The UK Beer and Lager Market: A Trade Perspective

by Susan Young

There is not a bar, pub or restaurant in the country that doesn’t stock beer. It is a key and crucial part of your business. In this article, we take a look at the current state of the UK beer market, and what brands are being pro-active. So sit back, and let’s dive into the frothy world of UK beer and lager.

The UK beer market is a significant player in the global beer industry. China may sell the most – an estimated £99bn worth of sales however, the UK holds its own, with the market worth just over £19 bn with per person revenues of around £265 generated in 2023, placing the UK as a significant player in the global beer market.

Looking ahead, the UK beer market is projected to grow by 7.81% from 2023 to 2027. This growth will result in a market volume of more than £26 bn in 2027. The researchers are predicting that by 2027, 68% of spending and 45% of volume consumption in the beer market will come from the on-trade.

Indeed the most recent drinks survey showed On Premise drinks sales were 7% ahead of the levels of June 2022 after the recent good weather, CGA by NIQ’s latest Drinks Recovery Tracker also showed that beer sales were up 12% in the period to 24 June. This research tracks sales in managed houses but we all know that good weather does drive beer sales.

There are several reasons that the forecasters are predicting healthy growth for beer. Firstly, the increasing popularity of craft beers and beer-mixed drinks.

Craft beers are typically produced by small, independent breweries, although many have now been snapped up by brewing giants. However according to the SIBA Craft Beer Report a growing number of consumers believe that genuine craft beer should be produced by an independent brewery. Only 3% believe it can be made by a global brewer.

One of Scotland’s most awarded independent craft breweries, Harviestoun Brewery, launched a nationwide campaign to celebrate forty years in business and two product launches - a new lager, due out this summer, and a limited edition 40-year-old expression of Ola Dubh - a collector’s piece.

Master Brewer Amy Cockburn said, “We’re already working hard to develop our next generation of great beers. Whatever we produce in the years to come, we’ll always ensure it’s true to the Harviestoun brand style and provide as much enjoyment as possible for craft beer fans around the world.”

Belhaven is another brand which has been a major success. It launched in 1991 and by 2001 had become Scotland’s best-selling ale, a position it retains to this day. But last month it received a refresh. Steven Sturgeon, Head of Marketing for Belhaven, said, “Best is as popular as ever and is currently gaining in market share, but we felt that it deserved a refresh to keep up with drinker’s current preferences. We also wanted to challenge the old-fashioned image of ale and communicate its freshness. The new look of Belhaven Best perfectly balancing its past, with a nod to the brewery’s iconic malting chimneys, and our ambition for the future, whilst reflecting the wonderful qualities of the ale inside”.

He added, “We saw an increase of 1.1% (79,000 pints) for Belhaven Best in the Scottish On Trade compared with the previous year, which is amazing to see and definitely encouraging with the fresh rebrand launching only last month.” Other categories seeing growth are hazy beers and IPA’s. Stephen Groucott, On Trade Category Management Controller at Molson Coors Beverage Company says, “Demand for hazy beers and IPAs continues to rise, up by 68% since 2018. It’s a trend we’re also noticing specifically within cask – prominence of cask IPAs, pale and golden beers have increased, now accounting for 27.5% of the overall category.

“To provide more options in this growing space, Sharp’s Brewery has launched its first ever nationally available cask hazy IPA, Sharp’s Solar Wave. It’s the perfect balance between what existing ale drinkers want and the bold, exciting flavours needed to attract new people to cask.”

There are also environmental reasons to go down the beer route with draught and cask. CAMRA’s 50th edition of its Good Beer Guide, highlights the environmental benefits of choosing to drink cask beer and outlines how CAMRA aims to support sustainability initiatives across the sector.

Writing in the Guide, Campaigns Assistant Cam Waddell said, “Cask forms the ultimate circular economy with almost every part of the supply chain – from grain to glass – being reused countless times. As a further benefit, much of this equipment is made from material that can be fully recycled at the end of its lifespan.”

She added: “Stocking locally produced beers has a huge range of benefits for consumers in the trade: pub-goers get to enjoy distinctive local beer styles, it improves consumer choice and supports brewers with increased sales, which in turn creates more local jobs, and increasing the resilience of the local economy with more money being generated and spent in the area.”

The rise of craft beers and non-alcoholic options, in particular, highlights innovation. These trends are not just passing fads, but reflect deeper shifts in consumer behaviour and attitudes towards beer consumption. Consumers today are not just looking for a beverage, but an experience - one that combines taste, quality, and a sense of responsibility towards health and wellbeing.

The growth of the non-alcoholic beer market is benefitting from this wellness movement. According the the Institute of Wines & Spirits Record (IWSR) which is the leading source of data and analysis on the global beverage alcohol market no-alcohol overtook low-alcohol in 2022 with a volume share of 51%, thanks to impressive recent growth: no-alcohol volumes rose by 23% between 2018 and 2021, and by 16% in 2022 alone. By contrast, low-alcohol volumes were essentially flat between 2018 and 2021, but saw slight growth in 2022.

The IWSR expects this trend to continue, forecasting no-alcohol volume growth of 10% between 2022 and 2026, versus low-alcohol at 3%.

Beer continues to dominate the UK no/low market, and commands majority share of the no/low space in both volume and value terms. No/low-beer volumes grew 8% in 2022, and are forecast to grow at 7% volume CAGR, 2022-2026. There has also been a move to more premium beers, particularly World lagers, perhaps driven by the pandemic behaviour which saw people more inclined to trade up.

Stephen Groucott, On Trade Category Management Controller at Molson Coors Beverage Company comments, “World Lager is one of the fastest-growing categories – it has increased its share of draught lager sales value in the UK from 25% pre-pandemic, up to more than 44% now. It continues to expand with more options to excite consumers – this diversity is part of what makes World Lagers so appealing.

“Madrí Excepcional’s ongoing success is a perfect example of this. Following its launch in October 2021 Madrí Excepcional became the the most successful on-trade launch since CGA On Premise records began, and currently has the highest rate of sale of any Draught World Lager.”

In fact sales of Madri Excepcional have already exceeded £430m.

Stephen Groucott adds, ““Premium 4% lagers offer accessible options that drinkers are willing to pay more for, offering that step up from the core that sits below the price point of a more premium beer, making it more accessible.

“This has been evident in the performance of Coors, which remains the 4th largest draught lager in the UK based on the number of pints sold. Tennents is still number one in Scotland.

Foster’s new campaign aims to bring the classic lager category front of mind for consumers, and maintain its high-volume ROS[7], promoting Foster’s as a key sales driver even amid the economic turmoil. The campaign will remind consumers that Foster’s is always a ‘good call’, providing them with a refreshing beer at an accessible price point.

Matt Saltzstein, HEINEKEN UK Beer Brand Unit Director, adds, “More than ever, we’re seeing a greater emphasis on ‘smart spending’, meaning consumers are increasingly looking for value for money. Beer is benefitting from this, as the pint offers greater value for money than smaller serves.”

“An independent analysis from CGA using their ‘Volume Pool’ of EPOS data has proved there’s a clear role for Premium 4% lager. Outlets that added Premium 4% lager to the bar saw draught lager sales volume grow on average by +9% year on year, whereas those who removed Premium 4% Lager from the bar saw draught lager volume decline on average by -22%.”

Although the market is looking buoyant there are challenges right now and there seems to be the expectation that beer sales will suffer as people economise. The good news is that beer is perceived as an affordable treat.

What’s ahead... August sees new duty reforms introduced. The government will introduce a new, simplified alcohol duty system based on the principle of taxing alcoholic drinks by their alcohol content (ABV). The new alcohol duty system will reduce the number of tax bands from 15 to 6.

All alcohol products across all categories will pay the same rate of duty and to support innovation and responsible drinking, low strength drinks below 3.5% ABV will be charged at a new lower rate of duty.

In addition, the government is introducing new reliefs to support businesses. These will include a Draught Relief, which is a lower rate of duty. It will apply to alcoholic products under 8.5% ABV, which are in containers of 20 litres or more and designed to be sold on draught. At Spring Budget 2023 the Chancellor announced an even more generous Draught Relief rate, to specifically support businesses in the hospitality industry. By widening the gap between the Draught Relief rate and the standard alcohol duty rate from 5% to 9.2%, the government has ensured that the duty on a pint in a pub will not increase on 1 August 2023.

The final word goes to IWSR,”As we raise our glasses to the future, the UK beer and lager market is poised for exciting times ahead. The growth of the market is not just a testament to the quality and diversity of the products it offers, but also a reflection of the changing consumer preferences and the industry’s ability to adapt and innovate in response to these changes.”