed to a 7% drop in UK sales to retail for owner Molson Coors between July and September.
A Coors spokesman says that while volumes were down margins were up as the brand refused to participate in discounting by the off-trade, particularly supermarkets. “At the end of the third quarter we were on target,” he insists.
Meanwhile, Foster’s and Kronenbourg brewer Scottish & Newcastle predicts the smoking ban could knock 2% off the whole beer market. Guinness sales were down 3% in the year to June, Inbev’s UK volumes slumped 11% between April and June, while the British Beer and Pub Association says brewers’ profits dropped 78% between 2004 and 2006.
Against this background, the UK’s biggest beer brand is refocusing its sponsorship strategy. However, Carling’s switch out of festivals surprised many in the industry. Following the England football team’s European expulsion, it was widely expected that music sponsorship would benefit from more interest next summer, not less.
Carling will no longer lend its name to the Reading and Leeds festivals which had become known as the Carling Weekender. After nine years as headline sponsor and an estimated £10m investment, Carling says it will instead continue backing the Academy Music Group which runs music venues across the UK. New Carling Academy venues are expected to form part of the brand’s revised sponsorship plan. Being indoor venues, events do not get rained off and such sponsorship works across the year rather than over one summer weekend.
But Jack Horner, founder of music sponsorship agency Frukt, says Carling fails to say much about its brand through its music sponsorships. “Its venue sponsorship has contributed little aside from beer, a few newsletters here and there and a competition or two. Brands must add something of value to the consumer while giving a clear context to their product in the sponsorship.”
Music has attracted much interest as an alternative destination for beer brand sponsorship over recent years, although some argue that festivals and tours are becoming overcrowded with brands. Steve Martin, chief executive of M&C Saatchi Sport & Entertainment, says: “Music in terms of sponsorship is the most cluttered environment ever.”
He believes that although the smoking ban has not had the dramatic effect on pub beer drinking many were expecting, the wine explosion of the past decade has led to a switch away from beer.
That said, beer is still a £10bn market in the UK and will continue to be a huge force for years to come. But factors beyond the brewers’ control – such as the performance of the England football team and the British weather – are becoming ever more important to sales.
England team sponsor Carlsberg is a particular hostage to fortune. It is understood to be putting a summer plan B into action now the team won’t be in Europe. But some observers believe the time has come for brewers to move sales onto a more predictable footing. Graeme Mitchell, business director at consultancy Drink Works and a former Inbev and Carlsberg marketer, thinks football may be past its sell-by date for beer sponsorship.
“Brewers have become too focused and too blinkered in terms of football. There’s an obvious link between drinking beer and watching football, but it is a bit too one-dimensional. The brewers need to expand their programmes and not have all their eggs in one basket,” he says.
Mitchell supports the idea of reviving the Home International Championship for a one-off next summer, but believes that Britain’s Euro expulsion could be one of the best things to happen to the beer industry. “Instead of every brewer planning promotional activity around football, it will force them into putting the consumer at the heart of their thinking and being innovative. It is an opportunity to try different products in an outlet and to be more creative.”
According to Andrew McGuinness, partner at Carling’s ad agency Beattie McGuinness Bungay, this is exactly what the lager brand has been doing. It ended its expensive sponsorship of the Premier League in 2001 and now backs the League Cup and has invested heavily in music.
In ads that broke last week, it is positioning the brand as a facilitator of male bonding. “Carling is tapping into the fundamental role beer still plays for people as something that fuels friendship. Rather than getting into temporary things – like Magners tapping into sunshine or Carlsberg with football – Carling is trying to associate itself with something more continuous,” he says.
The long-term decline of beer requires some imaginative solutions from brewers. The big question remains how they should focus their marketing budgets. Some observers believe it is time for brand owners to stop leaching onto external events beyond their control. Instead, they should take power over their own destinies and start creating properties of their own – and preferably ones that don’t rely on good weather.