Without a doubt, cider has become the hero alcoholic beverage category in Australia, bucking every trend imaginable and growing at speed against all odds. Huge marketing campaigns driven by big imported brands, a surging number of local craft suppliers and plenty of cider related events are all evidence of cider’s growing popularity. If you are involved with the cider industry in Australia you are most certainly riding the wave of excitement. And you are probably also wondering: “How long this is going to last?”
Well, let us give you a word of encouragement…
The Australian cider market is tiny and we have only just scratched the surface.
Interested? Read on.
According to Smart Company, the size of the Australian cider market in 2016 reached $309.7million, on the back of 11.4% growth on the year before. But how big are these numbers relative to other, more mature cider markets? The UK cider market, according to Weston’s Annual Report for 2017, accounted for GBP 2.88bn – or the equivalent of AUD 5bn. In other words, the size of the Australian cider market is 6.7% of the size of the UK market.
In volume terms the UK dwarfs the cider consumption elsewhere in the world and accounts for more than twice the cider volume in the rest of Europe (below). (Depending on the methodology, the exact size of the UK market varies slightly from source to source, however, the relative differences between Australia and the UK are consistent.)
Global Cider Volume Consumption By Region, NACM
Despite the huge excitement around cider, even if the predicted by IBIS World growth trajectory eventuates, by 2021 the value of the Australian cider market will reach AUD 404.4m. This will be a huge win for Australian producers, yet relative to the UK market today, the numbers are still miniscule.
It is no secret that the UK population exceeds that of Australia by 3 times, currently reported by Google at 65.14m people. Not only are there more of them but they also drink way more cider than us. The average person in the UK spends $76.75 per year vs $12.90 here in Australia. Of course not every single person in either country buys cider, but for the sake of the comparison, even if they did, people in the UK spend 5 times the amount on cider compared to their Australian counterparts. This alone suggests that the Australian cider market has a long way to go and the opportunities are plentiful.
Would you like to know how to disrupt the market and grow your sales in Australia? Read on.
According to Mintel the size of the UK market will reach GBP 3.6bn (AUD 6.3bn) by 2021, based on current market prices. This equates to 26% growth over the next 5 years. For a mature category, this growth is astounding.
However, this doesn’t mean that the volume consumption per capita will increase. Quite the contrary, Mintel forecasts that the overall volume will decline by 4% for the same period and will reach 847m litres by 2021.
Faster growth in value is generated by a higher price per litre. Premiumisation and the emergence of craft is likely to drive this, combined with inflation. Should Brexit happen, the most likely scenario is that all the cider and juice Britain imports from overseas will come at a higher price per litre due to a weaker pound sterling. This will result in a higher price for the consumer.
There are a number of factors which do and will continue to put pressure on UK cider consumption. The emerging trend towards avoiding sugar, which is heavily present in some cider, is a key factor.
Have a look at our article Sugar in Cider – The Facts to find out more about the sugar content in cider.
On a different note, the population in Europe is ageing. And this means that in the future there will be fewer consumers in the 25-34s age segment, which happens to be the main cider shopper. On top of this, alcohol consumption in general is also declining in developed markets on the back of increasing health concerns and awareness, driven by governments and health bodies.
Like in many mature categories, growth in cider is likely to be generated by innovation. According to Mintel, there is an opportunity to further develop the low calorie and low alcohol cider offering, as well as smaller formats such as 330ml cans. While some low alcohol and low-sugar products are available in Australia, this segments is still very much in its infancy.
Another factor likely to boost consumption is the increase in awareness of cider’s versatility. Similarly to wine, the cider industry can leverage food pairing as a vehicle to drive awareness. There is a huge opportunity for cider makers to position their products as complementary to food, just as the wine industry has so effectively done. This has the potential to transition shoppers away from wine and grow cider consumption per capita. Such a change in focus has the potential to break the strong link between cider and warm weather and ultimately increase sales in the colder months.
To source inspiration check out our recent article How To Pair Cider with Food : The Perfect Match
The growing number of ciders in wine like bottles, both in the UK and Australia, suggest producers are already trying to appeal to the wine drinkers. If anything Australia has an advantage in this space due to its prominent wine culture, which is way less developed in the UK.
With growing concerns about product origin, more shoppers are demanding locally grown and made products. This provides local producers with a strong advantage which they can capitalise on by dialling up the message on provenance, quality and craft. There is increasing consumer demand globally for higher transparency in supply chain and manufacturing and Australia is no exception (see recent scare over frozen berries in Australia). This in turn creates an environment where the more forthcoming producers, who are pro-actively educating the consumer, are likely to gain traction, generate higher engagement and position themselves as market leaders.
Unfortunately cider is exempt from the country of origin labelling which is currently being rolled out across the consumer goods industry in Australia. This is a major miss on behalf of the local regulators, who clearly favour the strong lobby of the large cider importers over local manufacturers and their communities. This is likely to interfere with Australian makers’ ability to promote their products as superior.
UK Cider Volume Sales Share 2015, NACM
The UK prides itself with a rich pub culture, however, cider consumed on premise accounts for only 36% of the total volume. In value terms, due to the higher price per litre, this channel represents 63%. Interestingly, unlike in Australia, males account for more than half of all cider consumption on trade.
In Australia, the majority of the draught cider offering is dominated by big brands while the smaller craft producers, whenever available, are mostly in bottles. In contrast, the rich cider heritage and huge choice of locally crafted drinks available on tap in the UK makes cider a lot more accessible and a viable alternative to beer. Therefore, to accelerate volume growth and consumer interest, Australian craft cider makers need to make their produce, particularly the drier varieties, available on tap in more outlets throughout the country. The trade have a huge part to play in this as well but having an easy, obvious and interesting alternative to beer has the capacity to convert more males to cider.
UK Cider On Trade Sales 2017, Weston’s Annual Report
Interestingly, the off trade in the UK drives the consumption and purchasing of fruit flavoured ciders (see below). While these might be too niche to have on tap, recent innovation and flavour proliferation has clearly found an audience overseas. The fruit flavoured cider segment is the growth driver for in-home consumption. This suggests that innovation in this area has the capacity to excite shoppers once again.
Another key difference between Australia and the UK is the share of cans vs. bottles. Cans are a lot more portable, suitable to bring to festivals and other outdoor gatherings. They are less of a hazard for both consumers and the public alike. Therefore it is no surprise that cans have overtaken glass bottles as the dominant off trade format. Australia is still lacking when it comes to cider availability in cans. The challenge, particularly for craft cider producers, is the impact cans have on premium product positioning.
As a format, however, it has the potential to address the challenges of using glass in the supply chain, not to mention the issue of low glass availability in Australia. As craft cider ranges mature and grow across the country we are likely to see more of the sessionable, volume-driving ciders in cans. While premium products will move towards the wine-like glass bottles. This will create a clear price and range tiering and is likely to add volume to the category.
UK Cider Off Trade Sales 2017, Weston’s Annual Report
While the UK is a great example of what the cider industry in Australia can aspire to be, product and format innovations alone are unlikely to get us there. The sheer size of the cider industry in Britain can be explained by the long lasting traditions and its recognised role in the community.
A Great British Industry 2017, NACM
For a glimpse into the scale of the cider industry and its big players, check out our short video of Bill Bradshaw, taken at the Australian Cider Festival 2016. Bill Bradshaw is an international cider judge, a co-author of the book World’s Best Ciders, as well as a dedicated cider photographer from Somerset in the UK.
The growing number of Australian cider makers, cider events and the visibility of Cider Australia (the industry body) are all encouraging signs of a budding cider culture. However, awareness of real cider made from 100% fruit and the benefits associated with this is still low.
To generate stronger consumer backing, the industry must invest in educating the public on the positive role cider plays in rural communities. From planting more trees, to employment in regional areas, the preservation of an ancient craft and nurturing a healthier diet, the real cider industry just keeps on giving. Markets are driven by demand, and as consumer awareness of the bigger picture develops and increases the Australian cider market will continue to flourish.
If you are interested in reading more on this topic the resources below will be of use:
Mintel Global Cider Review 2017 – unfortunately this report is not free
IBIS World Cider Production in Australia : Market Research Report – again, this is not free
World’s Best Ciders by Bill Bradshaw – Amazon affiliate link