Report summary RESEARCHSTORE. Obtain a detailed understanding of consumer attitudes and behaviors towards beer, cider and FABs

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1 The Future of Beer, Cider and FABs: Capitalizing on Emerging Trends and Changing Preferences Seeking Value Generation in a Mature and Slowing Marketplace Report summary Provides detailed insights and analysis documenting the drivers and inhibitors of the beer, cider and FABs market Obtain a detailed understanding of consumer attitudes and behaviors towards beer, cider and FABs Exclusive occasions, market and consumer survey data and analysis covering each category Strategic conclusions combined with actionable recommendations for all industry players looking to fully capitalize on this market Country coverage: France, Germany, Italy, the Netherlands, Spain, Sweden, UK, US, Australia, Japan, South Korea, China, India, Brazil, and Russia

2 About this report Introduction Against the backdrop of the economic crisis, the beer, cider & FABs market has faced an increase in the challenges already confronting it in terms of arresting the trend for declining sales volumes and faltering value. Success will be defined by compromising consumers premiumization impulses, habitual and sensory preferences, with their shift to off-trade consumption and concern for value-for-money.. Beer is overall the most popular form of alcoholic beverage globally, and constitutes the dominant share of sales in most markets worldwide. The difficulties in the overall alcoholic beverages market are in large part a reflection of trends within the beer category. It is therefore important to seek a deeper understanding of developments in the beer market and the consumer attitudes and behaviors behind them to gain a complete picture of what forces are defining the fortunes at the macro level. Key findings and highlights Alcohol sales growth is suffering from the affects of the global downturn, but longer term trends such as moderation for health or expenditure reasons are well established threats. The shift towards premiumization and a higher value/lower volume consumption pattern is set to continue but has lost momentum and is not forestalling the sales decline. Health is one of the most significant trends influencing CPG brands in the present. Although not always an obvious fit, the beer industry is now learning to adapt and meet consumers health concerns and wellness needs with products that are credibly perceived as better for consumers than standard products. Price and value-for-money are growing as influencing factors in what drinkers consume, where they consume and in what volume. The negative economic backdrop has clearly been a major motivator in this, and has further favored the off-trade over the on-trade. Reasons to buy Consumer understanding: obtain a detailed understanding of consumer attitudes and behaviors towards beer, cider and FABs Market understanding: identify the key beer markets and product innovation trends in 15 countries across three territories Ideation: find inspiration for innovative formulations and positioning that takes advantage of consumers' desires for premium and health attributes The growth of light beer has shown that consumers are looking for healthier alternatives and greater sophistication through products focusing on the next level of specificity in health issues, such as lower carbohydrate, low sugar, and lower calories Richard Parker, Datamonitor Analyst and Report Author

3 Sample pages The Future Decoded The Future Decoded Figure 39: Number of per capita beer consumption occasions, by gender, Europe, 2009 Figure 62: Number of off-trade alcoholic beverage consumption occasions (millions), in 15 countries across 140 Europe, the Americas, and Asia Pacific, Males Females France , , ,581 CAGR % CAGR % # of beer occasions Germany Italy Netherlands Russia Spain Sweden 8,901 6,810 1,309 11,937 2, ,717 6,564 1,337 12,266 2, ,365 6,119 1,335 12,176 2, % -0.7% 0.4% 0.5% 0.8% 1.3% -0.8% -1.4% 0.0% -0.1% -0.2% 1.5% UK 4,322 4,593 4, % -0.6% 0 Brazil 9,514 10,046 10, % 0.9% France Germany Italy Netherlands Russia Spain Sweden UK Source: Datamonitor analysis D A T A M O N I T O R US 19,707 21,868 22, % 1.0% Australia 1,626 1,758 1, % 1.1% Figure 40: Number of per capita beer consumption occasions, by gender, Brazil and the US, Males # of occasions 2009 Females China 20,450 30,090 38, % 5.1% India 2,692 3,614 4, % 5.1% Japan 9,601 9,593 9, % 0.1% South Korea 1,924 2,111 2, % 1.5% Source: Datamonitor analysis D A T A M O N I T O R The economic climate is influencing consumers propensity to consume on-trade and also their product choices The global economic crisis has had very real effects in terms of tightening the disposable income of millions of consumers Consumer cash flows are stretched because of escalating levels of indebtedness. Credit has become a major facilitator of established consumption patterns, so continuing consequences of the so-called credit crunch will have a major impact on 0 Brazil US consumption choices for some time. Datamonitor s 2009 consumer survey revealed that globally, 44.7% of consumers tended to agree and 24.4% strongly agreed that they were monitoring their finances more closely as a result of the Source: Datamonitor analysis D A T A M O N I T O R economic downturn. 38.7% thought that in the six months prior to April 2009, their household s financial situation had worsened or worsened significantly. With consumers seriously concerned about their financial wellbeing and monitoring expenditure, indulgences are often high on the list of things to de-prioritize. However, as consumers are attached to the comfort and escapism that alcoholic beverages can embody, as well as being usually strongly attached to their particular category preferences and brands, the desire to seek economies makes the on-trade, with its higher average prices, particularly susceptible to any downturn in spending. The off-trade s price advantages make it more appealing, especially if preferred brands can be bought conveniently for less and at a comparable level of quality. The Future of Beer, Cider & FABs: Capitalizing on New Opportunities and Preferences DMCM4715 / Published 01/2010 Datamonitor. This report is a licensed product and is not to be photocopied Page 59 The Future of Beer, Cider & FABs: Capitalizing on New Opportunities and Preferences DMCM4715 / Published 01/2010 Datamonitor. This report is a licensed product and is not to be photocopied Page 82 Contact our customer service team for more sample pages... Europe tel: fax: reports@datamonitor.com Americas tel: fax: reports@datamonitor.com Middle East tel: fax: reports@datamonitor.com Asia Pacific tel: fax: reports@datamonitor.com

4 Table of contents OVERVIEW Catalyst Summary THE FUTURE DECODED INTRODUCTION: Beer, cider and FABs constitute a central component of the overall alcoholic drinks market TREND: The overall alcoholic beverage market is defined by its maturity and the moderate consumption behaviors of consumers - Sales performance in the alcoholic beverages market highlights the contrast between the saturated, static markets of the West and the developing potential of key emerging markets - Trends in consumers' consumption occasions mirror the flat performance in sales volumes - Moderation, driven by rising attentiveness to health issues, is increasingly characterizing many consumers' alcoholic beverage consumption behaviors - Alcohol abstainers: although a minority, those that never drink account for a sizeable share of LDA consumers - Key takeouts and implications: growth potential in the alcohol market will be centered on tapping new consumer groups and the sustenance of trading up behavior TREND: The inherent popularity of beer is failing to sustain consumers' consumption levels - Sales in the beer, cider and FABs categories are showing a continuing decline - Beer occasions remain one of the key consumption occasions in the alcohol market, but frequency is falling - Cider is a fringe category, largely defined by its position in the UK alcohol market - Flavored alcoholic beverages (FABs) have elicited a mixed response from consumers globally - Gender stereotypes within the beer, cider and FABs categories remain potent - Consumer age bias is apparent across the beer, cider and FABs categories - Key takeouts and implications: the beer, cider and FABs market is facing a challenging period, requiring a focus on the shifts in consumer preferences and channel dynamics TREND: On and off-trade dynamics in the beer, cider and FABs market: consumers' off-trade consumption is increasingly driving the market - The shift in alcohol sales from the on-trade to the off-trade reflects a trend predating the global economic downturn - The economic climate is influencing consumers' propensity to consume on-trade and also their product choices - Time scarcity and related external pressures on alcohol consumption occasions adds impetus to the move to the offtrade - Brand choice is being influenced by price both on- and offtrade, although this is, perhaps surprisingly, more marked off-trade - The off-trade is the principal channel for volume sales in the beer, cider and FABs market - Key takeouts and implications: off-trade beer consumption is key to the market internationally, but the on-trade's value will remain as a showcase and value-added channel INSIGHT: Changing consumer preferences in the beer, cider and FABs market: price and health concerns are competing with consumers' habitual and sensory preferences - Some consumers are shifting between categories based on price and value-for-money considerations, but habit and experiential attributes remain highly important - Beer remains the dominant alcoholic drink outside of meal occasions - The influence of health on alcohol choice: health remains a difficult proposition for the beer market but consumers are becoming more receptive - Beer benefits from strong comfort associations among consumers, particularly in a recession - Authenticity has grown as a respected attribute within the beer, cider and FABs market - Key takeouts and implications: the beer, cider and FABs market derives continued strength from its association with informality and relaxation, which has been appreciated in difficult times INSIGHT: Innovation trends in beer, cider and FABs: premium and health attributes dominate NPD activity in the market - Manufacturers have continued to focus on meeting the upscale/premiumization trend despite the economic crisis, although 2009 suggests the tide may be turning - Health-related claims permeate the top 20 product claims - The natural/organic trend has influenced beer releases in a number of ways but is now waning - Beer, cider and FABs manufacturers continue to push development in the female market, although economic conditions and consumer uptake are leading some to reappraise their strategies - Extreme beer products have emerged to appeal to consumers' hedonism and grab headlines - Key takeouts and implications: tracking the key consumer mega-trends is essential to directing innovation in the beer, cider and FABs market ACTION POINTS ACTION: Build a compelling case for brand loyalty in the offtrade ACTION: Keep faith in the on-trade's value as a brand showcase and target the moderate on-trade consumer ACTION: Be aware of the risks of discounting and promotions to post-recessionary sales and brand equity

5 Table of contents (continued) ACTION: Maintain investment in, and exploitation of, opportunities within the healthy alcohol market - Target comfort-based and social occasions ACTION: Be ready for renewed trading up opportunities during the post-recessionary period - Maintain a strong focus on innovation and R&D during times of economic uncertainty - Start planning for the longer term by continually tracking consumers as an economic recovery begins to become a reality APPENDIX Methodology Further reading and references Ask the analyst Datamonitor consulting Disclaimer LIST OF FIGURES Figure 1: Alcoholic beverages market value and growth, 15 countries, across Europe, North and South America, and Asia Pacific Figure 2: Alcoholic beverages market value (US$ millions) and volume (million liters), by country, Europe, Figure 3: Alcoholic beverages market value (US$ millions) and market volume (million liters), Brazil and the US, Figure 4: Alcoholic beverages market value (US$ millions) and market volume (million liters) by country, Asia Pacific, Figure 5: Number of alcoholic beverage occasions (millions), in 15 countries across Europe, the Americas and Asia Pacific, Figure 6: Number of LDA per capita alcoholic beverage occasions, in 15 countries across Europe, the Americas and Asia, Figure 7: Male dominance in expenditure on alcohol mirrors that seen in occasion numbers Figure 8: Number of alcoholic beverage occasions (millions), Europe, comparison by gender, 2009 Figure 9: Number of alcoholic beverage occasions (millions), Europe, by gender, Figure 10: Number of alcoholic beverage occasions (millions), US and Brazil, comparison by gender, 2009 Figure 11: Number of alcoholic beverage occasions (millions), US and Brazil, by gender, Figure 12: Number of alcoholic beverage occasions (millions), Asia Pacific, comparison by gender, 2009 Figure 13: Number of alcoholic beverage occasions (millions), Asia Pacific, by gender, Figure 14: Number of alcoholic beverage consumption occasions (millions), by age, in 15 countries across Europe, the US, South America and Asia Pacific, Figure 15: Number of per capita alcoholic beverage consumption occasions, by age, in 15 countries across Europe, the US, South America and Asia Pacific, Figure 16: Consumer Survey: the level of attention given to 'ensuring you do not drink too much alcohol in general', by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2008 Figure 17: Consumer Survey: How much attention do you give towards the following? Potential weight gain from drinking alcohol Figure 18: In Europe, Italians are showing the highest overall commitment to consciously moderating their alcohol consumption Figure 19: Over a quarter of US drinkers strongly agree that they are making an effort to moderate consumption Figure 20: Asia Pacific consumers, compared to consumers globally, are less committed to moderating their alcohol intake, despite relatively high overall levels of interest in restraint Figure 21: Consumer Survey: Please indicate to what extent you agree or disagree with the following statements: I make a conscious effort not to drink too much alcohol Figure 22: Europeans are highly attentive to alcohol spend, but its impact on overall consumption is limited Figure 23: Brazilians and Americans show a greater likelihood to cut consumption and are more attentive than Europeans, but a stark gap is still apparent Figure 24: Asia Pacific exhibits a similar attentiveness/behavior gap in their alcohol consumption Figure 25: Consumer Survey: How much attention do you give toward the following? The amount of money you spend on alcohol Figure 26: Consumer Survey: Please indicate to what extent you have done the following more or less frequently in the past six months: Cut down on the overall amount of alcohol you buy/consume Figure 27: Rate of alcohol abstention (% of LDA population and number of abstainers, millions), in 15 countries across Europe, the Americas, and Asia Pacific, 2009 Figure 28: Rate of alcohol abstention (% of LDA population), by gender, in 15 countries across Europe, the Americas, and Asia Pacific, 2009 Figure 29: Rate of alcohol abstention (% of LDA population), by age, in 15 countries across Europe, the Americas, and Asia Pacific, 2009 Figure 30: Beer, cider, and FABs market value (US$ millions) and volume (millions liters), by country, Europe, Figure 31: Beer, cider, and FABs market value (US$ millions) and volume (millions liters), Brazil and the US, Figure 32: Beer, cider, and FABs market value (US$ millions) and volume (millions liters), by country, Asia Pacific, Figure 33: Number of beer consumption occasions (millions), Europe, Brazil, the US, and Asia Pacific, Figure 34: Per capita beer consumption occasions, Europe, Brazil, the US, and Asia Pacific, For a full list of tables and figures please refer to

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