Profits for top UK beer Carling are sliding, and its image never recovered from the axing of ‘Black Label’. Can BMB change that? asks David Benady
Coors Brewers’ appointment last week of Beattie McGuinness Bungay (BMB), the agency run by creative director Trevor Beattie, to Carling’s advertising account (MW last week) comes as pressures mount on the UK’s number one lager brand.
On the face of it, Carling has been a success story since it was bought by US company Coors in 2002. With annual sales through pubs, off-licences and supermarkets worth &£2.4bn at retail prices, and volume sales up 37% in five years, Carling outsells its closest rival Foster’s by 40%.
Yet despite this rosy picture, Carling’s profit margins are coming under pressure from powerful retailers and pub chains, and its marketing is perceived to be disconnected and unfocused.
Margins are under attack across the beer industry. Where once beer brands would make a 20% profit, this has been halved over the past five years in the face of consolidation among retailers and the growing power of pub chains such as JD Wetherspoon.
This margin erosion is bad news for Carling’s North American owner Molson Coors, for whom the brand is increasingly being seen as a cash cow. Coors took on huge debts when it paid &£1.2bn to buy the brand and the success of its merger last year with Canada’s Molson depends on healthy profits flowing in from Carling.
Meanwhile, marketing efforts behind standard lager Carling – with alcohol by volume (ABV) of 4.1% – seems to have lost focus over the years. It sponsors everything from designated busking spots on London Underground to football tournament, the Carling Cup, won by Manchester United this weekend. Carling’s ads promote the main brand, its football and music sponsorships, sub-brand Carling Extra Cold and there is activity to support low-alcohol variant C2, which is being tested at the moment.
Carling director of marketing Bill Simcox says hiring BMB to work on the account – parting company with Leith London after five years – signals a new push to sharpen the focus on Carling. “The real challenge is to get a consumer communication strategy that binds those things together,” he says. “The idea is to try and find themes that underpin what Carling is all about.” A new ad campaign from BMB is expected later this year.
The question is whether Carling’s American owner can ensure the brand is as strong as its sales. Since Carling dropped the Black Label tag, with its patriotic overtones, in 1998 and pulled out of sponsoring the FA Premiership, it seems to have lost some of the qualities of a brand leader. People still associate the brand with the Premiership and its former slogan “I bet he drinks Carling Black Label”. This underscores the difficulties of replacing a powerful, long-running ad campaign.
Even so, strong advertising is only one part of success in the beer market. The real challenge lies in tying up distribution deals through pub chains, and this often comes down to price. Carling’s strength goes back to its ownership until this decade by Bass, which owned more pubs than its rivals. With Mitchells & Butler, effectively the old Bass, still owning the largest number of managed houses, Carling’s success seems assured.
Carling’s growth has been driven mainly by the launch of Extra Cold in 2002. It was the first UK lager to introduce a chilled version, following the lead set by Guinness. Extra Cold has helped extend distribution in pubs and has boosted sales.
Another plus for Carling has been Heineken’s suicidal decision to ditch its standard version in the UK and replace it with the premium international brand, losing some 80% of its sales: these have been swallowed up by standard lager rivals.
Consolidation in the industry has also led to the demise of many smaller, regional brands and this has also helped to boost the brand leader. A Mintel report last year says “the big just get bigger” in the UK beer industry since the major brands are owned by multinational companies with huge buying power and economies of scale.
As brand leader, Carling will suffer more than most from a potential decline in beer sales, expected after the smoking ban is introduced in pubs. Restrictions introduced last year on alcohol advertising which are part of the Government’s anti-binge drinking strategy could also limit BMB’s scope for creativity.
Whether Carling’s brand image can be made to do justice to the size of its presence in the UK will be a significant challenge over coming years. Much rests on the advertising strategy from BMB. Carling needs to become a brand leader drinkers actively choose rather than a commoditised pint ordered at the bar with the words “lager, please”.