Marketing experts point to lessons as beer sales hit 60-year low

The changing nature of Australian consumer behaviour has been highlighted again by new figures showing sales of beer – the great Australian staple – have fallen to 60-year lows.

CommSec’s analysis of the latest data from the Australian Bureau of Statistics shows consumption of beer fell from 4.51 litres per person to 4.49 litres in the year to June 2009, the lowest since the 1950s. Wine consumption was steady at 3.56 litres per person.

While the fall is part of a wider trend – beer sales have been in decline for more than a decade – CommSec economist Craig James says the fall to levels not seen since the 1950s underlines a big change in Australian tastes.

“In the past, beer or wine production may have been seen as a licence to print money, but now the focus is ensuring your brand cuts through and grows market share in a very competitive market,” he says.

“Consumers are choosey; competition is strong, constraining margins.”

Dr Sean Sands from the Australian Centre for Retail Studies and Monash University is quick to point out that overall liquor sales have remained fairly steady over the last 12 months, indicating that beer is likely losing market share to other tipples, namely wine among older consumers and spirits and ready-to-drink beverages at the younger end of the market.

The problems in the beer market, he argues, have more to do with the fragmentation of the sector and a clear shift towards more expensive premium brands, leading to an overall drop in the absolute level of beer consumed.

He says big beer companies such as Lion Nathan and Foster’s, which have seen sales of their big beer brands fall in recent years – sales of Foster’s VB dropped 8.4% in volume terms in the first three months of the year – only have themselves to blame.

“They haven’t moved from where they were 15 or 20 years, when the beer market was a lot more buoyant and Fosters and XXXX were icons internationally,” Sands says.

“They have really stuck with the same, core market, the mass male market. But the male market is much more fragmented now and much more discerning in its taste. “

Sands says New Zealand beer brand Steinlarger, which has refreshed its brand in the last two years and won new sales, could provide an example for Australian majors to follow.

However, lack of marketing innovation from the big beer companies in the last decade might make it difficult for them to recover their position.

While the price differential between mainstream and premium beers means the big brands still have a shot at grabbing younger budget-conscious consumers, Sands says preventing these customers switching to premium brands as their incomes rise will not be easy.

“Those younger customers are also likely to switch away from those mainstream brands.”