As years go, 2007 has been less than perfect in the beers, wines and spirits category. After rain, rain and more rain through the summer, high profile players such as Magners and Scottish & Newcastle reported sales downturns leading to fears that the weather, plus the lack of a big football tournament, could leave 2007 as the industry's annus horribilis.
Increasing political pressure on supermarkets over discounts, and Scottish plans to outlaw secondary siting of alcohol and multibuy promotions only added to the gloom.
On the face of it, BWS stood up well. Nielsen figures show total liquor sales in the off-trade were up 4% to £12.2bn (year to Aug 11), and even "long drinks" - a catch-all for beer, cider and RTDs - were up 2%.
But behind the headline figures, the impact of the washout summer was clear. Long drink volumes were down 8% in the eight weeks to Aug 11, compared with the same period in 2006. And total beer sales were 11% down, with lager down 12%.
Bill Simmons, national controller for the off-trade at Fuller's, said: "The fact that there's been no big event and the weather's been dreadful has certainly had an effect on the packs that have been going out of stores.
"Last year we were doing very well on eight and 12-packs and this year hasn't been the same, though we're still doing well on single bottles. Not many people have been having barbecues and it's made for a very difficult trading period."
Only cider within long drinks came out relatively unscathed, though its 13% advance was less than most producers would have been hoping for, and a 27% increase across the whole year was largely down to its performance in the early portion of the 12 months.
All this raises the question of whether the industry has become too complacent about the positive impact of steadily rising temperatures that have given BWS a lift in recent years.
Steve McAllister, managing director for multiples at InBev UK, says: "Good weather generates beer sales so a spell of sunshine can make a huge difference to the performance of the category. Sports tournaments also generate sales, but to a lesser extent. I don't think the industry relies on these events; it just makes the most of them when they happen.
"There's no real substitute for the role the hot weather plays, simply because it increases the number of social occasions when people want to drink beer." However, Coors' portfolio activation director David Wigham urges caution: "It's important we don't rely on events beyond our control. We have to find ways of ensuring consumers increase their participation in beer whatever the weather." The brand claims it did relatively well in the summer, with Carling increasing market share.
Rupert Thompson, managing director of Wychwood Brewery, says the industry needs to expand its promotional footprint beyond football. "We should be looking at other things because we are getting very reliant on one or two events," he says. "It's easy to promote around football but there does need to be a bit more imagination.
"There are lots of people - including a lot of women - who aren't interested in football, and see the link between beer and football as something very masculine. It can be quite a turn-off for them.
"We've done some work around Halloween with Hobgoblin - and Charles Wells has with St George's Day and Bombardier - that show that beer can be appropriate with other events, but in the absence of brewers suggesting alternatives, retailers always look to football."
Wigham said Coors was seeking to broaden the appeal of beer with innovations such as the half-strength lager C2 and the introduction of indicators on packaged Grolsch and Carling to show when the beer is cold enough to drink. McAllister pointed to innovations such as Beck's Vier as evidence that brewers were doing their bit.
Wigham said: "We have a big challenge to ensure the beer category excites its customers and attracts new drinkers. Price is only one factor in the marketing mix."
Price has become a focus for BWS, and beer in particular, like never before this year. The effect of the floods on cereal crops - on top of increased prices of glass and aluminium - are bringing extra cost pressures to a relatively low margin take-home category.
Wigham says: "The global supply and demand for cereal stocks was already creating upward pressure on prices before this year's floods. In many cases prices are now double the level paid by buyers for the 2006 harvest. The brewing industry is experiencing significant raw materials cost rises which will ultimately need to be passed on to customers."
But in the short term retail prices are likely to stay keen, says Simmons at Fuller's, largely because the sector is entering the autumn with surplus stocks because of the weather.
While long drinks have been feeling the brunt of the nature's wrath, wine has continued its steady rise. Off-trade sales rose by 5% in the year to August, according to Nielsen, and wine is easily the single biggest off-trade drinks category with 36.8% market share, rising to 39.1% share in multiple grocers. And that's not taking into account sparkling wine and Champagne, which increased sales by 7% over the year.
But there are clouds on the horizon for wine too, with the Scottish Executive's plans to force retailers to sell alcohol from a specific display area from 2009. This would effectively outlaw secondary merchandising of alcohol on food counters.
The UK government is thought to be unhappy about the plans. Rumours suggest the Competition Commission will recommend no action against multiples over below-cost BWS pricing, but it's not hard to imagine a time when tougher restrictions on drinks merchandising and promotions could be introduced in England and Wales.
If they are, the rain could prove the least of the category's problems.n
WHAT THE BUYERS ARE SAYING
Rosé wine and Pinot Grigio are still doing really well, and bag-in-box is very big for us. Building our Extra Special range has been a big focus for us this year and we've put a lot of time into resourcing to get the best wines we can. The Old World is coming back again. More people are becoming health-conscious and looking for wines that are lighter in alcohol and they're already out there if you look at the Old World. You don't need to go and create them. It's our job to give consumers that if that's what they want.
Philippa Carr MW
wine buying manager, Asda
Category insight: Dark Spirits
Until recently pretty unfashionable, dark spirits is showing some of the biggest growth in the categor
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Some of the biggest interest in the BWS category is coming from dark spirits, a sub-sector that has been about as fashionable in recent times as the Chopper bicycle or cheesecloth shirts.
Vodka has led a decade-long charge by lighter spirits, but it seems brown may be the new white.
Golden rum saw off-trade sales increase by 26% in the year to August, according to Nielsen figures, putting it almost on a par with cider as the fastest growing drinks category.
Imported whiskey - led by Jack Daniel's but with an extra injection of energy from new brands such as Bulleit - was up 12% in the same period, while malt whisky rose 6% and Cognac 8%
Much of the interest has come from new brands that appeal to a younger section of the market, and old brands such as Glenmorangie and Morgan's Spiced given a new lease of life through pack redesigns.
First Drinks Brands' Monkey Shoulder Scotch and Sailor Jerry spiced rum are two such new brands.
Marketing director Katie Rawll says: "Monkey Shoulder isn't just for top end bars. We're getting pretty good distribution across the trade. It's been received very well and has an accessible price point at around £16.99.
"You can either mix it with Coke or have it over ice, and it's got a lot of appeal for younger drinkers looking for an alternative to Jack Daniel's and Coke.
"It's an interesting product in a very traditional sector of the market."
United Brands has just won its first multiple listing, with Sainsbury's, for its Goslings Black Seal rum.
Director Mark Dawkins says: "We've positioned it at £14.99 on purpose because we know it commands a trade-up premium, but it's also a sensible price because if we pitched any higher we'd have to come down to promote at below £15 anyway."
He adds: "It's difficult to go for mainstream consumer media until you've got the distribution to justify it, but we have got a budget and we'll be running educational-type pieces in Sainsbury's magazine, featuring the Dark 'n' Stormy cocktail, and explaining why the rum is so special."
WHAT THE BUYERS ARE SAYING
We came out of the summer not too badly. We held our beer festival in June this year to negate the effect of there being no World Cup, but the problem was it didn't stop raining for the full month. There's not a lot of beer been drunk this summer because people haven't been having barbecues. Cider continues to be the big growth area. We're up about 30% over the year. Pear cider is doing well and Jacques fruit cider has been exceptional since we had it on taste. I think next year we're going to see a lot more new products to come in fruit flavoured cider.
Dave Smith
beer and cider buyer, Booths
Category insight: Eastern Europe
The recent influx of eastern Europeans and particularly Poles into the UK has led to brands moving over too
The arrival of an estimated 1 million Poles into the UK since Poland joined the EU has led to increased demand for Polish products across the grocery sector, and alcohol has been one of the main beneficiaries.
SAB Miller said UK sales of Tyskie, the market-leading lager in Poland, rose by 333% in the six months to March, with combined sales of Tyskie and sister brand Lech reaching the equivalent of 17.6 million pints. Tyskie lorries in Poland now carry the Union Jack and the English text "deliveries to London daily" to advertise its new kudos as an export brand.
Alan Clark, managing director for SAB Miller Europe, said the profile of many Polish migrants matched the target market for premium lager. He said: "The Polish migrants who have moved to London have done so with an estimated disposable income of £4bn a year.
"Government figures show that 82% are aged between 18 and 34 which underlines the attractiveness of the Polish pound."
Specialist beer supplier Pierhead Purchasing has added two beers under the Brok brand to its range in response to rising demand.
"We're already on to our second container," said Michael Cook, director of imported beers, "so we're doing about 300 to 400 cases a week. "The problem we had was that a lot of the major brands are owned by the big multinationals. Brok is a regional brewer with four breweries and where we get clusters of Poles from one of those regions we do better.
"They'll go into a retailer and request it and the word spreads that that retailer lists it and it generates sales."
Rising demand for products from Poland has also brought more interested in the country's spirits. Global Brands has launched Sobieski vodka in the UK with an outdoor advertising campaign written in Polish to appeal directly to Polish people and create intrigue among non-Polish speakers.
While most of the focus has fallen on Poland, there are migrant groups from other countries who could also provide an export market.
"Romania is a big possibility," said Cook at Pierhead.
Has the number of customer complaints about the price of goods increased recently?
